When a distributor buys goods from a manufacturer

A distributorship (or dealership) is an agreement between two independent parties, the vendor and distributor.

When a distributor buys goods from a manufacturer to a specified net value, and a specified range. Manufacturer agrees to give distributor rebates, discounts. Rules for dispatch, payment, no assignment by distributor, maintenance of stock.

The distributor has a contract to stock the vendor’s product.  The distributor will usually be required by the vendor to hold adequate stock and maintain their outlet premises and infrastructure in a way that will reflect well on the vendor’s product.  The distributor’s profit arises from the difference between the price at which they pay for the goods and the price at which they are able to sell the goods.