16 Difference Between Wholesalers And Retailers

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Who Are Wholesalers?

A wholesaler is essentially a middleman between a manufacturer and a retail establishment. Wholesalers obtain large quantities of products at a lower price and sell them to retailers or other business, which sell them from their e-commerce sites or storefronts, usually to end consumers. Due to the large quantities purchased from the manufacturer at a discounted price, the wholesaler can also pass on this discount to retailers. The retailers then sell at a price that reflects the overall cost of doing business.

A wholesaler may specialize in a single product or product category or may offer a variety of goods. It can be anything from milk to mobile phones. Some wholesalers also broker deals between other wholesalers and retail businesses that require a variety of goods or components of goods that can be more efficiently obtained from a single source.

A wholesaler should not be confused with ‘’an official distributor’’ for a brand’s product line. The wholesaler does not generally offer product support, may not be connected directly to the company from which it purchases products, and may even have limited familiarity with the products. Moreover, unlike distributors, many wholesalers sell competing products.

Over half the UK's wholesalers may not last the year, Defra is warned |  News | The Grocer

What You Need To Know About Wholesalers

  • They are connecting links between the manufacturers and the retailers.
  • They purchase goods in large quantities from the manufacturers and sell in small quantities to the retailers.
  • They deal in limited number of products.
  • They need more capital to start their business.
  • The display of goods and decoration of premises is not necessary for them.
  • Their business operations extend to different cities and places.
  • They do not directly deal with the customers.
  • They do not extend free home delivery and after sales service.
  • The size of a wholesale business is larger than a retail business.
  • Promotion activities like advertising are not necessary for wholesalers.
  • They provide more credit facilities to retailers.
  • They do not possess knowledge in regard to selling techniques, market demands and market information.
  • They enjoy the economies of bulk buying, freight and price etc.
  • Their services can be dispensed with or can be eliminated from the chain of distribution.
  • Wholesalers generally have a large profit margin on goods and services.
  • Types of wholesalers include: Merchant wholesaler, Agent/Brokers and manufacturer distributors.
  • Wholesalers cannot communicate directly with the producers.

Who Are Retailers?

Retailers are merchants who buy the goods in bulk quantities from the wholesalers (rarely from manufacturers) and sell these goods in small quantities to final consumers for their consumption. Retailers terminate the Journey of goods which begins from the manufacturer. In other words, a retailer forms the last and vital link in the channel of distribution of products because they are the ones which take the goods from the producers by purchasing it from the wholesalers, to the end customers. They have a much stronger and personal relationship with the consumers. Retailers can operate in a physical building or online.

Retailers have multiple functions. At one end they create market for consumption of the goods and services and on the other hand generate employment for millions of people. Retailers range in size from small independent shop owners to giant international category shops. The merchandise that they offer also varies from foodstuff to drugs to apparel to flowers.

A retail transaction is usually complete once the buyer pays for the goods or services received. Big retailers such as Amazon, Walmart, Tesco and Sainsbury’s are designed to display goods from manufacturers or wholesalers. They are later sold to the consumers in line with the mark-up pricing technique.

Festive purchases help food and grocery chains recover from Covid shock -  The Economic Times

What You Need To Know About Retailers

  • They are connecting links between the wholesalers and the customers.
  • They purchase goods in small quantities from the wholesalers and sell to consumers in smaller quantities.
  • They deal in variety of products from meeting the varied needs of customers.
  • They can start business with limited capital.
  • They lay more emphasis on window display and proper decoration of business premises in order to attract the customers.
  • They usually localize at a particular place, area or city.
  • They have a direct link with the customers.
  • They provide free home delivery and after sales services to the consumers.
  • The size of a retail business is generally smaller than a wholesale business.
  • Promotion activities such as advertisement are necessary for retail business.
  • They provide lesser credit facilities to the consumers and usually sell goods on cash basis.
  • They do possess knowledge in regard to selling techniques, market demands and market information.
  • They do not enjoy economies of scale.
  • They are an integral component of the distribution chain and cannot be eliminated or bypassed.
  • Retailers generally have a small profit margin on goods and services.
  • Types of retailers include: Supermarkets, Departmental stores and convenient retailers.
  • Retailers cannot communicate directly with the producers.

Also Read: Difference Between Goods And Services

Difference Between Wholesalers And Retailers In Tabular Form

BASIS OF COMPARISON WHOLESALERS RETAILERS
Description They are connecting links between the manufacturers and the retailers.   They are connecting links between the wholesalers and the customers.  
Purchase Of Goods   They purchase goods in large quantities from the manufacturers and sell in small quantities to the retailers.   They purchase goods in small quantities from the wholesalers and sell to consumers in smaller quantities.  
Products They deal in limited number of products.   They deal in variety of products from meeting the varied needs of customers.  
Initial Capital They need more capital to start their business.   They can start business with limited capital.  
Display Of Goods The display of goods and decoration of premises is not necessary for them.   They lay more emphasis on window display and proper decoration of business premises in order to attract the customers.  
Locality Their business operations extend to different cities and places.   They usually localize at a particular place, area or city.  
Engagement With Consumers They do not directly deal with the customers.   They have a direct link with the customers.  
Home Delivery They do not extend free home delivery and after sales service.   They provide free home delivery and after sales services to the consumers.  
Size Of Business The size of a wholesale business is larger than a retail business.   The size of a retail business is generally smaller than a wholesale business.  
Promotion Promotion activities like advertising are not necessary for wholesalers.   Promotion activities such as advertisement are necessary for retail business.  
Credit Facilities They provide more credit facilities to retailers.   They provide lesser credit facilities to the consumers and usually sell goods on cash basis.  
Market Information They do not possess knowledge in regard to selling techniques, market demands and market information.   They do possess knowledge in regard to selling techniques, market demands and market information.  
Economies Of Scale They enjoy the economies of bulk buying, freight and price etc.   They do not enjoy economies of scale.  
Elimination From Supply Chain Their services can be dispensed with or can be eliminated from the chain of distribution.   They are an integral component of the distribution chain and cannot be eliminated or bypassed.  
Profit Margins Wholesalers generally have a large profit margin on goods and services.   Retailers generally have a small profit margin on goods and services.  
Types Types of wholesalers include: Merchant wholesaler, Agent/Brokers and manufacturer distributors.   Types of retailers include: Supermarkets, Departmental stores and convenient retailers.  
Communication Wholesalers cannot communicate directly with the producers.   Retailers cannot communicate directly with the producers.