What is distributorship?

A distributor is one who buys products from a supplier, warehouses them, then sells them to retailers or to end-use customers. A distributorship agreement is a contract made between an individual or entity (the “distributor”) and the supplier, setting out the terms under which the distributor may sell the products. Products are purchased from the supplier at a low cost, then sold to retailers or consumers at a higher cost to cover the distributor’s costs and earn a profit. To explore this concept, consider the following distributorship definition.

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