Any product that is manufactured by a company and reaches the end consumers can be sold through 2 ways. Company can either decide to be a retailer, or a wholesaler. Either way, the product has to reach the end customer.
But what is the difference between the two? How should a company decide which path to take? Let’s understand both the concepts one by one.
Wholesaler
If you are a wholesaler, you will not be selling the products to the end customer. You will either sell them to another micro wholesaler, or a retailer. And it is not just 1 or 2 products we are talking. The wholesalers usually take orders for bulk of products. For example, if you are selling wholesale sunglasses, you will send either 50 or 100s of such pieces further.
What do you think are the benefits of this?
When someone orders product in bulk from a wholesaler, they usually get them at the best price. Bulk products often come cheap than 1 or 2. And low unit price is possible due to reduction in handling time as well as inventory costs. For example, in the case of sunglasses, the retailers will mostly get best prices on wholesale sunglasses.
The wholesalers can either be the manufacturers themselves, or can just acquire products from multiple other wholesalers.
Retailer
Here, the products reach directly to the end customer. Retailers get products either from a manufacturer directly, or a wholesaler. The products are usually sold to the end customers on MRP.
Although the retailers acquire products from others in maximum cases, some retailers can also be the manufacturers themselves. Most of the home businesses are into retail, which means they are the only entity, be it manufacturer or a retailer. Usually small businesses which have reach up to a certain locality only, prefer going into retail directly.
These were the basic differences between the two. And hopefully now you are able to decide which path to choose for your own business. In conclusion, if you are a small local business, going directly into retail would be preferable to you. But if you are growing and have businesses in many cities, then wholesale is the option for you.
