Whether you are a student of finance or accounting one of the most common questions that you would be asked is what is the difference between profit maximization and wealth maximization?. However, in order to answer such a complicated question you need to understand various aspects of the business. So today we start this journey of financial education by explaining to you everything you should know about wholesale and retail which are the fundamental concepts of any business.
What is wholesale?
Wholesale is a term that describes a business that sells products or services to other businesses. A wholesaler is a person who buys goods in large quantities (often in bulk) and resells them to other retailers or businesses on a fee basis, usually at discounted prices. A wholesaler may sell products in bulk by shipping directly from the supplier to the retailer, or through a broker who has contacts with a number of suppliers and thus can match buyers and sellers in the best possible way based on their needs and preferences.
What are the different types of wholesalers?
- Merchant Wholesaler
Merchant wholesalers buy products from manufacturers and sell them to retailers. They usually pay a commission fee based on the number of goods they sell, but they also take a markup on their own cost for buying the product in bulk and then distributing it to their customers.
A broker acts as an intermediary between manufacturers and wholesalers, helping both sides find each other and negotiate prices, terms and conditions. Brokers can help with everything from finding a new supplier to negotiating contracts, invoicing, payments and delivery terms. Brokers are often more expensive than merchants because they must deal with the legal side of things (such as contracts) for both parties involved in any transaction.
- Sales and Distribution for Manufacturing
Similar to agents/brokers, sales and distribution representatives (SDs) help companies sell their products directly through distribution channels such as independent dealerships or retail stores that carry the company’s brand name-labelled products or merchandise.
What is retail?
A retailer only sells goods or services directly to consumers. This is the defining
difference between wholesaler and retailer. The term retail can refer to a variety of different end-user verticals in which retailers sell to individuals and organizations. The retail industry includes both a wide range of traditional sectors, as well as modern retail businesses that operate online or in small shopping centres, such as pop-up shops, flea markets, farmers’ markets and others.
Retailers are sometimes organized into different categories based on the products they sell or the areas they cater to.
What are the different types of retailers?
- Department Store
Department stores are the largest retail chains in the world. They sell a wide variety of goods and services, including clothing and accessories, household goods, food products, and personal care items. Some department stores also offer entertainment options such as restaurants, movie theatres, or gaming areas for families with young children.
Supermarkets sell groceries and other consumer goods under one roof. Grocery stores may be open 24 hours a day to serve customers who shop at night or on weekends when other stores are closed. Supermarket chains may also have pharmacies, pet shops, or other services on their premises.
- Convenience Retailer
Convenience stores are typically located within walking distance of residential neighbourhoods or small towns where people do not have easy access to grocery stores or large supermarkets that carry everything they need within easy reach of their homes or workplaces. Convenience stores typically carry food products such as bread, snack foods and beverages