Acronyms and business specific terminology exist in every industry, it is part of the way we write, speak, and think.  It is no different in the world of “sales”.  There has always been confusion in the definitions of sales methods, the differences between manufacturer’s agents, distributors, dealers, VARs and OEMs.

A manufacturer’s agent is a contracted salesperson.  It is there responsibility to provide field sales in the same manner as a salesperson would who was directly employed by your company.  They should supply forecasts of sales and marketing intelligence.  They generally have a protected geographical territory and receive a commission on any sales made within that assigned territory.  As a general statement, they do not buy and resell product.  Companies use manufacturer’s agents when the total sales of a geographical area are not sufficient to cover the costs of an employed salesperson.

A distributor buys and inventories your product and sells it to retailers and dealers.  They provide a sales staff, product knowledge and act as your local warehousing and distribution facility.  Distributors because they take ownership of the product generally don’t have a protected territory and can sell to whomever and wherever they want at any price, they desire.

A dealer buys product from the factory or from a distributor and sells it to the end user.  A dealer is similar to a retailer.  The term dealer is generally applied in instances where installation of the product is required.  The dealer provides the installation and after sales service and support.  It is most common to use the term dealer in areas such as vehicles, major appliances, HVAC products, and power tools.

The term VAR, value added reseller, is relatively new, and has become a popular description of dealers in the computer industry.  A VAR buys name brand hardware and software products and integrates them into a system that it sells.  The VAR usually supplies customization services, installation, and ongoing support.  The VAR is adding value to a standard product that they are reselling.

An OEM, original equipment manufacturer is a company that produces a finished product.  It buys components from other manufactures in order to complete the production of its products.  The difference between a VAR and an OEM is that a VAR generally identifies the names of the manufacturers that make up his finished product whereas an OEM doesn’t.  As an example, a car manufacturer is an OEM they buy parts from many different sources and put them together to make the finished product.  When you purchase a car the manufacturer does not identify that they bought the windshield from company A, the seats from company B and the headlights from company C.