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Understanding the Differences Between Representatives and Distributors

Manufacturers RepresentativesDistributors
• Sell only in defined territory
• Do not handle competing lines
• Sell as an agent; do not take possession
• Compensated by commission on sales
• Typically handle 12 to 14 lines
• Typically entrepreneurial, owner-operated
• Interface with distributors, refer orders to distributors, receive commissions on sales through distributors
• Add value through application engineering, design-in, product synergy
• May warehouse (for a fee), but do not maintain inventory
• Focus on customers needs
• May sell anywhere
• Frequently handle competing lines
• Buy for resale; assume ownership
• Compensated by margin of sale price over cost price
• Often handle several hundred lines
• Large firms often publicly-owned
• Rely heavily on rep for referrals, training, engineering support
• Add value through time-place utility
• Maintain inventory
• Focus on selling, what’s on the shelf
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