B2B Trade & Distribution Glossary

A distributor is a company that buys products from a manufacturer, takes ownership and holds stock, then resells to retailers or other businesses in a defined territory. The distributor carries the inventory risk and usually provides local logistics, marketing and after-sales support.

See also:Find distributors,Distributor vs wholesaler vs sales agent

A wholesaler buys goods in bulk and resells them in smaller quantities, usually to retailers rather than to the public. Unlike a distributor, a wholesaler typically does not hold an exclusive territory or provide brand marketing and after-sales service.

See also:B2B distribution types explained

A master distributor sits one level above ordinary distributors: it buys directly from the manufacturer for a large region and then supplies a network of sub-distributors or dealers rather than selling mainly to end customers. It is common where a manufacturer wants a single national or regional partner to manage the channel.

A sales agent sells a manufacturer's products on commission without taking ownership of the goods or holding stock. The agent introduces buyers and closes orders, but the manufacturer invoices the customer and carries the inventory and credit risk.

See also:Distributor vs wholesaler vs sales agent

An importer brings goods from a foreign manufacturer into its own country, handling customs clearance, duties and import compliance. Many importers also act as distributors, reselling the imported goods to local retailers or businesses.

See also:Browse importers by country

A manufacturer makes finished products or components, either under its own brand or for other companies. In a distribution chain the manufacturer is the origin point that supplies distributors, wholesalers, importers and agents.

See also:Browse manufacturers

An OEM, or Original Equipment Manufacturer, produces parts or finished products that another company sells under its own brand. The buyer specifies the design; the OEM builds it. The term is also used for the original maker of a component used inside a larger product.

See also:Private label vs white label

A contract manufacturer produces goods to another company's specification under a manufacturing agreement, without owning the brand. It is the production partner behind most private-label and OEM products.

See also:Private label manufacturing

Private label means a product is manufactured by one company but sold under another company's brand, with that brand controlling the formula, design or specification. Retailers use private label to offer exclusive own-brand ranges.

See also:Private label vs white label,Private label manufacturing

White label means a generic, ready-made product is rebranded and sold by multiple companies under their own names. Unlike private label, the buyer does not control the specification: the same product is sold to many resellers with only the branding changed.

See also:Private label vs white label

MOQ, or Minimum Order Quantity, is the smallest amount a supplier will sell in a single order. Suppliers set an MOQ to cover setup, material and handling costs, and it is often negotiable for ongoing relationships.

See also:What is MOQ, explained for buyers

Incoterms are standardised three-letter trade terms published by the International Chamber of Commerce that define who pays for and bears the risk of goods at each stage of an international shipment. The current set is Incoterms 2020, with 11 rules such as EXW, FOB, CIF and DDP.

See also:Incoterms interactive tool,Incoterms explained for buyers

Landed cost is the total cost of a product once it arrives at the buyer's door, including the unit price, freight, insurance, customs duties, taxes and handling fees. It is the true per-unit cost used to price goods and compare suppliers across countries.

See also:Landed cost calculator

An exclusive distribution agreement gives one distributor the sole right to sell a manufacturer's products in a defined territory or channel, so the manufacturer agrees not to appoint competing distributors there. Exclusivity is usually granted in exchange for sales targets, marketing investment or minimum purchases.

A distribution agreement is the contract between a manufacturer and a distributor that sets out territory, pricing, exclusivity, minimum volumes, term length, intellectual-property use and termination rights. It is the legal backbone of any ongoing distribution relationship.

Distributor margin is the difference between the price a distributor pays the manufacturer and the price it charges its customers, expressed as a percentage of the selling price. Typical margins vary widely by category, from low single digits in high-volume commodities to 30 percent or more in specialised goods, reflecting the distributor's logistics, stocking and selling costs.

A sourcing agent helps a buyer find, vet and manage suppliers in a foreign market, usually for a commission or fee. The agent handles factory selection, price negotiation, quality checks and shipping coordination on the buyer's behalf.

See also:How to find manufacturers

A B2B marketplace is an online platform where businesses find and connect with other businesses to buy, sell or distribute products, rather than selling to consumers. Marketplaces like this one let manufacturers and distributors publish structured profiles, filter by category and country, and request introductions.

See also:Browse the marketplace

A trade bloc is a group of countries that have reduced or removed trade barriers between members through a customs union, single market or free-trade agreement. Sourcing within a trade bloc can lower or eliminate import duties and simplify cross-border distribution.

See also:Browse partners by trade bloc

An HS code (Harmonized System code) is a standardised numerical code used worldwide to classify traded products for customs. It determines the import duty rate, taxes and any restrictions that apply to a shipment.

Lead time is the period between placing an order and receiving the goods, covering production and shipping. In sourcing it is a key planning figure because long or unpredictable lead times tie up cash and risk stockouts.

Drop shipping is a model where a seller takes customer orders but the supplier ships the goods directly to the customer, so the seller never holds stock. It lowers inventory risk but gives the seller less control over fulfilment and margins.