Wholesale and resale: differences, types, and importance

The introduction of e-commerce and supply chain management to the logistic chain of command has enabled consumers to have all their desired products at their disposal.

The concept of supply chain management was first introduced in the 1980s to maximize the efficiency of transporting goods from the manufacturer to the end consumer.

It encompasses the flow of all goods and services, including all steps taken to make a final product from raw materials.

Wholesale and resale (often called retail) are two different business models that are the last steps of the supply chain. In this article, we’ll discuss them in detail.

The difference between wholesalers and resellers  

A wholesaler buys goods from the manufacturer at a discounted price and sells them to resellers at a higher price for profit. A reseller buys specific quantities of products from the wholesaler to sell them to their customers.

Here are some of the key differences between the two business models.

Wholesaler

Wholesalers have lower profit margins

A wholesaler provides products to several outlets.

They do not face much competition in the market.

The investment of capital required to start a resale business is high.

There are fewer marketing and advertising expenses.

There are many kinds of wholesalers, Patches Co. is a wholesaler of custom patches uk, BPS is a wholesaler of promotional gifts.

Reseller

Resellers typically have higher profit margins.

Normally sells their product at one location.

A reseller faces considerable competition in the market.

A reseller requires less investment capital to start than a wholesale setup.

There are a lot of overhead costs, like marketing and advertising.

Types of wholesalers and resellers

Wholesalers and resellers can be divided into different types depending on their industry and the products they supply. All merchants, agents, brokers, and sales and distribution manufacturers are wholesalers.

On the other hand, we can categorise resellers based on the limited amounts of products they supply.

Anything from your local supermarket to a convenience store or a specialty store like a bar or flower shop is a different type of reseller/retailer.

This diversity of products is also why there are specific types of wholesale suppliers for resellers that can provide them with the products they need.

The importance of wholesalers and resellers in the supply chain

While we all understand the mechanism of adding extra steps in the delivery of products from manufacturers to customers, the reason why we need an intermediary for this process is not immediately apparent.

All we can infer is that adding a third party to the process hinders the direct contact of the manufacturer from the reseller or customer. However, adding a wholesaler to the supply chain is extremely helpful for both the manufacturers and their customers.

The Benefits of Wholesale

Companies that utilise a wholesaler to distribute their product can save a good amount of money on advertising their product for their customer base.  Instead of promoting their products to consumers, manufacturers can quickly sell them to a wholesaler.

Moreover, wholesaling is a streamlined process incorporating fixed-margin profits into the system. The manufacturer and wholesalers benefit from fixed margin earnings since they don't need to worry about inconsistent sales.

The Benefits of Resale

Unlike manufacturers and wholesalers, resellers already have a well established and solid consumer base.

They can handle a high volume of products, transactions, and customers. Many manufacturers benefit from utilising resellers to increase the awareness of their brand.

Additionally, wholesalers and manufacturers can use the sales statistics provided by their resellers to track the success of their products.

End note

Supply chain management is an essential tool that facilitates the global transportation of goods, benefitting both manufacturers and consumers. Wholesalers and resellers are two key players in this process.

While wholesalers fill the gap between retail and manufacturing, resellers provide the finished product to the customers. Both types of businesses play an important role in ensuring the supply chain continues to function successfully.