Types of Suppliers
There are 7 main types of suppliers:-
- Manufacturers and Vendors – These are the companies that research, develop and actually produce the finished product ready for purchase. Manufacturers and vendors are the source of the supply chain. Distributors, wholesalers, resellers and retailers who purchase goods from manufacturers and vendors benefit from the cheapest prices because no other companies have added their margin to cost of the goods yet.
- Wholesalers and Distributors – These suppliers are companies that buy in bulk from several manufacturers or vendors. They warehouse the goods for reselling to smaller local distributors, wholesalers and retailers. Distributors and wholesalers may also supply larger quantities to organisations or government departments directly. A genuine wholesale supplier will require your VAT or Tax ID number. This distinguishes them from discount retailers and resellers who market, particularly online, as wholesalers.
- Affiliate Merchants - An affiliate merchant is a supplier that wishes to drive traffic to their website or sales of their product through banner ads and links placed throughout a network of affiliates. Merchants will normally pay affiliates a commission for every visit to the website or every sales conversion.
- Franchisors - A franchisor is a business owner and will grant a licence to an individual, which allows them to develop their own business using the trademark, name, know-how and business systems of the franchisor which includes suppliers and often at better pricing than an individual could get themselves.
- Importers and exporters – These suppliers will purchase products from manufacturers in one country and either export them to a distributor in a different country, or import them from an exporter into their country. Some may travel abroad to buy direct from suppliers in another country.
- Independent crafts people – These are normally manufacturers of products they have designed or produced on smaller unique scales of economy and will usually sell direct to retailers or the end consumer through agents or trade shows.
- Dropshippers – These are suppliers of products from single or multiple companies that will deliver direct to the buyer once they have made the purchase from your business. This can be cost effective as it eliminates the need for storage or display of the items for sale.
Each of these types of suppliers can be found operating globally and within all industries.