If you were a manufacturer and produced the most revolutionary product, you will have nothing to show for your efforts unless you can take the product to the market. Until you start selling, nobody will know how great your product is and you’ll also be unable to make the profits you deserve.
As a manufacturer, you have the options of either selling directly to retailers or doing this through a distributor. Why do most manufacturers find it more sensible to use distributors rather than deal directly with retailers?
Having been in business for a long time, distributors already have an existing network in place which they can exploit at no additional expense. A manufacturer would take a lot of time and effort to create such a network and this would certainly make the product dearer. This is especially the case when the product has to be sold in diverse regions of a country or internationally. By using the network established by a distributor, the manufacturer can bring the product to the market at a more competitive price.
The process of creating a product takes time and the manufacturer needs to concentrate all of his or her energies on product development. That is what the manufacturer is good at and having to worry about distribution would be an unnecessary distraction. Should the manufacturer fail to hire a distributor, he or she will still need to deploy staff and other resources for this purpose. At the end of the day, this will prove inefficient and expensive as all such resources should be used on the company’s core business which is manufacturing.
If a manufacturer was to deal directly with retailers, efforts will have to be made to obtain such retailers and also manage them. If a company chose this road, it’d have to maintain and manage such outlets at great expense. When a company deals directly with retailers, it’ll also need to create a customer care department and this will also be an additional expense. When a distributor is used as the intermediary between the manufacturer and the retailer, such expenses are handled by the distributor and this lowers the cost at which the product reaches the market. Similar to the way a company provides Restoration.
By using a distributor, a company avoids many unnecessary expenses and is able to dedicate all its resources to product development.