Difference Between Retail and Wholesale
The wholesale is the essential link between manufacturers and end consumers. It is the presence of wholesalers that allows manufacturers to breathe a sigh of relief as they can sell their products in large quantities and focus on business and production. You can’t just imagine the plight of manufacturers because of the absence of wholesalers in the market as, in that scenario the wait for the subsequent cycle of production for the manufacturers so that they can directly sell the products to the customers, would be long one.Products arrive to retailers from the wholesalers who sell the products at a larger margin to end consumers. Although the manufacturer – wholesaler – retailer chain hardly had any difference for the end consumers but there are many differences in the retail and wholesale, which will be discussed in this article.
A manufacturer sells the product in bulk amount to the wholesaler, who, in turn sells it to the retail merchants, while the retailer purchases the products from the wholesaler for selling it to the final user. There is a difference in the quantity and variety both. While a wholesaler purchases in a large quantity (it has no scope of receiving only one piece of any product), a retailer has the option of buying according to their needs and requirements depending on its stock to its retail store. A retailer has an eye on both the MRP as well as the margins when buying from a wholesaler. Retailer is happy to get more margins but if the MRP is high then it becomes difficult to sell the product to the customers.
The significant difference between the wholesale and retail is that retail space is in the front and a lot of expenses are incurred in maintaining the space as it should be presentable to attract consumers to end while a wholesaler can store products anywhere as it’s not the end consumers who buy in retail, but the merchants who buy from him. And the merchants are more interested in their profit margin and not in the presentation and where they buy the goods from.
Merchandise by a retailer is brought from the wholesaler in cash and gets a period of a month or a month and a half to clear the bill on the basis of the nature of business. In sharp contrast, the terms are not so forgiving for wholesalers that they must buy on the cash and then move the products to retailers on credit. The profit margin for wholesalers is too small compared to the retailers who often receive a profit margin of 50% on every item while a wholesaler receives 5% at best. Still more money comes into the hands of the wholesaler because of the fact that he sells his products at a cost much higher as compared to a retailer who bears the entire costs of retailing to sell a product at a time.