Wholesaling vs. Retailing
Difference Between Wholesaling And Retailing
Wholesaling activities involve selling products and services to those businesses which buy for resale or to organizations that buy for their own use. Wholesalers may be divided into three categories:
1. Merchant wholesalers (wholesale merchants, industrial distributors, cash-and-carry wholesalers, drop shippers, and rack jobbers) are independent businesses that take title to the merchandise that they handle.
2. Functional middlemen (brokers, manufacturer agents, selling agents, purchasing agents, and commission merchants) are independent businesses that do not take title to the merchandise they handle and generally perform only a few wholesaling functions.
3. Cooperatives (producer sponsored, retailer sponsored) and other vertically integrated institutions (manufacturer sales branches, manufacturer sales offices) are partially or fully owned by producers or retailers who perform wholesaling functions.
Wholesalers provide value to the distribution process by addressing the complex task of coordinating production and buying. Their role has evolved largely because of the great differences—in size, needs, business orientation, and geographic location—between manufacturing and retailing. In essence, wholesaling exists because it adds efficiency and effectiveness to the distribution process, though the specific practices vary from industry to industry.
Retailing is the selling of finished products and services to the consumer for personal or household consumption. Any individual or organization that sells to the public—whether through a store; by mail order or other forms of direct marketing, vending machine, or the Internet; or through in-home presentations—is in retailing. Wal-Mart Stores, McDonald’s, the Exxon Mobil Corporation, Blockbuster, Tupperware, Amazon.com, Spiegel, Avon, and street vendors are all retailers.
Aspects of Retailing
Retailers facilitate the buying process from producer to consumer by serving as buying agents for the public, locating and selecting merchandise, setting prices and providing services, and consummating exchanges. As the final link between producers and consumers, retailers must follow closely any changes in consumer lifestyles, demand, and buying processes for the products and services that they sell.
There is great variety and dynamism in the retail structure of the United States and other highly developed countries. It is common for retailers to experiment with merchandise categories not typically associated with their retail institution. This “scrambled merchandising” approach and the evolution of retail forms broaden competition outside traditional retail institutions and make categorization of retailers imprecise. However, retailers experience their most direct competition within their institutional form. Major retail institutions may be grouped into store retailers (department stores, specialty stores, discount stores, supermarkets, convenience stores, and off-price retailers) and nonstore retailers (mail order, direct selling, and automated merchandising machines). The Internet, television home-shopping networks, and “infomercials” (television sales programs promoting a single product) are three nonstore approaches that have gained prominence in recent years.