3 - The role of the distributor Flashcards
What is the primary role of a distributor?
To serve as an intermediary that facilitates the distribution of products between suppliers and customers.
Who are the typical customers of distributors?
Smaller, independent traders, dealers, and retailers.
What is meant by ‘one-stop shop’ in the context of distributors?
A distributor that offers a range of products and services, allowing customers to fulfill most of their needs from a single source.
Fill in the blank: Distributors typically offer many thousands of ______ to ensure universal availability of products.
SKUs (stock-keeping units)
What does ‘breaking bulk’ refer to in distribution?
The practice of selling products in smaller quantities closer to what the end-customer needs.
List some typical core offerings provided by distributors.
- One-stop shop
- Sourcing of products
- Back-to-back ordering
- Simplified supply logistics
- Bulk breaking
What are some optional services that distributors can provide?
- Consignment stocking
- Repackaging
- Extended credit
- Technical training
- Logistics – drop shipment
True or False: Distributors typically charge for delivery logistics on all orders.
False
What is the significance of credit provision in distributor-customer relationships?
It enables customers to supply, install, or fit products without needing to finance the entire work-in-progress.
What type of support do most distributors provide?
Technical support, usually on a pre-sale (free) basis.
What is consignment stock?
Inventory that is owned by the supplier but held by the distributor until sold to the end customer.
What are value-added distributors focused on?
Products with limited distribution, requiring proactive market development.
What is the primary focus of broadline distributors?
Providing mainstream market coverage and access to most or all channels needed by suppliers.
Fill in the blank: Fulfilment distributors operate in markets where products are ‘bought’ rather than ______.
sold
What two core functions do distributors provide to suppliers?
- Demand generation
- Supply fulfilment
How do suppliers benefit from outsourcing non-differentiating activities to distributors?
They can focus on their core activities while leveraging the distributor’s capabilities.
List some additional functions that distributors can provide to suppliers.
- Market information
- Outsourced front office representation
- Warranty and technical support services
What is the expected outcome of market maturity on distributor services?
Cost transparency and the emergence of additional services to maintain profitability.
What challenges do distributors face in recovering delivery costs?
Delivery charges are often arbitrary and not reflective of actual costs.
True or False: Distributors typically bear the credit risk when dealing with suppliers.
True
What role does a distributor play in the marketing of a supplier’s products?
They assist in building demand through marketing and sales activities.
What is the primary reason suppliers turn to distributors?
To outsource non-differentiating activities
What do distributors do to offer specialized services?
Segment their businesses into discrete divisions
List some typical core offerings by distributors.
- Demand generation
- Supply fulfilment
- Market information
- Outsourced services
