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Buying Wholesale Toys for Retailers - the difference between Manufacturer, Distributor and Wholesaler
- Lisa Lambourn
- Bespoke Toys
Best Years Ltd are a manufacturer, distributor and wholesaler of toys but what exactly is the difference and why should you as a toy shop or gift shop buy from us?
A manufacturer can be used to describe the factory that makes the toys and/or the company that owns the original design. All our knitted dinosaur toys have been designed by Best Years and we are the only company who has the right to make them which is why we describe ourselves as a manufacturer.
As a manufacturer Best Years buy raw materials, schedule production and buy the full production run which is usually around 2000 pieces per design.
The advantage of being a manufacturer is that you own the sole rights for the soft toys and you are at the start of the process so you have the cheapest price.
The disadvantage is that you have all the risk. You must buy all the toys and you need to sell them all!
A distributor is someone who has the rights to sell another companies’ product in a set geographical area. So for instance Hornby trains are a toy train manufacturer who own the designs of their toys and are the sole manufacturer but they then have exclusive distributors in different countries around the world who sell their toys to retailers.
The role of the distributor is to raise awareness of the brands they distribute, and to service the requirements of the retailers who buy the brand. They buy direct from the manufacturer usually at FOB prices and add a margin to these prices before selling on to retailers.
Why do manufacturers have distributors when they could make more money by selling direct to retailers?
Distributors have a key role in raising the awareness of brands in each country both through market knowledge and through promotional activity. For instance, Best Years attend approximately 10 trade shows a year and Pebble toys’ distributor in the USA attends even more. Distributors approach key buyers directly, advertise in print and digital publications and pay for PR, all to raise the profile of the brands they stock. This is both time intensive and requires people, both of which are expensive and especially difficult to manage if you are the manufacturer like Pebble toys who are based in Bangladesh.
Distributors also simplify the process for the manufacturer. Most retailers want to buy 6 pieces or less of any one design which means that distributors are set up to handle hundreds of smaller orders. Manufacturers want to make 2000 pieces and ship them out as soon as possible. They don’t want to pay for warehouses, they don’t want to process hundreds of orders and they don’t want to process hundreds of smaller transactions.
Finally distributors de-risk the selling process for the manufacturers. We pay a 50% deposit upfront for Pebble toys so there is no chance of bad debt and cash flow can be managed more easily. A key point when you have to manage buying raw materials in bulk and employ a lot of people!
Whereas Distributors carry the brands exclusively, wholesalers tend to be one-stop-shops for a variety of non-exclusive brands. By carrying stock of a lot of different brands they are able to offer retailers a way to buy a wide variety of brands in smaller quantities.
So a wholesaler for baby shops may carry everything from nappies to prams and cots to baby toys. A distributor to gift shops may carry the same range of toys but will also offer candles, stationery and jewellery.
Wholesalers buy from distributors and put just a small margin on top, so make money by servicing the requirements of dozens of smaller retailers who want to buy a wide range of products from one central company.
Best Years are a toy distributor because we try to buy in toys from ethical producers around the world without insisting on exclusivity. This means the producer gets a large order which we pay for upfront without the time and money needed to agree terms on an exclusive agreement.
We have previously bought fair trade toys from handmade producers in Sri Lanka, Peru and Vietnam and offered them as a one off opportunity to buy and are always on the look-out for new toys to offer our retailers.
Best Years specialise in knitted and crochet toys which is why we are a manufacturer, distributor and a wholesaler. We are a specialist in tactile and bright baby toys which is why we buy our wholesale toys in so many different ways.
It also means that our ranges are always changing so make sure you keep checking back on our website or come along and see us at a trade show.
Best Years Ltd www.bestyears.co.uk