Supplier vs. Vendor: What's the difference?

Definition of supplier

A supplier is mainly used within the business to business (B2B) context. A supplier can be either a person or a company that makes and then supplies large quantities of a particular product, typically raw materials, components, services or finished products that are used in the production or operation of another business.

Suppliers are usually involved at the beginning of the production process and are the foundation of the supply chain. Businesses will usually place bulk orders with suppliers and this is how suppliers generally make their profit.

Definition of vendor

A vendor is a person or company that purchases products from a distribution company and then sells the products to their own customers. Vendors can be used in both business to business (B2B) and business to consumer (B2C) contexts and are the last link in the supply chain. They can sell products either online or from a physical store and may offer a wide range of different products specialising in different categories. Vendors have a lot less risk associated with them compared to suppliers as they only buy products in small quantities meaning they are less likely to lose large sums of money.

What is the difference between a supplier and a vendor?

Below are the many differences between a supplier and a vendor:

Selling technique:

‍The way a supplier sells products is very different to the way a vendor sells their products. A supplier usually creates a large quantity of a specific single item and then sells this large quantity to a company. A vendor on the other hand works on a much smaller scale and will source a smaller quantity of products from a more diverse range of categories and sell these directly to their end-customers.

Their place in the supply chain:

Another big difference between a supplier and a vendor is their place in the supply chain. The supply chain relates to the steps an organisation must take before selling a product to a customer. A supplier is typically at the beginning of the supply chain as they will produce the specific product in bulk which forms the basis of the materials needed in order for a company to produce a product. However, a vendor is usually at the end of the supply chain as they purchase small quantities of a product to then sell at a higher price to individual customers to make a profit.

Business relationship types:

A supplier will usually only have a relationship between their business and another business rather than have a wide range of clients. This means it is important for the supplier to maintain a healthy relationship with the business as suppliers will usually be working with the business for a long period of time. A vendor however will have a direct relationship with their individual customers. Some ways vendors can create this relationship with customers is through marketing both online and in store.