What is the Difference Between Wholesale and Retail

In the supply chain industry, wholesale and retail are two major components of the distribution process. When a company manufactures any products it is first sold in bulk quantity to the wholesaler, who then sells it to the retailer and further the retailer sells it to the ultimate customers. In simple words, a wholesaler buys the product in bulk from the manufacturer and sell it to the retailer, who then sells it to the end-users.

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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 Wholesale vs Retail

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.

Comparison Table:

Basis Wholesale Retail
Meaning Sale of goods in bulk but cheaper rates Sale of goods to the end-users in higher rates and limited quantity
Creates a link between Manufacturer and retailer Wholesaler and customer
Price Less High
Size of business Large Small
Competition Less More
Capital Higher Less
Business outreach Spread across the state, different state Limited space
Art of selling Not required Required
Promotion Not required It is important
Attractive display to good Doesn’t matter It 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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Frequently Asked Questions on Wholesale and Retail

why wholesale is cheaper?

The wholesale is cheaper because they buy the products in bulk directly from the manufacturer and get large discounts for buying large quantities of goods.

What do you mean by wholesale price?

A wholesale price is the price imposed for a product when sold in bulk to the distributors or large traders.

What is an example of retail?

Few retail examples in India are. Aditya Birla Fashion & Retail Ltd (Pantaloons). Avenue Supermarts Ltd (D-Mart). Future Enterprises Ltd. Future Lifestyle Fashions Ltd. Reliance Retail Ltd. Shoppers Stop Ltd

What are the types of retail?

The types of retails are: Department Store. Supermarket. Warehouse retailer. Speciality Retailers. E-tailer. Convenience Retailer. Discount Retailer

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