Vendor is a rather complicated term, even feel more ambiguous because it has many similarities with Supplier. So what is a Vendor? Is there any difference between Vendor and other terms in the supply chain, please follow the article below to get the answer.
What is a Vendor?
Vendor , also known as supplier, is an important term in the field of business and supply chain. These are individuals or organizations that provide goods, services or raw materials to other businesses. Vendors play a key role in ensuring the continuous operation of companies by providing the necessary resources for the production or business process. They can be direct manufacturers, distributors or sales agents.
In many cases, vendors do not simply supply products but also participate in the product development process, provide after-sales services, and provide technical support. The relationship between a business and a vendor is often built on trust, product quality, and the ability to meet needs. Choosing and managing vendors effectively can create a significant competitive advantage for a business, helping to optimize costs and improve the quality of final products.
Examples of vendors can be large supermarkets such as Lotte Mart, Winmart, Big C, Top Market,…; convenience stores such as Circle K, Family Mart or simply small grocery stores in the neighborhood. All of these groups are considered Vendors because they directly supply goods to consumers.
Vendor’s Position in the Supply Chain
In the modern supply chain, the Vendor plays a particularly important role, being the last link, closest to the consumer. The Vendor’s main task is to distribute goods from the manufacturer to each specific customer, ensuring the smooth and efficient flow of goods. This position allows the Vendor to have an insight into consumer demand and trends, while creating opportunities to optimize profits through flexible business strategies.
To maximize profits, most Vendors apply the traditional business model: importing goods directly from the manufacturer at cost price, then reselling to individuals and organizations in need at a higher retail price. This is a strategy that allows Vendors to control profit margins, maintaining flexibility in adjusting prices according to market conditions. In that model, Vendors take on a dual role: being both a buyer (from the manufacturer) and a “genuine” seller (to the end consumer).
However, the increasingly complex market reality has promoted the development of more diverse and innovative Vendor models. Many Vendors have moved beyond the traditional intermediary role to become independent manufacturers and distributors. They develop and produce products under their own brands, often referred to as “private labels”. This strategy not only helps Vendors increase their profit margins but also creates a difference in the market, attracting loyal customers.
Typical examples of this trend can be seen in large supermarket chains. Big C has successfully developed the WOW brand, providing quality products at reasonable prices. Similarly, Emart – a Korean supermarket chain – has created the No Brand brand , focusing on simple, essential products at competitive prices. The brands mentioned above not only generate significant revenue and profit for the Vendor but also contribute to building its own image and position in the market.
Some vendors also expand their activities into product research and development. They work closely with manufacturers to create exclusive products that meet the specific needs of the customer segments they serve. This allows vendors to have unique products and strengthen their bargaining position with manufacturers.
This trend also reflects a shift in the way vendors approach the supply chain. Rather than simply being the end point of the chain, many vendors are now actively involved in shaping and managing the entire process. This gives them greater control over product quality and costs, and allows them to respond more quickly to changes in market demand.
The Difference Between Vendor, Supplier, Seller, Manufacturer, Distributor
To understand the difference between Vendor, Supplier, Seller, Manufacturer, Distributor, we need to consider the role and function of each term in the supply chain, specifically:
| Criteria | Vendor | Supplier | Seller | Manufacturer | Distributor |
| Concept | A unit that provides products and services to businesses or end customers. | An entity that supplies materials, products, or services to another organization. | An entity that sells goods or services to customers (businesses or individuals). | The unit that produces a product from different raw materials or components. | The entity that purchases products from manufacturers and distributes them to retailers or other businesses. |
| Main customers | Businesses, government agencies or end consumers. | Manufacturer, business or distributor. | End consumers or businesses. | Wholesaler, distributor or business. | Retailer, wholesaler or business. |
| Scope of operation | Extends to all stages of the supply chain from manufacturing to retail. | Provide raw materials or goods for production and distribution. | Focus on selling goods to end consumers. | Create a product through manufacturing or assembly. | Wide distribution of products from manufacturers to retailers or customers. |
| Role in the supply chain | Providing goods or services to end customers or intermediaries in the supply chain. | Ensure supply to manufacturers or distributors of goods. | Sell finished products to end users. | The starting point of the supply chain, creating a product from scratch. | Linking manufacturers and retailers, ensuring goods are available on the market. |
| Transaction | Usually sell products directly, through intermediaries, to consumers or businesses. | Provide products necessary for production or distribution. | Direct commercial activity with end consumers or businesses. | Sell in bulk to distributors or businesses. | Distribute products to retailers or other businesses, not sell directly to consumers. |
| For example | A company that provides software to the government (B2G vendor). | The company supplies components to automobile manufacturers. | An online store that sells clothing to consumers. | Mobile phone manufacturing companies like Apple, Samsung. | The company distributes electronics to retail supermarkets. |
Vendor Classification
Vendors are often divided into two common groups: by source of goods or by customer target.
Classification by Role in the Supply Chain
According to their role in the supply chain, vendors are divided into the following types:
Manufacturer
Manufacturers are the units directly responsible for producing the final product from raw materials or components. They are the starting point in the supply chain, converting resources and raw materials into goods. Manufacturers can mass produce or produce to order depending on customer or market requirements. They play an important role in ensuring product quality, optimizing production processes, and maintaining the stability of the supply chain by ensuring a stable supply of raw materials to meet market demand.
Retailer
Retailers are intermediaries between manufacturers (or wholesalers) and end consumers. They purchase goods in large quantities and resell them to customers in small quantities. Retailers are responsible for distributing products directly to consumers with the goal of providing a convenient shopping experience, good customer service, and ensuring product availability. They also play an important role in receiving feedback from customers, providing information on consumer trends to other components in the supply chain.
Service Provider
Service providers do not provide physical products but instead provide support services to other supply chain participants. These services may include logistics, transportation, maintenance, repair, consulting, or information technology services. The role of the service provider is to ensure the smooth operation of the supply chain, including managing inventory, transporting goods, processing orders, and providing other value-added services. Service providers help optimize operational efficiency and reduce costs in the supply chain.
Wholesaler
A wholesaler is a person who buys products in bulk from a manufacturer or supplier and then resells them to retailers or other businesses at a lower price than the retail price. Wholesalers do not usually sell directly to the end consumer but act as a bridge between the manufacturer and the retailer, helping to optimize the distribution process. They play an important role in inventory management, reducing risk for manufacturers and retailers by ensuring that goods are distributed to the market in a timely manner.
Independent Supplier
Independent suppliers are entities that provide raw materials, components or services to manufacturers or other parties in the supply chain. They are not affiliated with any organization in the chain but operate independently, providing specialized products or services. These suppliers play an important role in providing specialized parts or materials, ensuring flexibility, diversifying the supply chain, and helping manufacturers reduce their dependence on a single source.
Classification Based on Customer Base
Vendors can also be categorized based on the customer base they serve. This helps businesses find vendors with in-depth experience in a particular field, capable of meeting the requirements of their target customers.
Vendor Serving Business Customers (B2B – Business To Business Vendors)
B2B vendors are businesses that provide products or services to other businesses, often in areas such as software, manufacturing materials, and professional services. Business-to-business transactions are often more complex than B2C, involving contract negotiations, large-scale orders, and long-term partnerships. B2B products or services require after-sales technical support, such as product maintenance or upgrades. B2B contracts are larger in value and more frequent in frequency, but the decision-making process can be lengthy, as multiple stakeholders in the business need to reach consensus before a transaction can be made. B2B companies must understand the specific needs of their customers to provide optimal solutions, and they need to build lasting relationships with customers.
Vendor serving individual customers (B2C – Business to Consumer Vendors)
B2C vendors directly provide products and services to individual consumers, mainly in industries such as retail, food service, fashion, and electronics. B2C transactions have a simple process, and purchasing decisions are often made quickly based on customers’ emotions or immediate needs. B2C customers do not require customized products, and transactions tend to be individual, without long-term contract constraints like in B2B. The important factor for B2C vendors is the customer’s shopping experience, including customer service, fast delivery, and flexible return policies. B2C marketing strategies will focus on extensive advertising, attracting consumer interest, and optimizing online or in-store sales channels.
Vendor serving main customers (B2G – Business to Government Vendors)
B2G vendors serve government agencies, providing products, services, and solutions to meet public needs such as infrastructure, defense, education, and public services. B2G transactions require strict compliance with regulations and standards set by the government, and are often conducted through open and transparent bidding processes. B2G contracts are of great value, have long execution times, and require strict negotiation and approval processes, leading to longer waiting times than B2B and B2C. However, once selected, B2G vendors often have the advantage of stability thanks to the sustainability of government contracts.
Vendor Selection Criteria
To choose the right vendor, ensure product and service quality and optimize business efficiency, you can rely on the following criteria:
Reasonable Price
Pricing not only directly affects your budget, but also determines your bottom line. When considering vendor pricing, you need to compare not only current prices but also calculate the total cost of ownership (TCO), including delivery, maintenance, and any other hidden costs. It is also important to assess whether the low price comes with a risk of quality loss. A vendor offering a low price may be attractive, but if they cannot guarantee quality or delivery time, the cost of fixing the problem may far exceed the initial value.
Product or Service Quality
The quality of a vendor’s product or service determines the satisfaction of your end customers and directly affects your reputation. Quality can be judged on factors such as durability, performance, accuracy, or compliance with industry standards. You should also request quality certifications, product testing, and technical evaluations from the vendor. In the case of services, consider the expertise and practical experience of the staff, the level of technical support, and the ability to meet your specific requirements.
Referrer Verification
Reviews and ratings from previous clients or referrals are one of the effective ways to determine the reputation of a vendor. This can be done by asking for references from customers who have used the service or looking for reviews from reliable sources such as forums, industry reports. For important projects, you can consider asking the vendor to provide a portfolio of previous projects or inviting their former clients to talk about their experience working with them. Confirmation from referrals not only gives you a clearer view of the vendor’s capabilities but also assesses how they handle problems that arise during the cooperation process.
Delivery Ability
Vendor delivery capability is not simply about delivering the right product, but also meeting the committed time and complying with logistics management processes. To assess this capability, you need to consider factors such as: Does the vendor’s production process meet the demand in terms of quantity and time? Do they have a reliable warehouse and transportation management system?
You also need to assess your ability to deal with risks, such as unfavorable delivery times, supply chain issues, and other unexpected risks. Late deliveries can seriously impact your business’s production plans or product launch timelines.
Customer Service
Good customer service is a sign of a professional, responsible vendor. This service does not stop at providing after-sales technical support but also ensures that customers receive timely assistance throughout the process of using the product or service. When evaluating customer service, you need to consider the vendor’s flexibility in handling requests, response speed, 24/7 support capabilities, especially how they resolve problems when they arise. A vendor with a good customer service team will help you feel secure, minimizing disruptions in your operations when problems arise.
Professional Ethics
Vendor ethics not only affect their reputation but also directly impact your business. A vendor that complies with legal regulations, protects the environment, and commits to labor rights will help your business avoid legal risks and maintain business sustainability. When choosing a vendor, you need to consider whether they have social and environmental responsibility certifications, and evaluate policies on employee benefits, fairness in transactions, and transparency in cooperation. A vendor with good ethics will help build a long-term, trustworthy, and mutually beneficial cooperative relationship.
How to Do Marketing to Best Approach Vendors
According to Marketing experts, the best way to do Marketing to approach Vendors is not to research products, learn about customers’ needs and preferences, etc. Because Vendors do not care about branding or expanding their potential customer base. The most important thing for them is the ability to make a profit through agreements with suppliers. Therefore, to do Marketing to approach Vendors most effectively, you need to approach Vendors in the following way:
6.1. Building Personal Relationships (Networking And Partnership)
Building personal relationships through networking and partnerships is one of the most effective ways to approach vendors. You can participate in industry events, seminars, and exhibitions to meet and talk directly with potential vendors. The process of personalized communication creates a close connection, thereby helping to build trust between the two parties. In addition, establishing long-term partnerships with vendors brings mutual benefits, brings opportunities for sustainable cooperation, and enhances reputation in the industry.
Providing Optimal Solutions for Vendors (Value Proposition)
To attract vendors, offering optimal solutions that suit their needs is a decisive factor. Vendors are always looking for solutions that help optimize processes, reduce costs, and increase business efficiency. Therefore, understanding the specific needs of vendors and customizing your products or services to suit them will bring great advantages. This not only helps vendors feel that you understand and accompany them, but also builds long-term trust.
Optimizing Website and Digital Platform Experience
A professional, accessible website is an important starting point for vendors to evaluate the quality of your business. Your website needs to provide complete information about products, services, completed projects, and optimize for user experience. Factors such as an intuitive interface, clear information, and quick contact tools will help vendors easily find and connect with you. A cooperation registration form on the website will help vendors quickly start the discussion and cooperation process.
Promotions and Special Offers
Vendors are often attracted to promotions or incentives when cooperating. Offering discounts, incentives or preferential policies to new vendors not only helps you attract them but also creates opportunities for them to test your products/services. In addition, building a loyalty program specifically for long-term vendors will encourage them to continue to cooperate with you in the long term. These incentives create competition, motivating vendors to choose to cooperate with you instead of other competitors.
Customer Care and Post-Cooperation Support
Good customer care plays a very important role in maintaining relationships with vendors. Vendors often appreciate quality after-sales services and timely support during the use of products or services. Ensuring that vendors always have their problems resolved quickly and thoughtfully helps build trust and retain them. In addition, providing strategic consulting services to help vendors optimize your products and services is also a good way to enhance the value of cooperation.
Quick and Transparent Response
During the transaction process, vendors appreciate speed and transparency. Timely responses and providing clear and accurate information help build professionalism and trust in the eyes of vendors. This is especially important when vendors need to make quick cooperation decisions or evaluate multiple suppliers at the same time. Providing detailed and specific quotes about products or services helps vendors easily compare and make decisions, while also helping you create a competitive advantage over your competitors.
Participate in Online Vendor Channels
B2B marketing and online communities are potential vendor access channels that cannot be ignored. Participating in platforms such as Alibaba, Amazon Business or specialized trading floors gives you the opportunity to access a series of vendors from all over the world. This is where vendors often search for products and services from potential suppliers. In addition, participating in communities and forums where vendors discuss also helps you better understand their needs and find cooperation opportunities.
What is Vendor has been fully answered through the content of the article. Along with that is distinguishing Vendor from other terms in the supply chain. If you have any interesting related information, please comment below for MarkKnow to answer.
Frequently Asked Questions
1. What Are Common Problems When Working With Vendors?
Some common problems when working with vendors include late deliveries, products that do not meet quality requirements, lack of communication or transparency in pricing and contract terms.
2. Should I Change Vendor?
Switching vendors may be necessary if you have serious problems with quality, service, or pricing. Before making a decision, carefully consider factors such as switching costs, the time it takes to find a new vendor, and the ability to stay in business.
3. How to Evaluate Vendor Performance?
Evaluating vendor performance can be done by tracking metrics such as delivery reliability, product quality, customer satisfaction, and responsiveness to inquiries. Using a scorecard or rating system can help you get an overview of vendor performance.
4. Why Use Multiple Vendors Instead of Just One?
Using multiple vendors reduces the risk of being dependent on a single source of supply. This also creates competition between vendors, allowing you to negotiate better prices, ensuring flexibility in the supply chain.
5. How to Manage Vendor Relationships?
Managing vendor relationships requires regular communication, timely feedback on products and services, and periodic reviews of their performance. Holding regular meetings and surveys also helps to strengthen the relationship.
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