Every product or good reaches the customers through a supply chain. There are various parts of a supply chain. Every supply chain starts with a manufacturer and ends with a retailer. Every stage is interrelated to each other. The two integral part of the supply chain is wholesale sales and retail sales.
Wholesale Sales vs Retail Sales
The main difference between wholesale sales and retail sales is that wholesale sales refer to the sale of goods and products in bulk quantities to retailers while retail sales refer to the sale of products and services in individual quantities to end consumers or customers.
Wholesale sales are especially for resale by retailers. The products of wholesale are procured from manufacturers. The sequence of wholesale sales in the supply chain is in the middle, after the manufacturers. The sales of wholesale are in huge, large, and bulk quantities. The prices of wholesale sales are cheaper. Wholesale sales usually deal with a limited range of goods.
On the other hand, retail sales are especially for end consumption by the consumers. The products of retail sales are procured from wholesalers. The sequence of retail sales in the supply chain is in the end, after the wholesale sales. The prices of retail sales are expensive than wholesale sale rates. Retail sales usually deal with a diverse range of goods and products and provide variety to the customers.
Comparison Table Between Wholesale Sales and Retail Sales
| Parameters of Comparison | Wholesale Sales | Retail Sales |
| Supply chain part | Middle part of the supply chain | End part of the supply chain |
| Product type | Raw materials and goods | Goods, products, and services for customers or businesses through online or offline mode |
| Product quantity | Bulk quantities | Individual quantities |
| Purpose | For resale by the retailer | For the end consumption by the consumer |
| Product procurement | From manufacturers | From wholesalers |
What is Wholesale Sales?
Wholesale sale refers to the system of sale of goods in bulk to other retailers, industries, commercial, professional or institutional users. Wholesale sales can be bought by a person or an organization. In wholesale, the goods sold are in huge quantities but at a relatively lower price. Retailers often buy goods from wholesalers at a cheaper price and sell them at a higher price, thus making a profit.
The United Nations Statistics Division defines wholesale as the resale of goods that are new or used to other professional users. It is called resale since it involves sales without any transformation. Wholesale sales may even involve agents or brokers for the buy and sell of merchandise. People involved in wholesaling often sort, grade, and repack goods in smaller bunches so that it becomes easier to distribute huge merchandise in smaller lots.
Wholesalers often have their independent premises at specific places. The world’s biggest wholesale markets are located in China, Southeast Asia, and Taiwan. Wholesale sales do not charge the buyers of sales tax, only if the buyer or customer has a resale license in the same state as the wholesaler. Wholesale is not only specific to goods and products, but also used in the banking domain. Wholesale banking caters to large customers.
Wholesale sales are at discounted prices. Bulk purchase at a lower price and sale at a higher price helps small businesses to operate. Wholesale models do not sell products directly to customers and usually sell to distributors.
What is Retail Sales?
Retail sales are the sake of goods or products to end consumers. The retail products and goods are consumed and used, and not sold ahead commercially. Retail sales refer to all the end products of a supply chain. Retail sales support and build the economy of the country. The goods in retail sales are brought in wholesale.
The products in a retail sale are bought at a lower price while sold at a higher price. The goods of retail sale are called consumer goods or final goods. Most of the products that consumers buy from shops and stores, can be termed as retail goods. Retail goods can further be classified into four major types – convenience products, shopping products, specialty products, and unsought products.
The products of the retail sales are finished goods. Retail sales do not include any raw materials. It can also include services for customers and businesses. Retail sales can be online as well as offline. The U.S. Census Bureau provides the monthly retail sales report of the US. This helps in the analysis of the sales of the entire year in the retail market. It acts as a yardstick to measure the trends.
Retail sales can be categorized into 13 types – auto dealers, non-store (online), department stores, apparel, electronics, food, building materials, sporting goods, furniture, beauty and health, hospitality, gas stations, and other miscellaneous. Retail sales directly affect the GDP of the nation.
Main Differences Between Wholesale Sales and Retail Sales
- Wholesale sales refers to the middle of the supply chain while retail sales refer to the end of the supply chain.
- Wholesale sales may or may not include raw materials while retail sales include finished products and no raw materials.
- The price of wholesale sales is low and cheaper while the retail sale prices are high and expensive.
- The products in wholesale sales are bought in bulk while the products in retail sales can be bought in smaller and individual quantities.
- Wholesale sales offer trade discounts or cash discounts on early payment while retail sales provide various sales and discounts like Black Friday, Cyber Monday, Pay Day, Green Monday, or during festivities.
- Wholesale sales can have a long credit period for making payment while retail sales do not offer any credit period and mostly the payment has to be done immediately at the time of purchase.
Conclusion
Wholesalers require capital and operate at a huge scale while retailers operate with less capital and at a smaller scale. Wholesale products are bought directly from manufacturers and distributed over a large geographical area while the retail products are bought from wholesalers and sold over a smaller area in offline mode or to different geographical locations through online mode.
The two ends of a supply chain are wholesalers and retailers. Both require extensive marketing efforts and directly affect the GDP growth of a country or nation. Both ends are interdependent on each other.
References
- https://www.jstor.org/stable/10.1086/323504
- http://ekhnuir.univer.kharkov.ua/bitstream/123456789/4554/4/Chapter%20I.pdf