The pros and cons of buying directly from the manufacturer

As a general rule of thumb, most manufacturers will distribute their products to a wholesaler, rather than directly to a customer.  Businesses then buy those products from the wholesaler.  However, some manufacturers sell directly to their customers, cutting out the middle man entirely.  A good example of this is RH Nuttall, a company that manufactures washers, gaskets, seals and strips, among other non-metallic materials.  Instead of  selling their products to a manufacturer, RH Nuttall have decided to sell directly to the customer, benefitting their business and their customers too.

Why do manufacturers use wholesalers?

Simply put, there is less risk involved for a manufacturer who sells to a wholesaler rather than directly to their customers.  It is an easier way for them to do business. They can sell large volumes of their product to the one wholesaler, focusing all their efforts on making the products and not having to worry about actually selling them individually.  Furthermore, for customers, especially ones like retailers, they have more options by buying through a wholesaler, for example, they can buy in smaller amounts and they have a choice of a wider range of products.

Pros of manufacturers selling directly to customers

Let’s take a look at the advantages of manufacturers and customers dealing directly with each other rather than through the middle-man:

1.       The manufacturers are the ones that make the product, they understand everything about it, the way it is made and what it can be used for.  Which means they are the experts when it comes to giving customers accurate advice.  When a customer buys direct from the manufacturer they benefit from this advice and they have peace of mind that the information they have been given is accurate. The manufacturer will advise as to what the best product is for the job at hand, but it can also make alternative suggestions, giving customers more options.

2.       When manufacturers deal directly with customers they have the ability to customise and tailor the product exactly to the customer’s needs.  This is perfect for the customer who ends up getting exactly what they wanted.  Customising a product is something that would be almost impossible to do through a middle man, but is very easy to do when dealing directly.

3.       When a manufacturer sells to a wholesaler, the wholesaler then adds on an additional charge so that they make a profit, this means the customer ends up paying slightly more for the exact same product.  When manufacturers deal directly with customers, they are able to offer their customers a price that wholesalers wouldn’t be able to match, saving the customer money and procuring more custom for the manufacturer.  Any time another middle-man is added to the chain, the price of the product is increased, so it is always cheaper to buy directly as and when you can.

4.       Customers who buy directly from the manufacturer have more control over their supply chain, and more advance notice of products being unavailable, which means they have more time to find an alternative.  So actually, buying direct from a manufacturer helps to ensure that the business runs smoother.

There are lots of other benefits to selling directly, the above is just some examples.

Cons of manufacturer selling directly to customers

1.       Some manufacturers do have a minimum quantity order and some customers may find that this is more than they need.

2.       The process can be more complicated and lengthier if the manufacturer is not local, for example if you’re dealing with a Chinese company rather than a UK based company.

3.       In times where there is a lack of product or some problem with the manufacturer, the likelihood is the manufacturer will honour their agreement with the wholesaler before its direct customers, this isn’t always the case, but it is worth bearing this in mind.