Wholesaling is a market-based business model that deals with the acquisition of products and then sells them to different types of organizations, retailers, or other businesses. The main task of wholesalers is to facilitate and improve the flow of goods between manufacturers or companies and final recipients, e.g. grocery stores.
Modern supply chains offer business owners many opportunities to get products into the hands of consumers
Wholesale and retail are two popular business models in companies that deal with selling the products both in-store and online. What at first appears the same is very different from one another. Our article explains the differences between the two models and shows the benefits of wholesale.
What is the difference between wholesale and retail?
The main difference is that wholesale trade is between two companies and retail trade is between companies and consumers.
In the wholesale model, you don't sell products directly to consumers. Instead, you buy products directly from the manufacturer or a retailer and then resell them to another company, usually in large quantities and at graduated prices.
Some wholesalers also sell directly to other wholesalers. Almost any permanent or non-permanent product can be wholesaled. Permanent products include furniture, for example, non-permanent products include food.
In the retail model, you buy products from a retailer and then sell them directly to consumers. The retailers include department stores. Some retail chains sell products under their own brand names. Other chains sell products under manufacturer brands, some prefer a hybrid variant and sell both private label and third-party brands.
What do you need to be able to buy at wholesalers?
To be able to shop at a wholesaler, whether online or stationary, you first must provide a trade license. Since the wholesaler is legally required to only deliver to resellers and not to the end consumer, shopping as a private person is usually not possible.
Wholesalers are middlemen between two groups:
- a group of companies that manufacture or sell products - these are usually companies that store goods, manufacturing companies, companies that store products from the agricultural sector, or companies that operate in foreign markets
- a group of companies that buy products from wholesalers - these are usually factories, retailers, customer groups, or individuals
Forms of wholesale
A distinction is made between 12 types of wholesale business:
- Pick-up wholesale
- Sales wholesale
- Purchase wholesale
- Service wholesale
- Wholesale market
- Warehouse wholesale
- Shelf wholesale
- Self-service wholesale
- Assortment wholesale
- Specialty wholesale
- Third-party wholesale
- Delivery wholesale
And 9 forms of retail:
- Discount stores
- shopping mall
- Specialty shop
- Specialist market
- General store
- Department store
- Consumer market
- Department store
Dealers - Wholesalers and Dealers - Retailers the summary
The dealer can deliver the products to the wholesaler or purchase the products from the wholesaler. Wholesalers buy products at a discount from dealers to get inventory that they will later sell to other companies. However, you can also sell purchased products to retailers who then ship them to retail stores.
On the other hand, the relationship between a dealer and a retailer is always of the supplier-consumer type. The retailer delivers the products to the retailer who then sells them to the consumer.