Distributor or logistics partner?

The difference between a logistics partner and a distributor in Bulgaria

логистика или дистрибуция

In the modern business world, the terms "logistics partner" and "distributor" are often used in the context of trade and supply chains, but they have different roles and functions that are important to distinguish. In Bulgaria, where the market is developing rapidly and logistics plays a key role in the economy, understanding these differences can help companies optimize their operations and choose the right partner according to their needs.

What is a logistics partner?

A logistics partner is a company or organization that provides services related to the transportation, storage, and management of goods. It is a specialized provider of logistics solutions, whose main goal is to ensure the efficient movement of products from point A to point B. In Bulgaria, logistics partners often work with companies from various sectors – from manufacturing to retail – and offer services such as:

• Transportation: Transport of goods by trucks, trains or other means, often across country borders (e.g. from Sofia to Varna or to neighboring countries).

• Warehousing: Management of warehouses for temporary storage of products.

• Logistics planning: Optimizing routes and deliveries to reduce costs and time.

• Additional services: Packaging, labeling or processing of customs documents.

Examples of logistics partners in Bulgaria are companies like Speedy, Econt or international players like DHL, which operate in the local market. They do not own the goods they transport, but act as intermediaries, focusing on physical movement and organization.

What is a distributor?

A distributor, on the other hand, is a business entity that purchases goods from a manufacturer or trader and sells them to the next level in the chain – usually to retailers, other companies or end customers. In Bulgaria, distributors often play the role of a "connecting link" between manufacturers (local or foreign) and the market. Their main functions include:

• Purchasing and Ownership: The distributor takes ownership of the goods, which means they bear the financial risk for unsold products.

• Sales and Marketing: Actively promotes and sells products, often through its own channels or a network of dealers.

• Warehousing: Maintains inventory of goods to ensure quick availability for its customers.

• After-sales service: May offer support, warranties, or product training.

Examples in Bulgaria are distributors of electronics (such as "Polycomp" for computer equipment) or of food products (such as suppliers for "Kaufland" or "Lidl"). A distributor is a commercial player whose focus is on market distribution, not just on logistics.

Main differences

1. Function:

   • The logistics partner takes care of the movement and storage of the goods without owning them.

   • The distributor buys, sells and distributes the goods, assuming ownership and commercial risk.

2. Role in the chain:

   • The logistics partner is a supporting element that facilitates the processes of manufacturers and distributors.

   • The distributor is an active participant in trade, connecting the manufacturer with the market.

3. Responsibilities:

   • The logistics partner is responsible for timely delivery and the condition of the goods during transport.

   • The distributor is responsible for sales, marketing, and customer satisfaction.

4. Revenue:

   • The logistics partner earns from service fees (e.g., transportation rate).

   • The distributor profits from the margin between the purchase and selling price of the goods.

     
     

A common misunderstanding in Bulgaria

In the Bulgarian business context, it often happens that local companies think they have a distributor, but in reality this "distributor" works with a large number of items and does not have the capacity to carry out an active commercial offer. For example, a company may expect its partner to advertise and sell its products aggressively in the market, but instead he only stocks them and delivers them on demand. In such a case, this partner functions more as a logistics partner than as a distributor in the full sense of the word.

This confusion requires companies to clearly understand what role the other party has entered into – whether it is a distributor engaged in commercial activities, or a logistics partner focused on transportation and storage. This also depends on what is paid for – whether it is a fixed fee for logistics services, or a percentage of sales, as is common with true distributors. Misunderstanding can lead to unrealistic expectations and losses for the business.

Example from the Bulgarian market

Imagine a Bulgarian cosmetics manufacturer. It hires a logistics partner like Econt to deliver its products to a warehouse in Plovdiv. From there, a distributor, such as a local cosmetics company, buys the products, stores them, and sells them to beauty salons or stores in the region. However, if the “distributor” only keeps the goods in stock and waits for orders without actively promoting them, it is essentially performing a logistics function, and the manufacturer needs to rethink its agreement – is it paying for distribution or just for transportation?

Importance for business in Bulgaria

In Bulgaria, where small and medium-sized enterprises dominate, the choice between a logistics partner and a distributor depends on the business goals. If a manufacturer only wants to deliver goods efficiently, a logistics partner is sufficient. However, if the goal is to expand the market and increase sales, a distributor is more suitable, as it brings added value through its sales network. Companies need to be aware of what they are getting for their money to avoid a gap between expectations and reality.

In short...

The logistics partner and the distributor are two sides of the same coin – delivering goods to the customer. In Bulgaria, where infrastructure and market conditions continue to evolve, understanding these roles helps businesses build more efficient supply chains and achieve a competitive advantage. The key is in clear communication and defining expectations for the partner – whether he moves the goods or actively sells them.