When you’re in the business world, you can hear the words “wholesale” and “retail” thrown around a lot, but what do each of them truly mean? Wholesale and retail operations can help you streamline inventory and more to make sure you’re getting the most out of every transaction or sale. It seems that both of these terms are quite similar, but it can be easy to overlook their important distinctions, like pricing, customer relations, product availability, and more.
The good news is that we’re here to help you investigate the meaning of these two terms so that you can better understand how each works for your store or business. Read on for more on what sets wholesale and retail apart!
What are the Wholesale and Retail Business Models?
When you’re running a business or a store, there are a number of business models to follow to bring in overall sales. Two of the most popular are the wholesale and retail models. Wholesale refers to the act of buying products or goods in bulk and then selling them to retailers, who then would sell them to consumers. The retail business model primarily is the sale of products or goods directly to customers. Both have a special place in the business world and can bring success to many companies. Knowing what each model is can bring you closer to making beneficial decisions when starting a business.
It can seem like a minor distinction between wholesale and retail, but there are actually many key differences between the two. Let’s dive in and take a closer look!
Products purchased for wholesale businesses are usually in bulk and can be food items such as canned goods, cereals, and other non-perishables. Or when they are in the initial steps of creating a business, even retail display fixtures are common products purchased by wholesalers, such as shelving, display cases, and hangers. For retail business models, it’s a little more of a direct style of products purchased, like clothes, shoes, and electronics. This business model tends to be more on the customization side of goods like custom retail fixtures or displays so that customers can get a more personalized experience.
Surprisingly enough, wholesale prices are generally lower than retail prices because wholesalers buy in larger quantities while retailers typically purchase smaller amounts of specific products. Most of the time, wholesalers tend to benefit more from buying in bulk which can allow them to sell their products at lower prices. However, retailers usually need to mark up prices in order to make a profit.
Knowing what we know now about wholesalers, they tend to target businesses rather than customers, while retailers sell directly to consumers. However, no matter what business model you follow, by understanding what a demographic needs or wants, you can build a relationship that leads to a loyal customer base that continues to support your business.
The Benefits of Selling Wholesale vs. Selling Retail
One of the biggest benefits of selling wholesale is that wholesalers can hold and move much larger quantities of product, which means they can fill larger orders more quickly than retailing competitors. The benefits of selling retail are having more flexibility and more opportunities to build brand recognition and loyalty among customers since they are dealing directly. But, ultimately, it really depends on the individual business. So decide what’s best for your own type of targeted demographic, then go from there.
There is no single correct answer for which business model works best for sellers- wholesale vs. retail. Overall, it's all up to you to decide what type of business model works best for your needs as a vendor or retailer. If you want quality fixtures with good customer service, explore S-Cube Fixtures. Serving both wholesalers and retailers alike, S-Cube Fixtures offers a wide selection of problem-solving fixtures now!