Wholesale and retail are different segments of the supply chain. Among others that involves different pricing structures, interactions with customers, and business models. In this article, we will walk through some of the most important characteristics and differences between retail and wholesale.
The Target Audience in Retail versus Wholesale
Wholesale sells products in bulk quantities to distributors and retailers while retailers sell products directly to consumers.
The Order Quantities in Retail versus Wholesale
Transactions in retail typically involve smaller quantities as consumers only need one or few products while wholesale transactions involve larger quantities as distributors or retailers need a greater number of products to sell to multiple customers.
The Pricing Structure in Retail Versus Wholesale
Prices in wholesale are lower per unit since the wholesale buyer buys in bulk. Buying products in bulk typically involves discounts. Comparing prices in retail with wholesale, prices are typically higher per product as they also must cover costs such as overhead, marketing, inventory, and operations of stores.
Profit Margins in Retail Versus Wholesale
In general, wholesale operates on lower profit margins per unit but because of the high-volume wholesale businesses can generate great profit while retail businesses operate on higher profit margins per product but sell fewer per time.
Customer Interaction in Retail Versus Wholesale
Transactions in wholesale are business-to-business whereas transactions in retail are business-to-consumer. Customers in wholesale can be retailers, manufacturers, restaurants, or other business-to-consumer businesses. Retail customers are private individuals who purchase a product for their own use.
Packaging and Presentation in Retail Versus Wholesale
In wholesale packaging and presentation is generally less important compared to in retail. Typically, wholesale products are repackaged and presented in stores to be shown to consumers.
Marketing and Advertising in Retail Versus Wholesale
Wholesale marketing channels are business-to-business channels whereas retail marketing uses business-to-consumer channels.
Store Location in Retail Versus Wholesale
Retail stores want to have high visibility from streets or in shopping centers to attract consumers to the stores while that is less important in wholesale. In wholesale stores are based in warehouses or industrial areas.
Inventory Management in Retail Versus Wholesale
Wholesale has a larger inventory to meet the demands of their customers who order in bulk while retail does have inventory it is typically not that large on location.
Returns and Customer Service in Retail Versus Wholesale
In retail, the service is handled directly by staff with customers in the stores. Whereas, in wholesale the service interactions are managed through agreements between retailers and wholesalers.
Branding and Packaging in Retail Versus Wholesale
In wholesale branding and packaging are designed to meet retail customers while retail focus on building a brand and packaging designed to appeal to consumers.