Every product or good reaches customers through a supply chain. There are various parts of a supply chain. Every supply chain starts with a manufacturer and ends with a retailer.
Every stage is interrelated to each other. The two integral parts of the supply chain are wholesale and retail sales.
Key Takeaways
- Wholesale sales involve selling products in bulk to retailers or other businesses, while retail sales target individual consumers.
- Wholesalers offer lower per-unit prices due to large quantities, whereas retailers have higher per-unit prices to cover costs and profit margins.
- Wholesalers act as intermediaries between manufacturers and retailers, while retailers serve as end consumers’ final point of sale.
Wholesale Sales vs Retail Sales
Wholesale sales means the sale of goods or products in large quantities to retailers or other businesses at discounted prices, for the purpose of reselling. Retail sales means the sale of goods or products directly to individual consumers at regular prices for their personal use or consumption.
Wholesale sales are especially for resale by retailers. The products of wholesale are procured from manufacturers. The sequence of wholesale sales in the supply chain is in the middle, after the manufacturers.
The sales of wholesale are in huge, large, and bulk quantities. The prices of wholesale sales are cheaper. Wholesale sales deal with a limited range of goods.
On the other hand, retail sales are especially for end consumption by consumers. The products of retail sales are procured from wholesalers. The sequence of retail sales in the supply chain is, in the end, after the wholesale sales.
The prices of retail sales are more expensive than wholesale sale rates. Retail sales deal with a diverse range of goods and products and provide variety to customers.
Comparison Table
| Parameters of Comparison | Wholesale Sales | Retail Sales |
|---|---|---|
| Supply chain part | The middle part of the supply chain | The end part of the supply chain |
| Product Type | Raw materials and goods | Goods, products, and services for customers or businesses through online or offline mode |
| Product quantity | Bulk quantities | Individual quantities |
| Purpose | For resale by the retailer | For the end consumption by the consumer |
| Product procurement | From manufacturers | From wholesalers |
What are Wholesale Sales?
Wholesale sale refers to the system of sale of goods in bulk to other retailers, industries, and commercial, professional or institutional users. A person or an organization can buy wholesale sales.
In wholesale, the goods sold are in huge quantities but at a relatively lower price. Retailers buy goods from wholesalers at a cheaper price and sell them at a higher price, thus making a profit.
The United Nations Statistics Division defines wholesale as the resale of new or used goods to other professional users. It is called resale since it involves sales without any transformation.
Wholesale sales may even involve agents or brokers buying and selling merchandise. People involved in wholesaling sort, grade, and repack goods in smaller bunches so that it becomes easier to distribute huge merchandise in smaller lots.
Wholesalers have their independent premises at specific places. The world’s biggest wholesale markets are located in China, Southeast Asia, and Taiwan.
Wholesale sales do not charge the buyer of sales tax only if the buyer or customer has a resale license in the same state as the wholesaler.
Wholesale is not only specific to goods and products but is also used in the banking domain. Wholesale banking caters to large numbers of customers.
Wholesale sales are at discounted prices. Bulk purchase at a lower price and sale at a higher price helps small businesses to operate. Wholesale models do not sell products directly to customers and sell to distributors.
What are Retail Sales?
Retail sales are the sake of goods or products to end consumers. The retail products and goods are consumed and used and not sold ahead commercially.
Retail sales refer to all the end products of a supply chain. Retail sales support and build the economy of the country. The goods in retail sales are brought in wholesale.
The products in a retail sale are bought at a lower price while sold at a higher price. The goods of retail sale are called consumer goods or final goods.
Most of the products that consumers buy from shops and stores can be termed retail goods. Retail goods can further be classified into four major types: convenience, shopping, speciality, and unsought.
The products of the retail sales are finished goods. Retail sales do not include any raw materials. It can also include services for customers and businesses. Retail sales can be online as well as offline.
The U.S. Census Bureau provides the monthly retail sales report of the US. This helps in the analysis of the sales of the entire year in the retail market. It acts as a yardstick to measure the trends.
Retail sales can be categorized into 13 types – auto dealers, non-store (online), department stores, apparel, electronics, food, building materials, sporting goods, furniture, beauty and health, hospitality, gas stations, and other miscellaneous.
Retail sales directly affect the GDP of the nation.
Main Differences Between Wholesale Sales and Retail Sales
- Wholesale sales refers to the middle of the supply chain, while retail sales refer to the end of the supply chain.
- Wholesale sales may or may not include raw materials, while retail sales include finished products and no raw materials.
- Wholesale sales are low and cheaper, while retail sale prices are high and expensive.
- The products in wholesale sales are bought in bulk, while the products in retail sales can be bought in smaller and individual quantities.
- Wholesale sales offer trade discounts or cash discounts on early payment while retail sales provide various sales and discounts like Black Friday, Cyber Monday, Pay Day, Green Monday, or during festivities.
- Wholesale sales can have a long credit period for making payments, while retail sales do not offer any credit period, and mostly the payment has to be done immediately at the time of purchase.
- https://www.jstor.org/stable/10.1086/323504
- http://ekhnuir.univer.kharkov.ua/bitstream/123456789/4554/4/Chapter%20I.pdf
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