Before buying any product, have you ever thought about its origin? How is the product manufactured? Or Where is the product manufactured? Or How do they reach to us?
To find out all the solutions to your queries, you need to learn how the supply chain works. Wholesale and retail are the two main components of the distribution process in the supply chain. When a company manufactures any products wholesalers are the first connecting link who purchases goods in bulk quantity from the manufacturer who then sells it to different retailers in small quantity and the end retailer sells it to the ultimate customer.
The main difference between wholesale and retail is the quantity of product. Wholesalers buy products in bulk quantity from the manufacturers and sell in small quantities to the retailers while retailers buy products in small quantity from the wholesalers and sell in smaller quantities to the ultimate consumers.
Comparison Chart
| Wholesale | Retail | |
| Definition | The word wholesale refers to the selling of the product in bulk quantity to the retailers at cheaper rates | The word retail refers to the selling of the product in small quantity to the ultimate consumers for their consumption and not for any resale |
| Link | Wholesalers are connecting links between the manufacturers and the retailers | Retailers serve as connecting links between the wholesalers and the customers |
| Types of Product | They trade in a limited number of products | They deal in a variety of product of products to fulfill the consumer demands |
| Capital | They need a huge amount of capital to start their business | They can start their business with a limited amount |
| Area Coverage | A wholesaler needs to go to different places and nearby areas to supply their products | A retailer needs limited space and usually sells at a particular place |
| Storage of Product | A wholesaler needs a big warehouse for the storage of products in bulk quantities | A retailer needs a shop or a mart to sell |
| Mode of Delivery | A wholesaler always delivers goods at the doorstep of the retailers. They may use big lorries and trucks to deliver the goods in bulk quantity | Retailers usually sell at their shops. However, some retailers have started to provide door delivery at the request of the consumers |
| Display of Products | A wholesaler does not need a luxurious display of goods like beautiful packaging, air-conditioned lorries, and many more | A retailer needs to do attractive decorations of the store premises to attract the customers |
| Payment | A wholesaler usually sell on credit to the retailers | They offer fewer credit facilities to the consumers and often sell products for cash |
| Knowledge of Product | A wholesaler may not possess expert knowledge regarding selling techniques, but he has to convince the retailers about the product quality necessarily | They need to possess expert knowledge in the art of selling, but they must let the buyer choose any brand of products that he likes |
| Discount | As per the rule of the trading system, a wholesaler needs to offer a trade discount to the retailers every time they buy | The retailers usually do not provide any discount to the customers. However, big retail storefronts offer a cash discount to attract customers |
| Marketing Strategies | Not required | Required |
What is Wholesale?
The term “wholesale” refers to buying goods in bulk quantities from manufacturers or distributors and resell them to retailers in relatively smaller quantities.
Wholesale is the term that is used to describe the process of buying and selling goods while the term wholesaler is used to refer to a middleman that is working as a connecting bridge between the manufacturer and the retailer.
Benefits of Wholesale
Spend less and make more money
A wholesaler buys products from the manufacturers at a lower price than other businesses because they receive huge discounts for bulk buying and resell these products to the retailers in more price than they paid.
For example, a small business buys 100 chocolate bars directly from the manufacturer to sell in their store by paying $10 per bar. If the chocolate bar is sold for $12, the retailer can make only $2 per bar.
However, a wholesaler who buys 50,000 chocolate bars a month from the same manufacturer can negotiate a better price of $4 per chocolate bar. Now the wholesaler sells the bars to the retailer for $8, the wholesaler makes $4 from the bar, but so does the retailer selling the same bar to the consumer for $12.
Grow your network
A wholesaler has the opportunity to build the network with the number of manufacturers and retailers. He is the person who corresponds directly with the manufacturers and providing small retailers accesses to products they cannot acquire without their help.
Being a wholesaler gives you access to the various range of outlets and allows you to reach a large customer base. Offering your product as wholesale allows larger audience access to your wares, therefore you can grow your business quickly. This can drive interest in your product and can make you attractive to retailers who can see that there is a massive audience for your goods and are more likely to want to stock your product.
Create and Propagate Your Brand
A wholesaler has a great way to build awareness for your product. Instead of consumers having to purchase entirely from a particular shop, they can see your product in a variety of outlets. It can allow a varied range of consumers who may otherwise not have been aware of your product to build a connection with it.
What is Retail?
The term “retail” refers to the selling of goods to the final consumer, not for resale but use and consumption. Retail is the last step of distribution that involves the sale of goods from a single point that can be as small as local shops or as large as markets.
Retailing is imperative because it allows manufacturers to focus on the production of goods without getting confused by the enormous amount of effort that it takes to interact with the end-user customers who want to purchase those goods. Retailers should purchase goods easy for the consumer. That is why retail stores have salespeople, internet shopping websites have customer-service instant chat popups, and why catalogues have descriptions, photos, and toll-free phone numbers.
Retailing is all about put on show products, describing the features and benefits of products, stocking products, processing payments, and doing whatsoever it takes to get the right products at the right rate to the right customers at the right time. Many retailers also offer supplementary services to the retail transaction like personal shopping consultations, gift wrapping, and something extra to the retail customer experience to exceed the retail customer experience.
Benefits of Retail
Profit Margin
When making your retail strategy, you can choose for yourself the price at which you are going to sell your merchandise for and at what profit side. All of that profit will directly be given to you and will not be shared with a wholesaler. Use the margin reports in your organization to make sure your products are making you the best margins possible and make changes if required.
Community Feel
While selling, you can get to know your customer base in great detail. You are dealing with them directly so that you can get to know their liking, their habits, and your business can respond rapidly to that. Reporting in your business system is also in easy reach here with the many customers, sales, and product reports you can very rapidly see what your best sellers versus no sellers are.
Easy Consumer Target
Being the retailer, you can specifically target a tailored consumer base. You can personally select the channels that are most likely to reach customers who need and want your product.
Key Differences
- A wholesaler buys the products from the manufacturers and sells it to the retailers while retailers buy the products from the wholesalers and sell them to the consumers.
- A wholesaler usually sells on credit to the retailers while the retailers usually sell for cash.
- A wholesaler deals with particular products, while retailers deal with a variety of goods.
- A wholesaler buys in bulk quantities from the manufacturers and sells in small quantities to the retailers while the retailers buy in small quantities from the wholesalers and sell in smaller quantities to the ultimate consumer.
- A wholesaler always delivers goods at the doorstep of the retailers while the retailers usually sell at their shops, marts, or malls. They do provide home delivery only at the request of the consumers.
- A wholesaler needs a big warehouse to stock the goods he handles while a retailer needs a shop or mart to sell.
- A wholesaler goes to different cities to supply while a retailer usually sells at a particular place but sometimes they may have branches at other places.
Conclusion
There are many differences between wholesalers and retailers, but the main difference between them is the quantity of product. A wholesaler buys goods in bulk quantities and sells it to retailer in smaller quantities while a retailer buys goods in smaller quantities from the wholesaler and sells it to the ultimate consumer.
