Several businesses around the world are quite successful. Ever wondered what is the reason behind earning such great profits? How do businesses plan their profits and loss? What strategies do they tend to implement? Let’s find out how one can have an established business without any or less loss percentage!
The businessmen follow several tricks, techniques, and rules to ensure at least 80% profit or maybe 100% also. One of the best and the oldest tips or tricks still being followed is having your business contract with a wholesale dealer. Have you ever wondered how profitable it can be to have your stuff purchased from a wholesaler and why? Let’s find out today.
What is meant by wholesale?
Buying and selling goods and supplies in bulk quantity to the public at a much cheaper rate than the original price is known as wholesale activity. Businessmen, retailers, and marketers tend to approach a wholesale market the most. A wholesale market offers all kinds of goods and supplies commonly used in day-to-day life.
Wholesale is always good and beneficial for the businessmen. It can help them earn significant profits by buying goods in large quantities and selling the individual items at the actual market rate. As the products are purchased in bulk and are sold as separate items, the profit rate goes up incredibly!
When judged by their appearance, these wholesale markets are usually not in excellent condition; neither is located at very good locations. The sellers don’t care about the shop’s appearance as it’s not for the public, and it just seems to be a warehouse and is visited by the businessmen or retailers the most. Wholesalers get their goods and supplies in bulk directly from the manufacturer. Once a product is manufactured and dispatched, the wholesalers approach the manufacturers and buy great quantities. Hence, these things do not matter at all to the wholesale sellers.
Who buys wholesale items and why?
Retailers are the people who purchase all kinds of wholesale items, and they are the middleman between the wholesalers and the customers. The items purchased in retail are comparatively higher than those purchased in wholesale. The retailers buy these goods from wholesalers as they get them at a much cheaper rate than the ones present in the public market.
Why are the prices higher in the retail market and not at a wholesale market?
Wholesalers do not sell anything less in quantity, and they aim to sell things in bulk only. Industries, factories, warehouses are some examples of how or what a wholesale shop looks like. Several retailers prefer buying goods from Wholesale Distributors USA.
These distributors sell goods at a relatively low price compared to the price in the actual market. Suppose a pack of chips costs $2 in a retail shop, so if a customer purchases ten bags, he will pay $20 for ten bags of chips. However, he can get those ten packs for $8 or even less from a wholesale market.
There are numerous reasons behind the price difference between a wholesale and a retail market. Some of them are listed below, explaining why a retail market has higher rates of everything:
- A retail market needs advertisement to attract more customers, which can be costly.
- A retail market is located ideally; hence, it needs to bear the expenses.
- Not to forget, retailers need to pay their extra bills, including electricity.
- A retail market needs maintenance every day, and hence, the domestic staff is required to keep the market/shop clean, tidy, and up to date every day, which adds up to another great expense.
- A retail shop must have a Point Of Sale (POS) system to have faster and quicker transactions and an employee who has a hang of using it. It is also used to accept credit/debit card purchases. Having a Point Of Sale (POS) installed can be costly.
- To run a retail shop, you need more employees such as a cashier, helping and supporting staff, etc. The salaries of these people is another expense a retailer must bear.
These are just some of the main points that explain why is a retail market more expensive than a wholesale one. There are many more reasons that are valid and can be considered.
What are some of the main differences between a wholesale and retail trade?
Wholesale and Retail are two completely different ways of trading. Both are very different in every aspect. Let’s find out the key differences below:
|Aspect for comparison||Wholesale||Retail|
|Key difference||Sells limited goods only in bulk quantity||Sells numerous goods only in limited quantity|
|Middleman between||Manufacturer and Retailer||Wholesaler and Customer|
|Competition||Significantly less compared to Retail||Very high and competitive|
|Price/Rate||Lesser when compared to Retail rates||Comparatively higher than wholesale|
|Capital Requirement||Great amount||Less as compared|
|Deals in||Limited goods and supplies||Numerous goods and supplies|
|Advertisement||Not Required||Requires great advertisement|
|Location||Does not matter||Matters the most|
|Selling tricks and techniques||Does not matter||A retailer MUST know the art of selling products|
What can be some examples of retail shops?
Retail shops are directly in link with the customers, and the customers are the end-user. These shops provide everything used in day-to-day life. You can find various products in a retail shop, and it has numerous distribution channels. Some of the most common ones are:
- Departmental Stores
- Discount shops
- Online stores
- Pharmacies, etc.
What are the possible advantages retailer when compared to a wholesaler?
There are numerous advantages of being a retailer when compared to a wholesaler. Let’s find some of them listed below:
|Has good sales potential, but lower than retailers.||Retail has greater sales potential.|
|Interacts with the retailers and sells goods at a fixed huge rate.||As a retail shop interacts with the end-user (customers), the chances of potential and loyal customers increase.|
|A wholesaler interacts with certain retailers only.||A retailer might have a more significant profit when compared to a wholesaler.|
|A wholesaler sells on a limited number of products, limiting them to having specific retailers only.||As a retailer sells all kinds of goods, they tend to have all types of customers. The need of each customer may vary.|
|A wholesaler has very little control over its products regarding retail selling.||Retailers have control over their products and goods. It is their wish to decide how it is sold, where it is sold, and how much it is sold.|
|It is difficult for a wholesaler to expand their business to another city or country compared to a retailer.||Retailers tend to grow their businesses to other cities and countries with excellent customer support and advertisement.|
What is better? Being a retailer or a wholesaler?
Keeping all the pros and cons in mind, it is entirely up to the person to decide the trading method they want. One must first look at themselves and analyze if they are fit for becoming a wholesaler or a retailer and then proceed with their business plans. Remember, the skills required to run a business are pretty important, irrespective of the type of business you are opting for.