Contents
- Definition of a Dealer
- How a Dealer Works
- Advantages of Dealing
- Types of Dealers
- How to Become a Dealer
- Requirements for Potential Dealers
- Where and How to Find Manufacturers and Suppliers
Definition of a Dealer
A dealer is a legal entity that purchases goods in bulk from manufacturers or distributors and then sells them to retailers or end consumers. In this process, the dealer sets their own prices, allowing them to profit from sales. Unlike a distributor, a dealer can work with multiple manufacturers simultaneously, offering both wholesale and retail trade.
In another context, a dealer can also refer to a professional participant in the stock market who trades stocks, bonds, and other securities on their own account. However, in this article, we will consider the dealer as an entrepreneur who specializes in the retail sale of goods purchased in bulk.
How a Dealer Works
Dealers earn money from the difference between the purchase price and the selling price by adding a markup to the goods. Sometimes manufacturers set price caps in contracts, limiting the dealer's ability to raise prices. Dealers carefully analyze the market, taking into account demand and competition, which allows them to set competitive prices.
Additionally, dealers conduct market research, store goods in warehouses, consult customers, and provide service and warranty support. To increase their profits, many dealers offer additional services, such as:
- Installation and delivery of goods;
- Related financial services (loans, insurance, leasing);
- Sale of accessories and consumables;
- Consultation and training for customers on using complex goods.
Advantages of Dealing
Working as a dealer offers several key advantages:
- Quick business start: the absence of the need to organize production processes allows for focusing on selling finished products;
- Low initial costs: capital is only necessary for purchasing goods and organizing sales;
- Wide range of products: the ability to work with various manufacturers allows for selecting the best terms;
- Support from suppliers: manufacturers often train dealers and provide promotional materials.
However, dealers face a highly competitive environment where success depends on the demand for products. New dealers may find it challenging to work with large manufacturers that require experience and a good reputation.
Types of Dealers
Dealers are classified according to various criteria, which allows for considering the specifics of their activities:
By Type of Goods:
- Universal: sell a wide range of goods;
- Specialized: sell specific categories of goods;
- Exclusive: have the right to sell goods from a specific manufacturer in a limited territory.
By Method of Sales:
- Retail: sell goods to end consumers;
- Wholesale: sell goods to other dealers and retailers.
By Level of Service:
- Authorized: have permission from the manufacturer;
- Unauthorized: do not have an official contract with the supplier.
By Size:
- Large and Medium: have a network of stores;
- Small: have one or a few stores.
How to Become a Dealer
The process of becoming a dealer includes several steps:
- Determine the direction of activity and identify profitable niches;
- Conduct market analysis to assess demand;
- Find a supplier and establish contact;
- Sign a dealer agreement with the chosen supplier;
- Organize a trading platform and train personnel.
It is also important to continually expand the customer base and maintain a positive company image.
Requirements for Potential Dealers
According to the law, dealers must register as individual entrepreneurs or legal entities. Common requirements may include:
- Business experience;
- Financial stability;
- Availability of suitable premises;
- Willingness to ensure certain volumes of supply.
Some manufacturers may set strict conditions, such as renting premises of a certain size or locating a retail outlet at a specific distance from other dealers.
Where and How to Find Manufacturers and Suppliers
There are several ways to find potential suppliers:
- Official websites of manufacturers and distributors, where you can apply for cooperation;
- Supplier aggregators that allow searching for companies by industry;
- Profile events and exhibitions where you can establish useful contacts;
- Local manufacturers with whom you can establish cooperation.
When choosing a supplier, it is important to consider the terms of cooperation, the availability of necessary documents and certificates, as well as the specifics of delivery and payment for goods.