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    1. CatchMe98 is offline

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      #1

      How does the supplier chain work? Manufacturers, distributors, wholesalers ladder

      Hi, I am a newbie at buying from suppliers and still do not understand how the supplier chain works. I thought that buying directly from the manufacturers would be cheaper than buying from a wholesaler. Can someone help me understand this?
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    2. fishbro is offline

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      #2
      The chain is simple: the manufacturer makes the product and sells it to a distributor. The distributor can then sell the products to wholesale companies who sell it to you. The distributor sometimes has a wholesale arm, as well.

      You can buy from the manufacturer but you will have to buy much more merchandise than you normally would on a wholesale purchase. For example, you may have to buy 10,000 shirts instead of 1,000.

      If you do not have a lot of cash flow, you will have to start by buying from low on the supplier ladder and work your way up.
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    3. CatchMe98 is offline

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      #3
      Are all of these considered distribution channels?

    4. fishbro is offline

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      #4
      Essentially, the distribution channels for a product are the middlemen for selling the product. This includes selling agents, wholesalers, retailers, etc. Most distribution channels, as I tried to explain above, start at the manufacturer then go to the distributor, then the wholesaler, then to the retailer, then to the user.

      Each component in the distribution channel tries to market the product in its own particular way.

    5. CatchMe98 is offline

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      #5
      I think I understand now. However, it seems to me that the manufacturer would want to sell directly to the end customer because it would be cheaper for both parties.

    6. fishbro is offline

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      #6
      What you have to consider is that a manufacturer is often located in one place and many potential customers are not near. By selling products to distributors, manufacturers make their products available to more potential customers, raising their chances of selling those products. Except by doing mail orders, manufacturers could not financially justify selling directly to customers.

      This, however, puts pressure on the manufacturer to make sure its distribution channels are providing sales and service support associated with the product. Successful distribution channels will be monitored consistently by the product’s company and managed well.

    7. jackson is offline

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      #7
      Some companies do not need distribution channels because it is appropriate to sell their products directly to consumers.

    8. fishbro is offline

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      #8
      These companies are known as a direct distribution channel. These companies are not prevalent, but have become more popular with the ease of selling directly through the Internet. Also, many companies that are struggling financially, cut costs by selling directly to customers in this way.

      A company that is an indirect distribution channel does not sell its products directly to the consumers.

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