Wholesale vs Retail: Difference and Comparison

While running a business, certain things need to be considered seriously. Supply management is among them.

There are many stages in supply chain management; an example of such stages is retail and wholesale. Both of them are different from each other in many aspects.

Key Takeaways

1. Wholesale involves buying goods in bulk at a discounted price and selling them to retailers or consumers, while retail involves selling goods at a marked-up price.
2. Wholesale businesses have a larger customer base and lower profit margins than retail businesses.
3. Wholesale businesses may require a resale license, while retail businesses may require a business license.

Wholesale vs Retail

The difference between wholesale and retail is that wholesale goods or services are sold/bought in bulk and to a large area, whereas retail involves selling/buying goods to limited places. They differ when it comes to cost, which is lower in the case of wholesale as products are sold/bought in bulk, which reduces the prices, while it is higher in the case of retail compared to wholesale as products are sold/bought individually or in lower quantities. Wholesale is a big and large business where more customers or buyers/sellers are involved, while retail is a small business where fewer customers are involved. Except this, they also differ in terms of capital requirement, business outreach, the art of selling, promotion, attractive display of goods, etc.

It requires overall less cost as several expenses are terminated, such as transportation of goods, as goods are purchased once in bulk only. However, for investing, the capital requirement is high in terms of monetary value.

It is operated in small sizes where low capital is required as an investment. There are many types of retailers in the market dealing with particular types of goods.

Comparison Table

Parameters of Comparison	Wholesale	Retail
Cost	Less costly	High cost
Business size	Large	Small
Capital	Higher	Less
Business Outreach	Large space	Limited space
Art of selling	Not required	Required

What is Wholesale?

The person dealing in wholesale is called a wholesaler, and the following are features of a wholesaler:

• They deal in goods directly from producers and manufacturers.
• They deal/buy-in goods in large quantities and sell in small quantities.
• They can deal with different and particular types of goods.

The following are the functions of a wholesaler:

• Collection of goods: They buy goods in bulk from producers and manufacturers.
• Distribution: They sell and distribute goods to the retailers in small quantities. 
• Financial Support: They provide credit to the retailers and also help financially to the manufacturers and producers. 

What is Retail?

Retail is the type of business where a seller sells and purchases goods in a limited area to limited buyers. The person doing this is called a retailer. There are three types of retailers:

1. Department Store: They offer a good range of consumer goods. There are separate areas based on particular products. They are a large store that can provide mostly all important products for livelihood.
2. Super Markets: They offer types of foods and beverage goods mainly. They sell goods including fashion, electrical products, etc.
3. Convenience Retailer: They can be easily found in residential areas, providing goods and premium prices due to extra convenience value.

Features of Retail:

• Small Quantities: Retailers do business in small quantities with limited stock. It operates in a few areas or a particular area.
• Limited customers: There are few customers associated with retailers that are less in numbers.
• Varieties: Despite doing business on a small scale, it can offer a good variety of goods/products.

Main Differences Between Wholesale and Retail

1. The art of selling is required in business to exceed the outreach of the business; in wholesale, this is not required as it already deals in large spaces and maximum business outreach, while retail requires the art of selling to exceed its business outreach, which is limited.
2. The wholesale business is not required to promote the business or needs comparatively less to promote the business, whereas retail businesses need to promote their business so that they can reach a maximum number of people.

References

1. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=270784
2. https://onlinelibrary.wiley.com/doi/abs/10.1111/1468-0289.00213
3. https://www.emerald.com/insight/content/doi/10.1108/13598541211269247/full/html
4. https://www.sciencedirect.com/science/article/pii/S0377221717310809
5. https://www.aeaweb.org/articles?id=10.1257/aer.103.3.575

Last Updated : 26 August, 2023