Definition
Two-tier distribution is a sales model where a vendor sells to a distributor, the distributor sells to resellers or MSPs, and those partners sell to end customers. The distributor handles ordering, credit and logistics for many partners at once. It helps vendors reach a large number of smaller partners efficiently.
In a one-tier model, the vendor sells directly to resellers. Two-tier adds a distributor in the middle. That lowers the vendor's workload but adds another company that takes a share of the margin.
Distributors in two-tier models often do more than logistics. Many run partner recruitment, training, marketing programs and their own marketplaces. Vendors and distributors should agree on who manages which partners so their efforts do not overlap.
In practice
A backup vendor sells through a distributor, and a small MSP buys licenses from that distributor on the same account it uses for other vendors.