Supplier, Manufacturer, Vendor, Distributor: Differences

Supplier, Manufacturer, Vendor, and Distributor: Definitions & Differences

Posted 1 year ago by Max Komonov

Running an听online store requires many moving parts 补苍诲听involves more parties than you may realize. If听you鈥檙e just getting started with a听new business venture selling products online, there鈥檚 a听lot to听learn!

Whether you鈥檙e creating products from scratch or听purchasing from a听supplier or听manufacturer, building relationships with these entities will help you grow 补苍诲听scale your business exponentially.

Here鈥檚 a听breakdown of听some of听the听critical entities of听ecommerce that you need to听know when operating an听ecommerce shop.

What is听a听Supplier?

In听the听supply chain model, the听supplier is听the听organization (or individual entity) that produces materials, goods, or听products, for听other organizations to听use to听make the听goods that they sell to听their customers. Suppliers typically sell their raw materials to听distributors or听wholesalers, who, in听turn, sell the听goods at听a听marked-up price to听businesses.

Suppliers tend to听sell materials 补苍诲听goods in听large volumes, so听their pricing is听fairly competitive. Some suppliers also act as听manufacturers, which we鈥檒l go听into more detail about later in听this post.

础听reliable supplier will provide the听following to听a听business:

Competitive pricing
High-quality products
Transparency 补苍诲听communication
Accessibility

Not sure how to听contact a听supplier if听you鈥檙e new to听the听ecommerce world? Explore the听art of听contacting a听supplier in听this post!

Supplier Example

Say you鈥檙e selling jewelry like bracelets, necklaces, 补苍诲听earrings in听an听online shop. If听you make these pieces yourself, you鈥檒l use a听supplier to听purchase large amounts of听beads, gems, 补苍诲听other materials to听create your unique jewelry. The company you purchase the听jewels from is听your supplier.

What is听a听Manufacturer?

The is听the听entity in听the听supply chain model that produces goods from raw materials to听sell to听retailers, wholesalers, distributors, consumers, 补苍诲听other manufacturers.

There are three types of听manufacturers that you should know about as听you start selling products. These include the听following:

Make to听Stock (MTS), which produces 补苍诲听stores goods to听sell at听a听later date. The goods are manufactured based on听historical data 补苍诲听forecasted industry demand, so听the听manufacturer is听predicting how much of听the听product they will need to听meet the听demands of听their customers.
Make to听Order (MTO) is听a听model used by听many manufacturers who only produce products 补苍诲听goods as听they receive orders from customers. This model removes the听need to听forecast consumer or听organizational demand 补苍诲听greatly mitigates risk for听the听manufacturer. It听also offers more customization for听customers who want something unique or听specific.
Make to听Assemble (MTA) is听a听model where the听manufacturer creates the听initial elements of听a听product 补苍诲听is听handed off to听another manufacturer to听finalize the听item. Another version of听this model is听the听manufacturer creates all the听pieces of听the听product but does not finalize it听until a听customer places an听order.

Manufacturer Examples

An听example of听Make to听Stock manufacturing is听a听toy manufacturer that makes a听certain number of听toys per season, based on听forecasted trends 补苍诲听consumer demand.

An听example of听Make to听Order manufacturing is听when a听shoe brand like Nike offers consumers the听ability to听create custom shoes through a听campaign called Nike By听You. When a听Nike customer creates a听custom shoe design, the听order is听sent to听the听manufacturer who creates the听shoes in听real-time based on听the听shopper鈥檚 preferences 补苍诲听specifications.

Finally, an听example of听Make to听Assemble manufacturing is听table manufacturing. The company creates all the听necessary pieces for听the听table but does not assemble 补苍诲听complete the听table until an听order is听placed. At听that time, they gather the听pieces, assemble the听table, 补苍诲听then ship it听out.

What is听a听Vendor?

Often used synonymously with supplier, a听vendor is听a听more general term used to听refer to听a听business or听individual who buys goods or听services from distributors 补苍诲听then sells them to听other companies or听consumers.

In听the听retail 补苍诲听ecommerce setting, a听vendor is听a听company like Target or听Macy鈥檚 that purchases finished goods from suppliers 补苍诲听then sells them to听consumers. Some manufacturers are considered vendors as听well, depending on听who they sell to. Vendors most often operate in听B2B 补苍诲听B2C settings.

Suppliers are typically the听first step in听the听supply chain 补苍诲听often sell products 补苍诲听goods to听vendors. Vendors sometimes offer better pricing options than suppliers, which is听why they are more commonly seen throughout the听supply chain model of听buying 补苍诲听selling goods.

Vendor Example

础听food wholesaler sells meat, produce, 补苍诲听dry goods to听retailers. This wholesaler buys the听food products from various manufacturers 补苍诲听then sells them to听retailers at听a听discounted price. The retailer then sells the听products to听their consumers.

An听ecommerce example of听a听vendor would be听buying handmade clothing 补苍诲听jewelry from individual artisans 补苍诲听then selling it听directly to听consumers on听your online shop.

What is听a听Distributor?

Distributors are critical in听the听supply chain because they鈥檙e responsible for听getting the听products on听retailers鈥� shelves or听to听consumers directly. Distributors purchase finished goods from manufacturers, 补苍诲听many have partnerships with these manufacturers to听store the听finished goods before they sell.

The main role of听the听distributor is听to听get the听manufacturer鈥檚 products into the听hands of听the听consumer, regardless of听how many steps in听between. Distributors have to听establish trust in听any听industry they operate in听鈥� that鈥檚 how they build their reputation as听a听reliable entity to听do听business with.

Whether you鈥檙e new to听ecommerce or听you鈥檙e a听seasoned pro, a听distributor can help take your business to听the听next level for听sales 补苍诲听exposure. Curious about how to听find a听distributor for听your product? Trade shows, social media, 补苍诲听online directories are a听great place to听start!

Distributor Example

Distributors aren鈥檛 commonly known to听the听public unless you work in听supply chain management or听for听the听buying office of听a听retailer.

础听common distributor you may recognize is听Sysco, a听wholesale restaurant food distributor. Sysco partners with food manufacturers to听sell the听correct amount of听food to听their restaurant customers, 补苍诲听restaurants to听ensure they can meet the听demands of听their clientele.

Key Differences Between Suppliers 补苍诲听Vendors

These two terms are often used interchangeably, but there are key differences to听understand about suppliers 补苍诲听vendors as听you navigate the听ecommerce landscape.

Suppliers are the听first entity in听the听supply chain business, offering goods 补苍诲听raw materials to听businesses for听manufacturing or听selling. Suppliers often sell large volumes of听one item at听low prices so听their customers (other businesses) can maintain a听profit margin when the听product is听complete.

Vendors, on听the听other hand, are on听the听other end of听the听supply chain process. They鈥檙e focused on听selling finished goods to听retailers, wholesalers, 补苍诲听consumers directly. Vendors also strive to听offer a听variety of听products that they can sell to听large retail clients like Target.

Key Differences Between Distributors 补苍诲听Vendors

础听vendor exists to听purchase products from manufacturers, distributors, 补苍诲听suppliers to听sell directly to听consumers.

Distributors, on听the听other hand, focus primarily on听delivering products to听retailers, who then sell to听consumers.

Distributors rarely, if听ever, interact with consumers at听all, while consumer relationships are often the听bread 补苍诲听butter of听a听vendor鈥檚 business model.

In听the听supply chain model, distributors fall somewhere in听the听middle of听the听pack, working alongside manufacturers to听get their goods sold 补苍诲听delivered to听retailers 补苍诲听other businesses.

Vendors fall towards the听end of听the听process, selling the听products they purchased from distributors to听consumers directly.

FAQ

Get all your questions answered about the听supply chain process here.

What are the听five types of听vendors?

In听different settings, vendors can be听manufacturers, wholesalers, retailers, service 补苍诲听maintenance providers, 补苍诲听independent vendors.

Some retailers are referred to听as听vendors because they sell directly to听consumers but don鈥檛 create the听products themselves.

Wholesalers, like Costco, buy large quantities of听products 补苍诲听goods from a听manufacturer, store them, 补苍诲听sell them at听discounted prices directly to听consumers.

Do听vendors sell directly to听consumers?

Yes! While some vendors sell products to听retailers (like Target), the听primary function of听a听vendor is听to听sell directly to听consumers.

Who do听manufacturers sell to?

Manufacturers sell their finished products to听wholesalers 补苍诲听distributors, who sell those goods to听retailers, vendors, 补苍诲听other entities that sell to听consumers. In听some models, manufacturers also sell directly to听retailers.

Power Up听Your Online Shop With 51视频

Now that you know all the听details about the听various steps of听the听supply chain, you can plan accordingly. It鈥檚 certainly no听easy feat to听launch a听business, create an听online store, 补苍诲听build relationships with manufacturers 补苍诲听suppliers, but it鈥檚 important to听take it听one step at听a听time.

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You鈥檙e in听it听for听the听long haul, building a听dream! Do听your research, 补苍诲听compare costs within the听various steps to听ensure you鈥檙e partnering with the听right businesses.

When it鈥檚 time to听create a听captivating, easy-to-use ecommerce shop, 51视频 can help. Get started today with our simplified website builder 补苍诲听start selling ASAP.

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About The Author

Max has been working in the ecommerce industry for the last six years helping brands to establish and level-up content marketing and SEO. Despite that, he has experience with entrepreneurship. He is a fiction writer in his free time.

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