Distributor vs Wholesale

Distributor vs Wholesale is a common question. Lucky Cha Cha will explain this to you.

Distributor – Buys from the Manufacturer in very large quantities. This allows the Manufacturer to sell their inventory at a lower cost per unit but higher volume. Since Distributors are the main sales channel for Manufacturers, they can negotiate exclusive territories or geographic locations.

Wholesaler – Buys from Distributors at lower quantities.

Retailer – Buys from the Distributor or Wholesaler at smaller quantities. The retailer sells to the customer. This is B2C (Business-to-Customer). This is when the tax is collected by the Retailer.

Manufacturer, Distributor, Wholesaler, and Retailer are all B2B (Business-to-Business) transactions. They don’t pay the transaction tax in the USA. However, they need to obtain a Resale Certificate from their respective State Tax Board. More importantly, it’s the responsibility of the B2B parties to validate all non-taxable transactions had a valid Resale Certificate.

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