Wholesale Versus Retail Trade: An Insight

Business- the activity, is divided in a number of branches and wholesale and retail trade make an integral part of this division. Both are indeed hard core business activities to generate businesses and trade leads, but with a stark distinction. Lets understand this difference between wholesale and retail trade in a simplified form:

The Concept

Wholesale – The concept of wholesale trade is B2B driven. In other words wholesale trade is all about economic activities revolving around business to business. The ultimate consumer is nowhere in the picture here.

Retail – Retail trade on the other hand is a B2C driven activity. Consumer plays a vital role in retail trade as the business transactions are done directly with the final consumers.

Capital Investment

Wholesale – Setting up of a wholesale business calls for considerable amount of capital. Since it is a larger scaled business, the investment invariably increases to a hefty amount.

Retail – Retail trade can be started with a minimal amount of investment as compared to the wholesale trade. It is relatively a smaller form of business.

Target Audience

Wholesale – Wholesale trade targets businessmen, traders and retailers for its business. Here the products or services are rendered to the people involved in the concerned business who in turn sell it further to the final consumers or middle men.

Retail – Retailers target the final consumer unlike wholesale traders. The products and services are first sourced from the wholesalers and then are directly sold to the ultimate consumers.

Quantity Supplied

Wholesale – Wholesale trade deals in bulk quantities as the products are supplied to the merchants and traders who further make it available to the ultimate consumers.

Retail – Since retail trade deals with the final consumers, the quantity of products supplied in this case is as much as the consumer wants. The products supplied generally totals to real small quantities.

Profit Margins

Wholesale – Profit margins per product in wholesale trade are relatively lesser but as the trading is done in bulk quantities, the actual profit to the wholesaler shoots up.

Retail – The products retailed generally carry a higher profit margin but since the actual quantity or number of products sold are less, overall profit rendered to the retailer is low.