In this economic world, we are a little bit familiar with the terms Retailers and wholesalers. We know that Walmart Inc. (WMT), Amazon.com Inc. (AMZN), Reliance Retail Ltd, Aditya Birla Fashion & Retail Ltd (Pantaloons), The Kroger Co. (KR), Dollar General are some biggest retail agencies in the world.
“Save time. Save money. Every day.” is the slogan of Dollar General. Though in today’s economics it’s the motto of every retailers. It means the consumer will get all the consuming products/goods under one roof (i.e. retails shop) instantly at a discount price.
Whereas in the wholesale business, wholesalers buy large volumes of goods from suppliers then sell those products in bulk to other small merchants. They can supply only a single or a variety of goods/products in a bunch. The main purpose of wholesale business is to distribute goods in large quantities.
Let’s discuss Retailers & wholesalers in a brief.
What is the Retailing?
In retailing, retailers sell products or services directly at a discount price to the final consumers/customer for their personal, non-business uses. Nowadays several manufacturers, wholesalers, institutions are involved in the retailing business.
What is a Retailer?
In general, we can say Retailers are those people whose sales come mainly from retailing.
Retailing performs a very significant role in most of the marketing channels. Every year, retailers sell products, which worth more than $4.1 trillion to final consumers.
Some 40% of total consumer decisions are made in or near the Retails store. So it is proven that retailers can influence consumers’ decisions at the point of purchase.
Types of Retailers
Specialty store: A retail store or shop that carries a narrow product line (i.e. category of goods) with a deep assortment (of brands, styles, or models) within that line.
Department store: A retail organization or store that carries an extensive variety of product lines (i.e. category of goods). Every product line or goods category is operated as a separate department. Each department is managed by specialist merchandisers for precise buyers or consumers.
Supermarket: It is a self-service store/market that carries a wide variety of household & grocery products at low margin, low cost, and high volume.
Convenience store: It is basically a small store/shop near the residential area with extended opening hours and carries a limited range of convenience goods.
Superstore: It is a much larger store than the regular supermarket, offers a wide variety of routinely buying food items, nonfood products, & services.
Category killer: It is a giant specialty shop/store that carries a very wide collection of a particular category of products and is operated by trained employees.
Service retailer: A retailer who offers services like foods, hotels, banks, airlines, colleges, etc.
Discount store: A retail operation in which a retail store sells a higher volume of products at lower prices (discount rate) through accepting the lower margins. In this case, the product selling price is lower than the actual or supposed “full retail price”.
Off-price retailer: In this case retailers buy products/items at less than usual wholesale prices and sell at cheaper than retail prices. The factory outlets, warehouse clubs are examples of Off-price retailers.
Independent off-price retailer: It is either an independently-owned division or is a brunch of a larger retail corporation.
Factory outlet: It is an off-price retailing store which is owned & operated by the manufacturer. These outlet stores usually offer the manufacturer’s mostly surplus, irregular, or discontinued goods at utmost 50 percent below the regular retail price.
What is Wholesaling?
Wholesaling is a trading activity in which goods and services sale in bulk to retailers, traders, industrial, institutional, or other professional commercial users for business purposes.
What is a wholesaler?
Agencies or People who are primarily involved in wholesaling activities are called wholesalers.
Types of wholesalers
Merchant wholesalers: an independent wholesaler who buys merchandise in bulk from the suppliers directly. They manage the product inventory, sell the goods directly to brick-and-mortar retailers or online at a competitive price.
- Full-service wholesalers
- Wholesale merchants
- Industrial distributors
- Limited-service wholesalers
- Cash-and-carry wholesaler
- Truck wholesalers (or truck jobbers)
- Drop shippers
- Rack jobbers
- Producers’ cooperatives
- Mail-order or Web wholesalers
Brokers and agents
- Broker: The broker doesn’t have ownership of the goods. They just bring buyers & sellers together and assist in the negotiation process.
Example – multivendor marketplace eTraders connect online buyers and sellers & help in negotiation.
- Agent: A wholesaler who represents the manufacturers and retailers on an almost permanent basis and performs a few functions. But do not take ownership or title of the goods.
- Manufacturers’ agents
- Selling agents
- Purchasing agents
- Commission merchants
Manufacturers’ sales branches and offices (Manufacturing distributors): When the wholesaling is done by sellers or buyers themselves, instead of independent wholesalers. Most of in this case the Manufacturer companies’ production & sales areas located on two different locations. And the sales department works as a wholesaler.
On a short note:
The difference between large retailers & large wholesalers is very fragile. Nowadays many retailers operate as wholesalers. Whereas, many big wholesalers have started their retailing operations too.