A distributor sits between the factory and the shop. Your job is to stock the right designs, carry inventory, give retailers credit and service, and still make money. That only works if the margin structure from factory to counter leaves room for everyone.
The chain
- Manufacturer: makes the piece and sells at factory rate.
- Distributor / wholesaler: buys in bulk, holds stock, sells to many retailers in smaller lots.
- Retailer: sells to the end customer at MRP.
Each layer adds cost and value. The distributor's value is range, availability, credit and local service.
What the distributor's margin must cover
- Inventory holding: cash tied up in stock for weeks or months
- Warehouse or shop space
- Sales visits and staff
- Credit to retailers and occasional bad debts
- Transport to retailers
- Unsold and slow stock
- Profit
Keeping the structure healthy
Buy direct at volume. Every extra middle layer between you and the factory eats into your margin. Buying from the manufacturer at 200+ units per design often creates the room you need.
Choose designs with MRP headroom. Designs that look richer than their cost give everyone room. Temple, kemp and antique bridal pieces with strong visual weight often do well here.
Avoid over-ranging. Carrying too many designs at thin quantities raises your per-design cost and leaves slow stock.
Protect retailer margin. If retailers cannot make money on your range, they stop re-ordering. Price so the shop can reach a normal MRP with a fair margin.
A worked example (illustrative)
| Stage | Value per unit |
|---|---|
| Factory price | 100 |
| Distributor landed cost (plus transport, packing) | 108 |
| Distributor price to retailer | 150 |
| Retail MRP | 300 |
In this illustration, the distributor's margin covers holding, credit and service; the retailer has room for rent, staff and discounts. Your actual numbers depend on category and region.
Where distributors lose margin
- Discounts given to push slow stock
- Credit periods that stretch without interest
- Breakage and tarnish on poorly packed stock
- Designs copied by competitors, forcing price cuts
Exclusivity as a margin protector
If a design is available from every wholesaler in your city, price becomes the only difference. Private label or regionally exclusive designs protect your margin. Read exclusive designs for wholesalers.
Working with us
We supply distributors at factory rates, MOQ 200 pcs per design (400 for earrings and pendants), with GST invoices and batch-wise production for large orders. See imitation jewellery for wholesalers and distributors.
Credit days: the hidden cost in a distributor's margin
Distributors usually give retailers credit, often 30 to 60 days, while paying the factory in advance. That gap is money the distributor funds. If a distributor's gross margin is 25% but stock and credit together take three months to turn into cash, the real return depends on how many times a year that money can go round. A distributor turning stock four times a year at 25% earns far more than one turning it twice at 30%.
Practical steps:
- Match credit terms to your own cash cycle, not to what competitors offer.
- Offer a small discount for payment on delivery; it is often cheaper than funding credit.
- Watch overdue accounts weekly, not monthly.
Returns and replacement policy
Retailers will ask to return slow sellers. A clear policy protects margin:
- replacement only for genuine defects, reported within a set number of days
- exchanges for slow stock limited to a small share of the order, and only for current designs
- no returns on customised or exclusive designs
Put the policy on your invoice or order form so it is agreed before the first delivery, not argued about afterwards.
Pricing tiers for your retailers
Many distributors use two or three price levels: a standard rate, a better rate for retailers buying above a monthly value, and a best rate for retailers who pay promptly. Tiers reward the behaviour that protects your margin.
Watching the numbers each month
A few simple figures, tracked monthly, show whether the margin structure is working: gross margin by category, stock turnover (how many times stock is sold and replaced in a year), average days retailers take to pay, and the value of slow stock older than one season. When any of these moves the wrong way for two months in a row, act before it becomes a cash problem.