THE ROLE OF DISTRIBUTORS IN THE SUPPLY PROCESS

The role of distributors at locations leasing premises in District 2

1. The concept of distribution of goods

Distribution is the act of importing goods from the producer and supplying them to the consumer. Distributors have a role in connecting customers with the place where the products they use are manufactured. These distributors also have the task of keeping the supply and demand chain in the market uninterrupted. Helping to bring customers quality products and helping manufacturers get potential customers and create a reputation for them in the commodity market. However, in reality, many distributors do not supply products directly to customers. They just put the product on the market so that the product as well as the name of the manufacturer can be closer to groups of customers who have shopping needs in many different areas. In other words, distributors often operate on a large scale, offers a wide range of merchandise and brand-focused marketing methods.

2. Exclusive distributor and mutual benefits when cooperating

An exclusive distributor is the only unit authorized to distribute the products of an enterprise manufactured in a particular country or region. Exclusive distributors and product manufacturers are legally bound to ensure the interests of both parties in the cooperation process. The manufacturer may not authorize any other distributor during the cooperation and vice versa, the distributor may not sell similar products from other manufacturers.

Authorization and exclusive distribution bring benefits to both parties. For manufacturing businesses, they will be more assured that their products have been sold on the market, know the volume of goods to be produced, maintain stable operations and have income from the manufacturer. On the other hand, the sole distributor of that business will have a stable source of goods and a unique position in the business area. In addition, in long-term cooperation, if the enterprise finds a high degree of trust in the distributor, the subsequent products manufactured can also be distributed exclusively by that unit.

3. Concepts of different distribution intermediaries

Distribution intermediaries vary in size, operation, and specific roles:

• Distributor: responsible for the distribution of goods in the market through their distribution channel. Usually operates on a large scale such as an area or province.
• Broker: to sell products on behalf of the manufacturer but does not take ownership of the product.
• Wholesaler (wholesaler): distributes goods to retailers to sell to customers. Wholesalers in the multi-level indirect distribution chain are smaller in scale than distributors and agents.
• Retailer: this is an intermediary that provides products directly to customers through stores or online shopping.

4. Common types of distribution of goods

Direct distribution

Direct distribution is the form of providing goods from the producer to the consumer without going through any middlemen. This will help reduce many intermediary costs and goods reach customers at a cheaper rate.

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Indirect distribution

Intermittent distributions usually have three levels:

• Distributing indirectly to an intermediary and then to the customer 
• Indirect distribution through 2 intermediaries and includes 4 components involved in the supply and purchase process: manufacturer - wholesaler - retailer – customer
• 3-level distribution includes 5 components: manufacturer - agent - wholesaler - retailer - customer.

Modern distribution

This is the type of distribution where the manufacturer and the distributor are a unified entity. The products are consumed directly at the distribution systems of that manufacturing company. This helps the process of managing the quantity of products produced to match the needs of customers. (For example: Vinmart sells products manufactured by Vingroup).

5. The role of distributors for businesses

Distributors are considered by many businesses as a partner to help them achieve their target revenue. Businesses can produce quality products, but not all businesses can stand to sell their own products. Then they need to find an intermediary with finance, experience in sales, advertising, warehouse, ... to bring the company's products closer to customers and the business brand to reach further on the market.

Manufacturers and distributors need a solution in the interests of both parties to maintain a long-term cooperation. It can be said that the distribution units mostly operate independently of the goods manufacturing company, so they also put the interests of their businesses first when looking for a manufacturing company to cooperate and receive to distribute their products

6. Conditions to become a distributor

Distributors can be individuals or companies operating on a large or small scale depending on the capacity of that distributor. However, for long-term operation and prestige in the industry, a distributor should be a company with a clear size and business plan and meet the following requirements:

• Finance : distribution activities, similar to other businesses, require business owners to have strong finance to maintain operations and create trust for cooperation partners.
• Business license : this is the basic element that needs to be done to create a reputation in the market. At the same time, it helps distribution businesses to find partners easily.
• Market research : distribution is also a business activity (business does not produce), so market research is necessary. It is necessary to understand the needs of consumers to provide products that meet those needs.

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Distribution of goods should rent space like?

Enterprises are goods distribution units, so they should find a space suitable for their business scale and distribution products. For example, in District 2, which is attracting many businesses to do business. The area near Cat Lai port can rent space in District 2 in the form of a warehouse to store goods. The sales staff working in the cheap district 2 premises are arranged like an office. A distribution company can also be a direct-to-consumer seller. At that time, businesses can rent small premises in District 2, shop house premises in District 2 or rent kiosks in District 2 to display and sell products.