June 22, 2022
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12 Distribution Terms Every Distributor Or Wholesaler Should Know

Learn the Language of the Distribution Business


We all know that starting a new business is complicated, especially related to the distribution industry. You need to manage all of your operations effectively and have control of your team members in order to keep your business running smoothly, reach your goals, and achieve growth.  


Many wholesalers or distributors might focus on only the operative part of their business. They will create strategies, manage the team, look for improvement opportunities, and search for new clients, while leaving behind an essential thing when it comes to starting a new business: learning the basic terminology. 


It may seem like something that is not as relevant as the tasks listed above, but it's one of the most important things to learn when starting a new business. Fully understanding the industry you are working in will help you manage your business more efficiently and create successful strategies. It can also help you get a better understanding of what you are doing and how you can improve, allowing you to hold a more straightforward, clearer conversation without the need to explain complicated ideas or check that the information is understood.


Here are some distribution-related terms that should be in your vocabulary: 


Related to the Distribution Industry


1. Pre-sale


Pre-sale is selling a product or service in advance. The sales rep visits the customer and creates a product order, but does not deliver it right away. 


The pre-sales process involves all of the activities that take place before a product is sold to the customer, like invoice and order creation.


2. Van sales


Van sales, or direct store delivery (DSD), is the term used to describe a method of delivering products directly to a retail store. This means that the sales rep is able to sell products directly from their truck to the client they are visiting. DSD products are typically fast-moving items like food, beverages, and personal care.


3. ERP


Enterprise resource planning (ERP) is a process used by companies to manage and integrate the important parts of their businesses. It refers to a type of software that organizations use to manage day-to-day business activities, such as accounting, procurement, project management, risk management and compliance, and supply chain operations. The most popular ERP systems that you can apply to your business to automate accounting processes are QuickBooks, SAP, Sage, ZOHO, and NetSuite. 


4. Sales rep


A sales rep is the short form of sales representative. A sales rep’s job is to sell products or services for a company, often in a particular area. He or she usually follows up leads from clients, participates in trade shows and exhibitions, and visits new clients unannounced.


Related to the Distribution Process


5. Price Levels

This refers to the different prices that you can assign to a product, depending on what type of client you are selling to. You can assign your buyers different prices, according to their order volume, wholesale deal, etc.


6. Replenishment


It's an activity particular to the van sales (DSD) process. It consists of relocating materials from a warehouse or bulk storage area to an order pick-up or shipment area. The purpose of replenishment is to keep inventory flowing through the supply chain by maintaining efficient order and line-item fill rates. 


7. Order


A sales order is a commercial document made by a sales rep and issued to a customer, confirming the sale of certain goods. The document contains details like quantity, quality, and price. It should also cover things like delivery date, delivery address, payment method, and any other relevant information for the logistics and the sale itself. This allows companies to keep track of the orders they fulfill.


8. Invoice


Invoice and order are often confused. The main difference between the two terms is that an invoice comes in after the order is taken. The invoice is the document a seller sends to a retailer once the retailer has confirmed a submitted order, and it includes a date and unique identifying code for recordkeeping. The invoice also includes information about the number of goods sold, what those goods were, the individual cost of the products, additional charges (such as shipping fees), and contact information for both parties. 


9. Open invoice 


An open invoice is a detailed document that shows the amount owed and the due date of the payment. An open invoice can also show if there is any past due amount from previous transactions or past amounts the company paid.


10. Credit balance


This is the amount of money that a client owes you when you carry out a credit sale. The amount of the sales invoice is added to the client's account to keep track of his or her payments and debts.


11. Route


A set path for regularly moving or delivering products. It refers to the specific roadway that a sales rep usually follows, whether it is to deliver products or visit customers. 


12. Customer logs 


A customer log refers to the register a sales rep creates during a customer visit. The log records any relevant events that occurred during that particular visit. It can help you get to know your customers better by having a record of what they like and do not like to purchase, how the store is organized, and whether that customer is interested in better deals or getting free products or discounts.


In conclusion 


Whether you are starting a new distribution business or have years in the industry, you never stop learning about terms and ways that could help you make your wholesale or distribution business a success. If you want to know more about ways to improve your business and enhance your efforts, we are ready to help you! 

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