Wholesale Vs Retail

What is Wholesale? Wholesale vs Retail

Whether you own a business in buying or selling goods and supplies, it is important to analyze what you want to start with- a wholesale or retail. Both wholesale and retail are the perfect way to earn profit by selling goods and supplies. If you are a small or big business owner, you need to think twice before choosing the best out of wholesale and retail. Here we are going to get a deeper understanding of the same.

What is Wholesale?

Wholesale || Wholesale vs Retail

Wholesale emphasizes on selling merchandise in bulk quantities.

What is Wholesaling?

Wholesaling is when you buy goods in larger quantities from manufacturers or even distributors to resell or sell them to other retailers, who own big or small stores. Most of the time, the products are brought in bulk to sell by wholesalers. Since they buy in bulk quantity, the products are most often obtained at a lower price. The wholesalers sell the goods to the retailers who sell the products to reach out to the customers.

Benefits of Wholesale

Wholesaling is all about finding the right products and the fertile market to sell the same. Retailers shoulder certain responsibilities in selling the products to the customers, hence the wholesaler need not worry about the same.

Here are some benefits of Wholesaling.

Save your Money

Whenever you own a store, the major portion of your revenue goes into buying products and then marketing it. When you are a wholesaler, you have the liberty to choose the kind of products you want to sell. In this way, you can observe the current trends in the market and then invest rightly. In this way, you save a huge amount here by taking no risks in the products you sell. Moreover, the second part of your investments comes in the marketing of your products to reach out to the customers. Since you are already into the market with a promising product and then the retailers take your products to the customers, it makes it easier. You need not worry about the marketing part of the business to reach out to the right audience.

Build an expert list of Suppliers

When you are into wholesaling, you need to ensure that you have a good network of suppliers. With a good supplier, you can generate a good sale for your business. To get your business run smoothly, you need to ensure that your suppliers are prompt in delivering products as well as maintain quality in deliverables and service. In this way, you will be able to build a network of excellent suppliers who are building your brand.

Expansion of the market with ease

As a wholesaler, you need to get your foothold on the industry you work on, that is when your connections grow. When you are into wholesale and you know the market well enough, more and more people approach you for business. Even upsell and cross-sell becomes easier when you are having a thorough knowledge of the market you are working on. It becomes easier to set up or launch a new venture.

How does traditional Wholesaling work?

When you hear about wholesaling, the first thing that comes to your mind is all about selling goods in bulk quantities. But how does a wholesaler actually decide on their merchandise as well as whom should it be sold to, to get better profit? Basically, a wholesaler purchases products from the manufacturers at a certain price(which is mostly lower) and sells it to the retailer at a better price earning a marginal profit from it. Since the wholesaler deals with bulk products to sell, they need to focus on their prospective buyers who can actually bring in profit and sell well the products.

Now how does a wholesaler decide how much to sell and whom to sell their products?

It is again a hard decision to make. A wholesaler is approached by different types of retailers who have the potential to sell the products or maybe not. Majorly a wholesaler has to find which retailer can be potentially good for their business on the basis of various factors like long-term or short-term prospects, marginal profit obtained while selling in small or in bulk quantities, the marketing strategies of the retailer and whether the retailer knows the market place well enough to sell the products. A wholesaler has to find its potential retailer or another wholesale distributor to sell its merchandise through the right channels.

Pricing- an integral part of a wholesaling

Price plays a vital role when you are wholesaling. As a wholesaler, you purchase your product in bulk quantities and when you want to make a profit from the same, you might want to sell them at a better price to other retailers. When you are wholesaling you might be approached by different kinds of retailers who might be interested in your products or group of products. Now as a wholesaler you need to arrive at a price that mitigates the risk of non-profitability. It is again a tedious job to be done.

Finding the right consumer for your wholesale

Finding the right retailer || Wholesale vs Retail

If you consider the major factor that differentiates the wholesale from retail, it is the complexity of choosing the right retailer to resell the products. The retailers need not worry about the in-depth inquiry of any customer, all they need to find is the right market place to sell their potential goods.

Usually, while wholesaling you might want to sell the same products or group of products to different customers at different prices depending on how the retailer is sound about his selling ideas.  

Now how do you arrive at different prices for the same products for different users?

A wholesaler can do it either by keeping a record of the list of users and then assigning certain roles to differentiate and criteria to the retailer and then assign prices. Or they can even use any desired system (automated) to arrive at the same. By assigning user roles and specifications based on the retailer’s attributes like:

  • their market selling potential
  • their location
  • the value of the products and
  • even their association with the wholesale dealer being long or short.

It is easier to decide upon the rates or the marginal price to sell the products on the basis of all these factors.

Manually setting prices for different customers is again a time-consuming job. WordPress WooCommerce has plenty of options to set up a wholesale store quickly and in a commendable manner without much hassle.   

User-roles in WordPress WooCommerce

USer roles on WordPress || wholesale vs Retail

In WordPress WooCommerce, you can easily create a set of user roles and assign certain capabilities or responsibilities to each role By default there is an Admin role which is governed by you as the wholesaler. You can go ahead and create roles like Retailer1, retailer 2, etc. on the basis of the criteria like their market potential, the products they deal with or even their tenure with you on your products or group of products.

Once these user roles are defined and baselined, it becomes easier for you to assign prices or even other rules as per your need to work on your profit. You can also modify these user roles at a further point as per your needs or requirements. Like for example, you can assign a user role as Retailer 1; for the retailer who is being associated with your for a long time and purchases products in bulk from you, so you may want to give the retailer a discount or even a price adjustment based on the number of goods purchased.  

Retailer 2; might be someone who is buying products or a group of products for a short term, etc.

There are several criteria to be considered while assigning user roles. With WordPress, it becomes easier to handle such user roles in the future. Once the user roles are assigned, it becomes more convenient to assign rules and requirements to them.  To automate such tasks and simplify the process, there are multiple ways to do it using certain WooCommerce plugins.  

What is the advantage of developing an eCommerce store for a wholesaler?

Wholesaling comes with a baggage of several responsibilities and a huge investment. To get your wholesale store function effectively, you need to technologically enable the process to streamline every opportunity that is arriving. Several new technologies are used to ensure the wholesaler can successfully function their wholesale store in an effective manner. Here are some advantages of using an automated WooCommerce store :

  1. If the wholesaler wants to sell the same products to different user roles at different prices, they can do the same by assigning prices on the role-based strategy using the plugin. 
  2. When the wholesaler wants to offer discounts or other offers depending upon the overall cart checkout price, a number of items or any other pricing factors, then it is easier to do the same using a plugin.
  3. If the wholesalers want to keep a check on the Minimum order amount the retailer is spending for specific products or groups of products, they can do it using the plugin.

All these just simplify your overall wholesale process using the WooCommerce plugins.

What is Retail?

Retail || Wholesale Vs Retail

Retail business is when you directly sell the products to the end-user. Retail may involve selling a variety of products to customers through online stores, departmental stores, etc. Apart from the wholesale store, the retail requires direct interaction with the end-user. Most retailers are middlemen working between wholesalers and customers. Retailers do not worry about the distribution channels to sell their products.

In short, Retail is selling commodities in smaller quantities.

Key Differences- Wholesale Vs Retail

When you consider Wholesale Vs Retail, here are some of the major differences to ponder about :

Factor for differentiating

WHOLESALE

RETAIL

DefinitionWholesale is all about dealing with selling bulk quantities of merchandise to retailers or other businesses to reach the end-user.Retail is all about selling merchandise to the end-user via small shops, supermarkets or other sources to reach the end customer.
The linking factor betweenA Manufacturer and  a RetailerA Wholesaler and an end-user Customer
PricesComparatively Lower, as brought in bulk quantitiesComparatively higher, as they are sold in just numbers to the customers.
CompetitionLesser as most of the merchandise is chosen by the wholesaler which are in high demand.Very high as the retailers sell a varied set of commodities in the market.
Volume of transactionLarger  as the merchandise is sold in bulkSmaller, as the commodities are sold in fewer quantities to different customers.
Capital RequirementA huge amount is invested as capital for dealing bulk range of items.Little investment is required.
Deals in productsLimited products as the wholesalers mostly look for commodities to be sold in bulk from the manufactures or industries which are to be sold in a fertile market.Different products are dealt with the retailers, as they sell varied products to the users.
Area of operationExtended to various cities as expansion is not a hurdle when selling in wholesale.Limited to a specific area, as the retailers own small to big shops to sell and advertise their products
Knack of sellingNot Required as they do not deal with the end-users but the retailers.Required expertise in selling merchandise to convince the end-user in buying your commodities.
Marketing and need for advertisementNot required extensively for selling in wholesale as the retailers who are selling those products approach you directly.Yes, it is required to market your products in an exclusive manner to gain good profit.

EndNote

Whenever a commodity is manufactured, it requires a wholesaler to purchase it in bulk as well as a retailer to reach out to the customers. Every business requires both wholesalers and retailers to expand their business and market in the right way to successfully establish their brand in the market. Even though the retailers experience high competition in their field compared to wholesalers, they are middlemen between wholesalers and customers. WordPress WooCommerce is one of the profitable ways to develop a simple wholesale website.

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