What is the distinction between retail and wholesale merchandising companies?

WholesalersRetailers1. Wholesalers buy from the manufactures and sell goods to the retailers.Retailers buy from the wholesalers and sell goods to the consumers.2. Wholesalers usually sell on credit to the retailers.Retailers usually sell for cash.3. They specialise in a particular product.They deal in different kinds of goods.4. They buy in bulk quantities from the manufacturers and sell in small quantities to the retailers.They buy in small quantities from the wholesalers and sell in smaller quantities to the ultimate consumers.5. Wholesalers always deliver goods at the doorstep of the retailers.Retailers usually sell at their shops. They provide door delivery only at the request of the consumers.6. A wholesaler needs mainly a godown to stock the goods he handles.A retailer needs a shop or a showroom to sell.7. A wholesaler goes to different places to supply.A retailer usually sells at a particular place. Sometime he may have branches in other places.8. A wholesaler need not provide shopping comforts like luxurious, interiors, provision of air-condition, trolleys, etc.A retailer usually provides shopping comforts mainly to attract customers.9. As the wholesaler specialises in a particular pmduct, he has to necessarily convince the retailers about the product quality. Only then the latter will place an order.As the retailer deals in a variety of goods, he need not influence buyers. He can let the buyer choose any brand of product the he likes.10. As per the custom of their trade, wholesalers allow the retailers trade discount each time the retailers buy.The retailers normally do not allow any discount to their customers. Some of them may offer cash discount to bulk buyers. Sometimes, they may offer seasonal discounts.

To summarize the key differences, retailers sell goods directly to the end-user, typically in small quantities. Wholesalers, on the other hand, sell goods to other store owners and others in the retail industry who then turn around and sell the goods to the end user. Wholesalers sell a large number of products at a time.

If you’ve ever heard of the terms B2B and B2C, they are especially relevant when discussing wholesalers and retailers. B2B stands for “business to business.” B2C stands for “business to consumer.”

Retailers participate in B2C transactions. They receive a product from another business, a wholesaler, and sell it to consumers. Wholesalers engage in B2B sales. They receive a product from a manufacturer (or manufacture products themselves) and sell them to other companies.

There are a few other differences between wholesalers and retailers. For one, there is much higher competition between retailers, and retailers care significantly about the customer experience.

For instance, if you’re shopping for a product, you would likely shop around to determine where you can get the best price. You may choose to shop at a particular store for other reasons, such as their location or their customer service.

There is much less competition when it comes to wholesalers. You may only find a handful of wholesalers compared to hundreds, if not thousands, of retailers.

Use General Mills as an example again. General Mills produces cereals and distributes them to grocery stores. Sure, there are other cereal manufacturers. But according to Food Industry, there are nearly  40,000 grocery stores in the United States .

Furthermore, retailers typically need to worry about advertising costs, while this is not the case with wholesalers. Wholesalers typically only deal with limited products as well, where retailers tend to handle many different products at one time.

Wholesaler’s main aim is to sell goods to businesses or retailers and they sell it further. On the other hand, a retailer targets the audience is the final consumer and only sell goods only to them. 

These two business links are important mediators of the marketing channel. If any of these links are absent, the entire supply chain will get disrupted. In this article, we will explain the significant differences between wholesale and retail.

Also Read: Difference between Wholesaler and Distributor

Wholesale vs Retail:

Wholesale is selling of goods in bulk to the retailers and businesses at cheaper rates. The wholesaler buys the products in bulk, breaks it into small parts, repacked,  and sells it to the retailers. The wholesaler sells only specific items and is least interested in the location of the shop, packaging, and display of the goods. They are more interested in the quantity not the quality of a product. 

For wholesale business, considerable investment is required, and not the promotion and advertisement. The customers of the wholesale are spread in various cities, town, and different states. Most of the purchases are sold through credit to the customers.

A wholesale shop should have a license to sell the goods only to the retailer and usually not available to the customer. However, if the customer wants to buy a product from the wholesaler directly them they will be charged higher as compared to the retailer. Usually, a wholesaler sells only one product or a category of products, so that they can focus on one kind of business for their goods.

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What is Wholesale?

Wholesale is selling of goods in bulk to the retailers and businesses at cheaper rates. The wholesaler buys the products in bulk, breaks it into small parts, repacked, and sells it to the retailers. The wholesaler sells only specific items and is least interested in the location of the shop, packaging and display of the goods. They are more interested in the quantity not the quality of a product.

For wholesale business, considerable investment is required, and not the promotion and advertisement. The customers of the wholesale are spread in various cities, town, and different states. Most of the purchases are sold through credit to the customers.

Quick link: Difference between Dealer and Distributor

What is Retail?

When buyers buy a product and sell it to the final customers for their consumption, and not for any resale, this is known as Retail. The retailers are the mediator between wholesaler and customers. They purchase goods from the wholesaler and sell them to the ultimate customers in small quantity.

The profit margin in the retail business is high as the retailer buy goods at cheaper rates and sell them to the customers at a higher price. The final price in which the retailers sell the product includes expenses such as rent, electricity, salaries of workers, etc.,

Additional Reading: What is Customer vs Consumer?

This article is ready to reckoner for all the students to learn the difference between Wholesale and Retail.

WholesaleRetailDefinitionSale of goods in bulk but cheaper ratesSale of goods to the end-users in higher rates and limited quantityCostLessHighBusiness sizeLargeSmallCapitalHigherLessBusiness outreachSpread across the state, different stateLimited spaceArt of sellingNot requiredRequiredPromotionNot requiredIt is importantAttractive display to goodDoesn’t matterIt is required to attract the customers

3 Types of Wholesaler

• Merchant Wholesaler-This type of whole selling involves the purchase of a product in larger quantity, stock it, and sell it smaller batches or quantities. This smaller portion of selling is also known as wholesale, however, they are broken up for retailers to purchase in smaller batches.
• Agent/Brokers- They don’t own the goods they’re selling but bargains on behalf of the wholesaler so that they get the best price possible and they get the commission for each sale.
• Sales and Distribution for Manufacturing – They are a sales team and distributors representing the manufacturers in getting goods out in the wholesale market. 

You might also want to know: Difference between Sales and Marketing

3 Types of Retailers

There are different types of retailers that can be determined by the business size and by the nature in which they sell their goods. However, the top three types of retailers are.

• Department Store – They offer an extensive range of goods and act as a combination of small retail stores operated by one group. 
• Supermarkets – They focuses only on providing a range of food and beverage goods. They supply goods related to fashion, home, and electrical products, etc. 
• Convenience Retailer – These are located in a residential area and provides a limited variety of goods at premium prices because of the added value of convenience.

The above mentioned is the concept, that is elucidated in detail about ‘Wholesale vs Retail’ for the Commerce students. To know more, stay tuned to BYJU’S.

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