In the business world, distributor and agent are two terms that we often encounter, although both are types of intermediary services in the supply chain and they also sell products to customers, these two terms have different functions and meanings. ...Read more
In the business world, distributor and agent are two terms that we often encounter, although both are types of intermediary services in the supply chain and they also sell products to customers, these two terms have different functions and meanings. So what is the difference between an agent and a distributor?
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The main differences between an agent and a distributor are: Agent: - Represents a company by soliciting sales orders or negotiating contracts on the company's behalf. They do not take ownership of the goods. - Works on commission based on sales revenue generated. - Typically sells complementary proRead more
The main differences between an agent and a distributor are:
Agent:
– Represents a company by soliciting sales orders or negotiating contracts on the company’s behalf. They do not take ownership of the goods.
– Works on commission based on sales revenue generated.
– Typically sells complementary products from multiple companies.
– Limited authority to make pricing/terms decisions.
– Lower financial risk – does not purchase and resell goods.
Distributor:
– Purchases goods from a manufacturer and resells them to retailers or end customers. Takes title to the goods.
– Operates independently, bears higher financial risk.
– Makes own pricing/terms decisions within guidelines.
– May provide value-added services like warehousing, delivery, packaging.
– Revenue comes from margin between distributor purchase price and sales price.
– Typically sells a manufacturer’s full product line in an assigned territory.
In summary, agents just facilitate sales as a representative, while distributors function more as independent resellers that buy and take ownership of inventory. The distribution model involves higher financial risk but also greater control over the local market.
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