POM/U4 Topic 4 Retailer and Wholesaler
A retailer is one who retails the item which means, he sells directly to the end customer. A retailer is the one who is involved in B2C sales meaning Business to customer sale. He buys from businesses and sells to customers.
The retailer himself buys products from wholesalers and distributors. If it is electronic goods, most likely a retailer will buy from a distributor because the distributor visits his place to sell the item. There is also a lot of logistics involved in distribution of large items so generally distributors visit retailers.
If however, a retailer wants to sell food items, then it is likely that the retailer visits a wholesaler and buys the products in wholesale. This is because a single wholesaler generally deals in a limited number of goods and he has huge quantities of those goods. So a retailer might have to visit multiple wholesalers to complete his requirement.
A retailer might stock only limited number of each item. So if you go to a stationery store, you will see only 50 units of the same pen being stocked. But if you go to a wholesaler, the quantity will be 500000 units in stock with the wholesaler. This is a major difference between wholesalers retailers and distributors – the number of units they have in stock at a time.
The best example of wholesalers is the local cement guy or the local vegetable market. Although a normal vegetable retailer might roam the market with his van or might visit place to place, a wholesaler sits in his own place and does business.
You might noticed from time to time various Cloth wholesale markets where a huge business is done from a small shop. The wholesalers generally operate from a small shop but they will have a huge warehouse nearby from where they supply the material.
Because wholesalers sell material in huge bulk or the material which they sell is in demand, these wholesalers do not move from shop (this is generally the norm) and they sell most of their products from their own shop. Imagine the vegetable wholesaler who might sell tons of vegetables from his shop when retailers visit him.
A wholesaler may buy direct from the company or he might buy from another distributor. If you look at the ice cream market, there is a C&F (wholesaler of ice cream) involved who stocks the ice cream in bulk and other ice cream vendors may buy from him or the distributor arranges transportation from the wholesaler to the retailer. This bulk stocking wholesaler is needed in every city within a few milers because otherwise the ice cream will melt. As a result, wholesalers have a huge role to play in perishable good items.
Finally, distributors are not allowed to sell to end customers are all whereas a wholesaler might do that. For example – a cement wholesaler generally sells in bulk to the local developers who are erecting buildings. However, he may sell small items through a shop to local labourers, plumbers who need small work to be done with cement (home jobs). A distributor cannot do that because he is obstructing the sale of the retailer to whom the distributor is selling.
Differences between retailer and wholesaler
|Retailers buy from the wholesalers and sell goods to the consumers.||Wholesalers buy from the manufactures and sell goods to the retailers.|
|Retailers usually sell for cash.||Wholesalers usually sell on credit to the retailers.|
|They deal in different kinds of goods.||They specialise in a particular product.|
|They buy in small quantities from the wholesalers and sell in smaller quantities to the ultimate consumers.||They buy in bulk quantities from the manufacturers and sell in small quantities to the retailers.|
|Retailers usually sell at their shops. They provide door delivery only at the request of the consumers.||Wholesalers always deliver goods at the doorstep of the retailers.|
|A retailer needs a shop or a showroom to sell.||A wholesaler needs mainly a godown to stock the goods he handles.|
|A retailer usually sells at a particular place. Sometime he may have branches in other places.||A wholesaler goes to different places to supply.|
|A retailer usually provides shopping comforts mainly to attract customers.||A wholesaler need not provide shopping comforts like luxurious, interiors, provision of air-condition, trolleys, etc.|
|As the retailer deals in a variety of goods, he need not influence buyers. He can let the buyer choose any brand of product the he likes.||As the wholesaler specialises in a particular pmduct, he has to necessarily convince the retailers about the product quality. Only then the latter will place an order.|
|The retailers normally do not allow any discount to their customers. Some of them may offer cash discount to bulk buyers. Sometimes, they may offer seasonal discounts.||As per the custom of their trade, wholesalers allow the retailers trade discount each time the retailers buy.|