What is retail? What is wholesale? A guide for small business owners

Everyone into sales, either online or offline, should grasp the concepts of retail and wholesale as there is a considerable demand for information on these topics.

In this article, we’ll clarify the distinctions between the two. 

First and foremost, both fall into the category of sales, and this is where they are comparable. So, understanding the differences between the two should make you decide as to which area you focus on in your scope of work. 

This article will provide you the essentials and guide you towards making short-term and long-term decisions for your business. Every approach to selling has its perks and struggles, and each new era in business provides opportunities for those who can reap the benefits. 

Bear in mind that, regardless of whether you decide to go through the retail route, or you want to go wholesale, you’ll need to think about your options for how to get started. And one of the best ways is to look at something like franchise local, so that you can simply get into a business that is already up and running. That might be good for e-commerce, for instance.

While we are facing an ever expanding push to e-commerce, especially during the Covid-19 pandemic, the process is characterised by many transformative adaptations.

Consequently, distributors need modern day tools to keep up with a fast changeing world, a perfect example of which can be found in the emergence of online wholesale platforms like GoWholesale, a marketplace for refurbished electronics. 

Follow through with this article to explore the prospects, decide whether you should throw your hat in the bucket for wholesale or retail, and shape your business model.

What is wholesale?

Wholesaling is distributing goods or merchandise to retailers, industrial, commercial, institutional, or other professional business users; or other wholesalers (wholesale businesses) and related subordinated services. Traders in wholesale generally don’t market their stock to individuals but rather to local shops. 

When a wholesale trade is made, bulk products are sold at a lower price, which gets sold again to other purchasers at higher prices. The items can be bought from the manufacturer or another type of wholesalers named distributors. 

Distributors are wholesalers who will convey items that do not belong to a rival brand of merchandise and sell these products to their corresponding list of retailers.

Since the manufacturers strongly back them, you can come by a more superior standard of client support and a broader range of services than working with the producer of the goods themselves.

What is retail?

Retail is at the concluding end of the distribution process. It translates to a business that procures merchandise from the wholesaler, or the manufacturer and further places them to the ultimate user on the market, thus obtaining profit.

In most cases, retailers will purchase a larger volume of goods at a smaller price after which they will sell them at a higher price. 

Commonly retailers will fall into one of the following two classifications:

●      Itinerary. In this instance, the seller will go to various places to sell their products. There is no permanent marketplace. An example of this would be a small dairy trader, which would go to the local market, restaurants, and ice cream parlours.

This way they try and make their case in sales directly to the consumer. Itinerant traders generally market goods that are at the lower end of prices and are meant to be consumed on a daily basis.

●      Fixed shop trade. This is a more broadly established version of retailing, having the sellers arrange a store to get customers to come to them, usually being situated in a shopping center, a commuter area, or a residential area.

Fixed shop traders offer a greater choice to the buyers. Buyers tend to favor this type of trade since it is more dependable and comes with extra options such as warrants, maintenance, and deductions.

Final thoughts: how to make a choice

Retail and wholesale can both help you achieve excellent yields if you are looking to grow or open a new business. It depends on your preference and the judgment of where your talents lie and your weak points. 

Do you want to sell to the general population, or will you be focused on a global level? Would you like to chart the course and strictly manage the amount, or do you need flexibility to market fewer items according to popular demand?

Wholesale demands tighter connections to reach continuous orders with repeating retailers but is unburdened by taking a behind curtain approach. If you’re the type of person who is relaxed with crowds, you will likely be more inclined towards retail since it has increased proximity to customers.

What is most important is to stick with your choice, make a plan, work according to it, and success will likely follow.