Deciding to sell your products to gift stores can be overwhelming if you are not familiar to the roles and ‘players’ in the industry. For example, should you hire a sales rep or a wholesaler or a distributor to sell your products? And what is the difference between the three?
Following is a short listing of the different entities involved in selling wholesale and what their primary role entail:
Distributors: An intermediary between producers and retailers, with large warehousing capacity and a sales and delivery force servicing stores in their area or region. Different from reps, in that they purchase directly in quantity, and take both ownership and possession of the products, for delivery. Distributors sell (often with the use of reps or brokers) and collect payments directly from the stores. This is the dominant method of food distribution in grocery and food service.
Rack Jobber: A wholesale middleman who maintains stock of convenience type merchandise handled by a distributor such as snack foods, postcards, etc. The rack jobber commonly inventories display racks in retail stores, periodically checks the stock, and replenishes inventories. (Also called a service merchandiser.)
Wholesalers: Similar to a distributor, EXCEPT they generally do not have a sales force or offer on-site delivery, instead shipping to retailers by common carrier from central warehouses.
Manufacturers Representatives: Independent sales representatives, or “reps” who call on retailers in many categories to sell your products, and items from many other companies, on a commission basis, paid monthly. The producer ships, invoices, and collects from the retailers, who are the mutual customers of both the manufacturer and the importer. Reps are a dominant force in the gift, and aspects of the specialty gourmet industries.
• Brokers: Similar to manufacturers’ representatives, but work almost exclusively in higher volume food markets such as grocery and food service. Commission rates generally much lower than for “reps”, due to larger volumes
• Independent or Individual Sales Rep: One person or couple working as a sales rep without the benefit of a larger organizational umbrella.
• Sales Rep Organization of Rep Group: An organization of several sales reps working under one business umbrella, often assigned to a specific territory of several states or regions.
Manufacturers or producers: A name for a person or company who choose to manufacture a product for a target market or markets
Retailers: Companies that – usually from a physical structure, but increasingly over the internet – sell products directly to end consumers and collect sales tax (where applicable) on the transactions. Some direct sales companies and other organizations might also fit in this category. Note the confusion of terms, since retailers buy at wholesale and sell at retail, which what makes them “retailers”. A Specialty Store or Retailer is a retailer who concentrates on selling one type of goods
All of these entities and roles are all a part of the Channel of Distribution. Channel of distributions includes all of the businesses and people involved in the physical movement and transfer of ownership of goods and services from producer to consumer. Simplest form includes producer and consumer, but can include sales reps, wholesalers or distributors, and retail outlets.)