Here are the main differences between a wholesaler and a retailer.
Wholesalers and retailers all perform vital functions and contribute to the process of how goods and services reach their final consumers.
While both of these are important, there are fundamental differences in how they operate. We are interested in highlighting such differences in this article.
So, without delay, we’ll proceed with stating how both differ.
13 Differences Between A Wholesaler And A Retailer
Wholesalers and retailers have complementary roles. Without the other, neither wholesale nor retail will be possible.
A lot of times, people confuse their roles. Here, you’ll better understand what functions are performed by who.
The interconnection of the roles of both wholesalers and retailers come with basic differences.
While wholesalers serve as connecting links between manufacturers and retailers, retailers, on the other hand, serve as connecting links between wholesalers and the customers or end-users.
This is an important link without which, finished goods or products will hardly reach targeted consumers. The distinctive nature of this relationship makes it possible and eliminates confusion and chaos.
Volume Of Purchase
Both wholesalers and retailers make purchases.
However, the difference lies in the volume of such purchases. For wholesalers, they purchase in bulk from the manufacturer. Retailers, on the other hand, operate on a much smaller scale. This is seen in their volume of purchase.
Rather than purchase from manufacturers like wholesalers do, retailers purchase in smaller volumes from wholesalers.
Wholesalers are usually limited in the number of products they deal with. In other words, sell a definite or limited number of products. This is based on their partnership with a single manufacturer.
Retailers, on the other hand, are quite versatile in the goods or products they sell. Retailers sell more variety of products because they deal with multiple wholesalers.
Amount Of Capital Needed To Do Business
Because wholesalers operate on a bigger scale, the amount of money needed to successfully launch their operations is usually substantial. This may require a warehouse, delivery vehicles among other things.
For retailers, the startup costs are significantly lower and won’t cost as much as what’s required for wholesalers.
Preparations For Selling Goods
To sell goods, wholesalers won’t need to worry about setting the place in order with such things as decorations being made or displaying goods to be sold. The same is not true for retailers.
Retailers need to worry about putting the place in order with decorations as well as proper display or arrangement of goods for buyers to easily find them.
Retailers deal with end buyers who buy finished goods in small quantities. As such, these goods will need to be properly arranged and placed well.
When doing business, wholesalers have a wider coverage area that may go beyond a city or state. In other words, they cover more locations.
For retailers, this is very different. Retailers are much more restricted and serve smaller locations or localities.
Dealing With Customers
For wholesalers, retailers are their target customers. They sell their products to such retailers and not to end-users.
Retailers have no dealings with the manufacturer as their mode of operations are incompatible. Rather, they (retailers) sell or deal directly with end-users of a product.
Free Home Delivery And After Sales Services
It is difficult or practically impossible to find wholesalers providing free home delivery or after-sales services to customers or end-users. This is not within their areas of responsibility.
Rather, the retailer has to provide free home delivery and after-sales services for certain products sold.
The mode of operation or relationship between wholesalers and retailers is much different compared to that between retailers and end-users or customers.
The business relationship between wholesalers and retailers comes with significant access to credit facilities provided by the wholesaler. The same cannot be said for business relationships between retailers and end-users or customers.
In other words, there are fewer credit facilities for end-users.
The Art of Selling
Selling is an art that can be learned over time. There are multiple levels of selling involved in the relationship between wholesalers and retailers. The manufacturer sells to the wholesaler, who in turn sells to the retailer who then sells to the consumer.
Expertise comes from constantly selling to end-users. Here, the art of selling is developed over time. The wholesaler only deals with the retailer, as such doesn’t develop such skills. The retailer is an expert in the art of selling and holds significant experience on how to sell and push products to the end-user.
Economies Of Scale
This is important in commerce and gives certain advantages. Purchasing in bulk as the wholesaler always does come with significant discounts. Also, wholesalers get lower fixed costs in proportion to the total costs. With the benefits of economies of scale, cost per unit decreases as fixed costs for products are spread over a large number of units.
Such advantages are absent for retailers based on the volume of goods or products they deal with.
When it comes to the classification of wholesalers, they are classified under one category. The same isn’t true for retailers. Retailers come in different types such as small and largescale retailers among others.
Which Is Indispensable?
It is important to have this fully figured out because people often wonder and ask questions on which distribution roles are indispensable. The role of wholesalers isn’t as indispensable as some people think. It can be eliminated from the chain of distribution. For retailers, their roles are very vital and can’t be done away with.
In other words, retailers cannot be eliminated from the chain of product distribution.
These are the fundamental differences between wholesalers and retailers. However, it must be reiterated that both roles complement each other. Each is very crucial to the distribution of products and services from the manufacturer to the end-user. Your participation in any will be influenced by where your interest lies as well as your capacity and skills.