In the merchandising industry, there are two kinds of people that act as the arbitrary link between the manufacturers and the consumers. These middlemen are the wholesaler and retailer, who provide the same services for both the producer and the buyer of the goods. They basically make things work for the business.
While they relatively have similar functions, one differs from the other in many ways.
Basic Role and Individualities
In general, wholesalers buy huge quantities or bulk orders of products directly from the manufacturers or the distributors. The advantage in high-volume purchase is that producers often give wholesalers big discounts, especially for regular orders. This kind of middleman is known for their buy-and-sell business.
Retailers, on the other hand, are either large or SMEs that run a for-profit business. They usually sell the products directly to the consumers. Retailers look for suppliers with the most competitive product rates to realise their profit. Oftentimes, they get small quantities of goods from distributors or wholesalers.
Technically, wholesalers and retailers are direct competitors. But at the same time, they also cooperate with each other for profit. Wholesalers sell the products to the retailers, who in turn, will market it to the consumers. They can either directly negotiate with the buyers or do business amongst themselves.
Dissimilarity in Price and Profit
One key difference between these two middlemen is the product price; costs are always lower in wholesale than in retail. The reason retailers sell the goods at higher rates is because they have to add other costs, like taxes, property rents, marketing costs and the salaries of the employees on top of the business profit.
The wholesalers, meanwhile, don’t have to worry much about these factors and loss of profit. For instance, food wholesalers in Melbourne, per SimonGeorge.com, can sell the goods for a much lower price because they don’t shell out comparatively large amounts of capital money in their purchase.
The main distinction between these two middlemen is based on their trade model and their specific merchandising objectives. Depending on your needs, either of the two can be a suitable source of goods.