7 Types of Software Distributors with Examples and Best Platforms

This is the insider's guide on software distribution, an essential yet often overlooked pillar of the tech industry.  

Here, we're diving into what makes software distributors and distribution companies tick. If you’ve ever wondered how a distributor works or what sets different types of distributors apart, you're in the right place.  

This article unpacks everything from traditional distribution channels to the latest in SaaS and independent software dealing.  

It's more than just facts; it's about understanding the heartbeat of software distribution.  

Get ready to uncover insights and opportunities in a sector critical to delivering innovative software solutions globally.  

1. Traditional Software Distributors

If you're delving into the world of software distribution, understanding the role of traditional software distributors is key. These entities, often pivotal in the tech landscape, excel in broadening the reach of software products.  

As the crucial link between manufacturers and consumers, traditional software distributors streamline the sales process. By managing inventory, handling logistics, and often providing value-added services like marketing and technical support, they ensure that software products efficiently reach a wide range of customers.  

Whether you're pondering how to be a distributor for a company or curious about how distributors make money, these entities exemplify the distribution process in action. 

Software Distributor Example: SAP 

In the realm of traditional software distribution, SAP stands out. A giant in the industry, SAP has over 18,000 wholesale distributors utilizing its software solutions.  

SAP offers a comprehensive suite for managing business operations, from material requirements planning and purchasing to sophisticated inventory and order processing systems. It is a stellar example of a traditional software distributor. 

Best Platform for Traditional Software Distribution 

When selecting the best platform for traditional software distribution, choosing one that simplifies your tech stack and enhances efficiency is crucial. Proton CRM is a standout choice in this regard.  

Explicitly designed for distributors, Proton CRM integrates data from various sources like ERP, e-commerce, and product information management software. It's not just a CRM; it's a 2-in-1 tool for CRM and business intelligence, using AI to analyze customer data and behavior, streamline interactions, and increase sales.  

Proton's AI-powered system also assists in managing large product catalogs and provides a 360-degree view of customers, making it an ideal platform for traditional software distribution

2. SaaS Distributors

In the evolving landscape of software distribution, SaaS (Software as a Service) distributors are increasingly significant. These distributors specialize in delivering software services via the cloud, changing how businesses access and use software.  

Key to their operation is the SaaS distribution model, which allows for scalable, subscription-based access to software applications. This model has transformed traditional software concepts for distributors, emphasizing flexibility and continuous updates.  

For those wondering how distributors make money in the SaaS world, it lies in their ability to offer tailor-made solutions and regular upgrades,  which are essential in today's fast-paced digital environment. 

Software Distributor Example: Salesforce 

Salesforce, a giant in the SaaS sector, is an exemplary distributor in this category. Pioneering CRM-based SaaS solutions, Salesforce has expanded into areas like platform development, marketing, and analytics.  

Its innovative approach to cloud software solutions has made it a leader in the SaaS distribution space, boasting a significant market cap of $208.91 billion as of March 2022. 

Top Platform for SaaS Distribution: Microsoft 

For top-tier SaaS distribution, Microsoft is a formidable contender. The transition of Office 365 to the cloud revolutionized its business model, making it one of the largest SaaS companies globally.  

With offerings like Dynamics CRM and SharePoint, Microsoft exemplifies an ideal platform for SaaS distribution, focusing on customer acquisition, onboarding, and retention, making it a preferred choice for a broad spectrum of enterprise customers.

3. Software Wholesalers

Software wholesalers play a pivotal role in the software distribution ecosystem. Unlike typical distributors, software wholesalers often purchase software in bulk, capitalizing on software wholesales to provide cost-effective solutions to retailers or smaller distributors.  

This model is critical in differentiating between distributors and suppliers.  

Software wholesalers typically handle large volumes of products, offering them at reduced prices, and are essential for businesses looking to buy in bulk. 

For companies that need distributors, these wholesalers offer a crucial avenue for acquiring software at competitive rates. 

Software Distributor Example: SPS Commerce 

A notable example of a software wholesaler is SPS Commerce. Specializing in cloud-based EDI solutions, SPS Commerce assists various clients, including retailers, distributors, and grocers.  

Their offerings encompass essential services like order management, status tracking, and invoice management, making them a vital player in the software wholesaling domain. 

Leading Platform for Software Wholesaling: NetSuite 

When considering the leading platforms for software wholesaling, NetSuite stands out.  

Renowned for its integrated system that includes ERP, financials, inventory management, and CRM, NetSuite is tailored for fast-growing businesses across various industries.  

It is particularly popular in manufacturing, logistics, and transportation, due to its capabilities in improving product tracking and enhancing customer relationship management. This makes NetSuite an ideal choice for those seeking comprehensive solutions in software wholesaling.

4. IT Distributors

IT distributors play a pivotal role in the technology ecosystem, serving as a crucial link between software manufacturers and various market segments.   

As an IT distributor, these entities specialize in distributing a wide range of IT products, including hardware and software solutions. This includes not just the selling but also the added responsibility of providing support and services related to these products.  

A key aspect of their operation is understanding what a distributor is in the context of technology, which often involves a blend of logistical expertise, technical support, and market knowledge.  

This distinguishes them from a typical software distribution company, as their focus often extends beyond mere software distribution to encompass a broader range of IT solutions and services. 

Software Distributor Example: Arrow Electronics 

A prime example of an IT distributor is Arrow Electronics, renowned for its leadership in the field of electronics and office equipment distribution.  

Recognized for the 10th consecutive year as number one in its category, Arrow Electronics exemplifies the core characteristics of an efficient and successful IT distributor, with its expansive reach and comprehensive suite of services and solutions. 

Recommended IT Distribution Platform 

In the IT distribution sector, digital distribution platforms are increasingly important. One such platform that stands out is Cloudmore.  

It supports the modern needs of IT distribution with features like seamless integrations, a comprehensive cloud services catalog, and cost-effective SaaS solutions. Cloudmore's platform is highly extensible via APIs and webhooks, allowing distributors to reduce costs through digital automation.  

It also offers expert support, flexible provisioning, and the ability to customize the platform to meet specific reseller needs. With its global reach and multi-tenant capabilities, Cloudmore is a top choice for IT distributors looking to thrive in the digital age

5. Value-Added Distributors

Value-Added Distributors (VADs) play a transformative role in the software distribution landscape.  

They do more than just distribute; VADs enhance the value of software through additional services and products. These enhancements range from implementing specialized software features to providing expert consulting and support services.  

The work of a VAD extends beyond the essential distributor work, encompassing a broader spectrum of customer engagement and technical support. Understanding what distributors are in the VAD context involves recognizing their ability to add significant value to both the product and the customer experience. 

Software Distributor Example: Gridheart 

Among value-added distributors, Gridheart stands out as a shining example. Originating as a significant player in hosting Microsoft Exchange, Gridheart AB has evolved remarkably since its inception in 2009. Today, it has become a leading cloud service distributor, primarily catering to Managed Service Providers (MSPs) through its innovative Gridheart Cloud Market. This evolution highlights Gridheart's adaptability and pioneering spirit in the tech ecosystem. 

Gridheart's mission revolves around revolutionizing business operations with a unique multi-cloud strategy. This strategy enhances efficiency, simplifies business processes, and provides a technological edge necessary for success in today's market. By integrating multiple cloud providers, Gridheart offers a robust and flexible digital infrastructure, ensuring operational stability and performance for its clients. 

Moreover, Gridheart distinguishes itself with collaborations with leading technology providers. This ensures that their customers always have access to the latest and most innovative technologies, staying competitive and adding value to their business offerings.  

Preferred Platform for Value-Added Distribution 

For VADs, the preferred platform should support digital transformation and offer a range of integrated solutions. Mindware's platform, the Mindware Cloud marketplace, serves as an excellent example.  

It provides a comprehensive set of automation tools, supply chain capabilities, and educational resources. This platform caters to the needs of both vendors and resellers, simplifying complex licensing models and offering an array of cloud solutions. 

Such platforms are essential for VADs, enabling them to offer aggregated solutions and stay ahead in a rapidly evolving digital landscape. 

6. Manufacturer Direct Distributors

In the dynamic world of software distribution, manufacturer direct distributors stand out as a vital link in directly connecting innovative software product creators with their market.  

This model, encapsulating the essence of manufacturers selling to distributors, blurs the traditional lines between supplier and distributor. It's an avenue increasingly explored by companies who need distributors, seeking a more direct and efficient route to market their products.  

For those working with distributors, this model offers a unique blend of direct communication and tailored distribution strategies, vital for streamlined market penetration. 

Top Platform for Manufacturer Direct Distribution: Katana 

Katana is ideal for manufacturer direct distributors seeking a platform that streamlines their operations. Katana offers a comprehensive cloud inventory platform tailored to meet the specific needs of direct distribution. It facilitates real-time inventory management from materials to finished goods, ensuring a seamless flow of products from manufacturer to market. 

Katana's platform is adept at integrating multiple functions, such as purchase management, sales order consolidation, and production optimization. This integration is crucial for manufacturer direct distributors, who must efficiently manage extensive product catalogs and complex supply chains. 

Furthermore, Katana MRP supports seamless integration with leading e-commerce platforms like Shopify, WooCommerce, and BigCommerce, and accounting software such as QuickBooks Online and Xero. This compatibility is essential for distributors looking to maintain accurate inventory tracking across all sales channels and streamline their financial management. 

Katana is a top platform for manufacturer direct distributors who require a robust, flexible, and comprehensive tool to manage their distribution operations effectively.

7. Independent Software Vendors

In the dynamic tech market, independent software vendors play a pivotal role. They offer unique value by catering to niche markets and specific customer needs.  

For those pondering how to become a distributor without money, independent software vendors represent an accessible entry point into the distribution world. They often have lower barriers to entry and provide more flexible business models.  

These dealers can be invaluable partners for products that need distributors, offering specialized market insights and targeted distribution channels.  

Software Distributor Example: Alteryx 

Alteryx represents an exemplary model of an independent software vendor. Since its inception in 1997, Alteryx has been at the forefront of democratizing data analytics and revolutionizing businesses through its data science and analytics expertise.  

The company's flagship product, the Alteryx Analytics Cloud Platform, offers an intuitive and comprehensive suite for data engineering, data prep, analytics, machine learning, geospatial analytics, and AI-driven data storytelling.  

This platform is a testament to Alteryx’s commitment to making analytics accessible for all.  

Alteryx’s suite of products includes innovative solutions such as Alteryx AiDIN for generative AI analytics, Designer Cloud for simplifying data pipeline automation, and Alteryx Machine Learning for building advanced models.  

These products demonstrate Alteryx’s ability to lead in technology innovation and offer cutting-edge solutions in the independent software dealer space. 

FAQs about Software Distributors 

Why use a software distributor? 

Utilizing a software distributor can streamline your journey in acquiring tech solutions. These distributors, equipped with a vast array of software from various software distribution companies, provide ease of access, expert advice, and often value-added services.  

They simplify the process for businesses and individuals alike, answering the critical question of how a distributor works by efficiently managing logistics, technical support, and customized solutions. 

What’s the difference between distributors and resellers? 

As implied by the name, a reseller primarily focuses on reselling products to the end customer. This role is more about retailing and less about the broader supply chain management. Resellers, often seen as vendors, typically have closer relationships with end consumers, offering products with added customer support and services. 

On the other hand, a distributor operates on a larger scale, often dealing with bulk orders and playing a pivotal role in the supply chain. They act as intermediaries between manufacturers and resellers (or sometimes directly with consumers), managing logistics, inventory, and even after-sales services in some cases. 

While a reseller focuses more on direct sales to consumers, a distributor manages the broader logistics and supply chain aspects, often dealing with multiple vendors and resellers. 

How do software distributors get their products? 

Software distributors typically source their products directly from manufacturers or software developers. This relationship between supplier and distributor is key in the tech industry.  

Distributors might also work with software wholesalers for bulk purchases, ensuring a diverse and comprehensive product portfolio to meet varied customer needs. 

Do software distributors only sell to businesses? 

While traditionally focused on B2B (business-to-business) transactions, many software distributors have expanded their reach.  

Now, they often cater to a broader audience, including individual consumers, especially in areas like SaaS distribution, where the software model for distributors is more flexible and scalable. 

Key Takeaways about Software Distributors 

As we wrap up, let's revisit the diverse landscape of software distributors, a crucial component in the tech industry's ecosystem. Here are the key takeaways: 

• Traditional Software Distributors: Central in bridging manufacturers and consumers, managing inventory and logistics.
• SaaS Distributors: Specialize in cloud-based software services, offering flexible, subscription-based solutions.
• Software Wholesalers: Focus on bulk purchases, serving retailers or smaller distributors with cost-effective options.
• IT Distributors: Distribute a range of IT products, including hardware and software, with added support services.
• Value-Added Distributors (VADs): Enhance software value through additional services and expertise.
• Manufacturer Direct Distributors: Connect manufacturers directly with the market, optimizing supply chain efficiency.
• Independent Software Dealers: Cater to niche markets, offering specialized and targeted software solutions. 

Each type plays a unique role, offering distinct opportunities for those exploring how to be a distributor for a company and how to work with distributors.  

This guide should give you confidence in understanding the software distribution landscape. Stay tuned for more insights and guidance in this ever-evolving field.