Difference Between Wholesale and Retail (With Table)

While running a business, certain things need to be considered seriously. Supply management is among one of them. It is important to critically examine supply management as it decides the future of the company/business. The business has to decide in initially planning whether it wants to deal with a single industry of multiple or several industries.

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. It is important to understand at which stage you want to carry out the business.

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 bulks which reduces the prices, while it is higher in the case of retail compared to wholesale as products as goods are sold/bought individual or in lower quantities. Wholesale is a big and large size of business where more customers or buyers/sellers are involved, while retail is a small size of 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.

Wholesale is a stage in the supply chain where goods are bought in large quantities and sold in small quantities to different retailers. It requires overall less cost as several expenses are terminated, such as transportation of goods, as goods are purchase once in bulk only. But for investing, the capital requirement is high in terms of monetary value.

Retail is a stage in the supply chain which is directly connected with its customers. It requires a relatively higher cost as goods need to be bought from a wholesaler and other sources and then have to be sold in the market, which includes expenses such as transportation. It is operated in small size 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 Between Wholesale and Retail

Parameters of ComparisonWholesaleRetail
CostLess costlyHigh cost
Business sizeLarge  Small
CapitalHigherLess
Business OutreachLarge spaceLimited space
Art of sellingNot requiredRequired

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.
  • They also employ agents as workers for distribution.
  • A large amount of capital is required for wholesaling.
  • They also help financially help to producers and manufacturers.
  • They are usually located in a particular area.

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. 
  • Risk-taking: they take a risk by buying goods in bulk and store them in the warehouse till they think the product is in demand in the market.
  • Provide information: they provide information about the quality and type of the product to the retailers 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 separated 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 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.
  • Personal Touch: there is a personal touch in the retailer as the buyer interacts with the customer directly. Ti increases its market value.
  • Last link: it is the last link of the supply chain or management which directly connects with the customers.

Main Differences Between Wholesale and Retail

  1. Capital requirement is the main thing that needs to be considered before starting. In terms of capital required, wholesale, as mentioned above, is associated with bulk production and the sale of products. Therefore, a high amount of capital is required, and comparatively less capital is required for retail as products are not sold in bulk.
  2. Compared to business size, wholesale is large in size due to bulk selling/buying of the product, whereas retail is of small size as it is done with limited people with limited products.
  3. In terms of business outreach, wholesale is spread in a larger space, in different states, a single wholesale business deals with several products in large quantity with more than a single state or area, whereas retail is limited to a certain space as it deals with limited products in limited states or areas.
  4. 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 space and maximum business outreach while retail requires the art of selling to exceed its business outreach which is limited.
  5. Promotion is also essential for a successful business. The wholesale business is not required to promote the business or need comparatively less to promote the business, whereas retail businesses need to promote their business so that they can reach a maximum number of people. This also means that wholesale does not require attracting more customers in comparison to retail, in which customer attraction is essential.

Conclusion

Therefore, it is clear how both retail and wholesale different from each other. Both of them play an important role in the market. They are opposite from each other in many aspects, such as business size, cost, and capital required, etc. but the similarity is that both of them sell their goods to their respective customers and both of them aim at similar objectives such as they aim at increasing profits, expand their respective business, and other small and long term objectives.

Other than wholesaler and retailer, there is manufacturer, consumer, distributor, supplier, etc. all of them have their respective role in business and market, a consumer being the end-user, and wholesale being the supplier first identity.

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
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