Businesses are categorized in a number of branches. Wholesale and retail trades make integral parts of this categorization. Both wholesale and retail trade is hard core business activity that generates businesses and trade leads, but at the same time they are distinct. Both the concepts can be further compared and defined in a simplified manner.
The concept of wholesale trade is B2B driven whereas the Retail trade is a B2C driven activity. In wholesale trade, all about economic activities revolves around business to business. The ultimate consumer is not taken into account in this stage. On the other hand, consumers play a crucial role in retail trade as the business transactions are conducted directly with the final consumers.
Establishment of a wholesale business necessitates considerable amount of capital. Wholesale business is on a large scale and hence the investment invariably increases to a hefty amount. But compared to the wholesale trade, retail trade is a relatively smaller form of business and can be started with a minimal amount of investment.
For the wholesalers, the target audience is the businessmen, traders and retailers. Here, the products or services are delivered to the people involved in the concerned business who in turn sell it further to the final consumers or middle men. However, retailers unlike wholesale traders, target the final consumer. These products and services are first sourced from the wholesalers and then are directly sold to the ultimate consumers.
Wholesale trade deals in bulk quantities. The products are supplied to the merchants and traders who further make it available to the ultimate consumers. In case of retail trade, which deals with the final consumers, the quantity of products supplied is as much as the consumer wants. Here, the products are doled out in small quantities.
Margins for Profit
In case of wholesale trade, profit margin is kept for bulk quantities. Therefore the actual profit of the wholesaler shoots up. But in retail, the overall profit is low since the actual quantity of products sold is less. This happens even if the products retailed generally carry a higher profit margin.
Therefore there exists much difference between wholesale trade and retail trade with each having their own share of pros and cons.