🛒 Wholesaler vs. Retailer: What is the Difference Between Wholesaler and Retailer?

Discover the major difference between Retailer and Wholesaler, their Similarities, Pros & Cons, and FAQs you need to know
🛒 Wholesaler vs Retailer: 8 Key Differences + Pros & Cons

Both wholesalers and retailers are important parts of a product supply chain. Wholesaler vs. retailer difference lies in their roles. Where wholesalers deal in bulk, retailers deal in small lots. The difference between wholesalers and retailers can also be seen in the prices of goods. While the former sell goods at lower prices, the latter sell them at higher prices.

Let’s take a closer look at Wholesaler vs. Retailer

RoleWholesalers sell products to a retailer who sells them to customers
PriceWholesalers charge much lower prices than retailers
Capital requirementWholesalers need to invest higher capital than retailers
Competition facedRetailers face more competition than wholesalers

Who is a Wholesaler?

A wholesaler is a person creating a link between the manufacturer and the retailer in the product supply chain. Wholesalers usually deal in large quantities of goods which allows them to get great discounts from the manufacturer. They pass on these discounts to the retailers they sell their goods to in the form of lower prices.

Who is a Retailer?

A retailer is a person creating a link between the wholesaler and the customer in the product supply chain. Retailers usually deal in small quantities of goods and charge higher prices than the ones charged by wholesalers. They deal in a wide variety of goods and maintain a pleasant appearance of their outlet to attract more customers.

Wholesaler vs. Retailer Pros and Cons

Wholesaler Pros and Cons

Pros of Wholesalers

  • They deal in large quantities.
  • They sell goods at lower prices.
  • They don’t need to decorate their outlet or store.
  • They face low competition.

Cons of Wholesalers

  • They deal in a limited variety of goods.
  • They need more initial investment.

Retailer Pros and Cons

Pros of Retailers

  • They deal in a wide variety of goods.
  • They need less initial investment.

Cons of Retailers

  • They deal in small quantities.
  • They face high competition.
  • They sell at higher prices.
  • They need to decorate their outlet to attract more customers.

Wholesaler vs. Retailer Similarities Explained

  • Both wholesalers and retailers are important parts of a product supply chain.
  • Both keep a profit margin while dealing in goods.
  • Both wholesalers and retailers need to make an initial investment in their businesses.
  • Both might deal in a variety of goods.

8 Key Differences Between Wholesalers and Retailers

There are some key points of difference between wholesaler and retailer that are listed here:

BasisWholesalersRetailers
RoleThey are middlemen between manufacturers and retailers.They are middlemen between wholesalers and customers.
PricesThey sell goods at lower prices.They sell goods at higher prices.
QuantitiesThey generally deal in large quantities.They deal in smaller quantities.
Capital investmentThey require more initial capital.They require less initial capital.
Variety of productsThey generally deal in a limited variety of goods.They generally deal in a wide variety of goods.
Competition facedThey face lower competition.They face higher competition.
Appearance of outletThe appearance of their outlet or store doesn’t matter.The appearance of their outlet matters a lot as it helps in attracting customers.
AdvertisementThey don’t need to advertise their products.They need to advertise their products to bring in more customers.

Comparison Chart

Discover the major difference between Retailer and Wholesaler, their Similarities, Pros & Cons, and FAQs you need to know

Comparison Video

Retail Vs Wholesale Explained – Part 2 | Difference between Retail & Wholesale

Wholesaler and Retailer FAQ

What is the major difference between a wholesaler and a retailer?

An important wholesaler and retailer difference can be seen in the wholesale vs. retail sales volume and price of products sold by them. Wholesale volume is larger and prices are lower than the retail sales.

What is the difference between wholesale and retail prices?

Wholesale prices are lower than retail prices. Wholesale prices are charged by the wholesaler from the retailer. Retail prices, on the other hand, are charged by the retailer from the customers.

Is Amazon a retailer or wholesaler?

Amazon is neither a retailer nor a wholesaler. It is an online marketplace that allows various retailers to offer their products for sale.

Where do wholesalers get their products?

Wholesalers get their products either from distributors or directly from manufacturers. 

What are the three types of wholesalers?

Three types of wholesalers are: 

  1. Merchant Wholesalers
  2. Brokers, agents, and commission merchants
  3. Manufacturers’ sales offices and branches (Ref. 1)

Can I buy wholesale without a business?

Yes, you can buy wholesale even without a business. Retailers on many online marketplaces offer wholesale prices when you purchase a minimum quantity of the product you desire to buy.

How much money do wholesalers make?

Wholesalers make money according to the volume and profit margin of the product they deal in. Different industries have different profit margins, so the earnings vary accordingly. Generally, wholesalers seek at least a 15-20% profit margin on the products sold (Ref. 2).

Why is wholesale so cheap?

Wholesale is cheap because wholesalers get heavy discounts for buying products in large quantities.

What is the difference between retail and wholesale?

The difference between retailing and wholesaling lies both in the volume and price at which deals are made. Retailing involves selling small lots of goods while wholesaling involves bulk selling. Also, retail prices are much higher than wholesale prices.

Who is a distributor?

A distributor sells the products to various wholesalers. Considering wholesaler vs. retailer vs. distributor, a distributor is in direct contact with the manufacturer while others might not be. In some cases, a manufacturer can also be a distributor or a wholesaler.

What is the difference between wholesale and retail mortgages?

The wholesale vs. retail mortgage difference can be seen in dealings with consumers of the loan. A wholesale lender does not lend money to a consumer, while a retail lender does.

The Final Words 

The major difference between a wholesaler and a retailer lies in the parties they deal with. Retailers mainly sell their goods to customers while wholesalers sell them to retailers. Wholesalers generally deal in bulk quantities while retailers deal in small lots. Additionally, wholesalers charge lower prices since they can receive discounts for bulk dealings. Retailers, on the other hand, sell goods at higher prices, generally at Maximum Retail Price (MRP). Wholesalers have to invest more money in their goods but don’t need to advertise the products they deal in. Retailers, however, don’t have to invest huge amounts in the goods but need to advertise their products to attract more customers.

References:

  1. https://www.inc.com/encyclopedia/wholesaling.html
  2. https://smallbusiness.chron.com/average-profit-margin-wholesale-12941.html 
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