A distributor is an intermediary in the channel that buys products from vendors at volume pricing and resells them to a network of resellers, VARs, and MSPs. Distributors do not sell to end customers. Their customer is the reseller.
The distributor business model is built on scale and operational efficiency. By aggregating demand from hundreds or thousands of resellers, distributors achieve volume pricing from vendors and pass part of that discount to their reseller customers. They earn margin on the spread, plus fees for value-added services.
Traditional IT distributors like Ingram Micro, TD SYNNEX, and Arrow Electronics built massive logistics operations: warehouses, shipping networks, and inventory management for hardware products. They also provide credit (resellers buy on terms instead of paying upfront), technical training, and marketing support.
Cloud and SaaS have created a new class of distributors. Companies like Pax8, Sherweb, and AppSmart focus on subscription software. Instead of warehousing and shipping, they provide license provisioning, billing aggregation, and multi-vendor management portals for MSPs and resellers.
For vendors, distributors provide market coverage that would be impossible to build directly. A single distributor relationship can connect you to thousands of resellers across geographies. The trade-off is another layer of margin and less direct control over how your product is positioned and sold to end customers.