Wholesale Distribution

Wholesale and retail are two distinctly different concepts. Although both involve selling products to customers, they do not always refer to the same entity. Retail is the direct sale of products and services to customers, as against wholesaling, which involves the sale to non-business or institutional clients. A retail dealer buys products in large quantities from importers, directly or indirectly, and sells them to customers at a profit. Wholesale on the other hand involves the sale to either non-commercial clients or to commercial customers but does not involve direct sale.

The major difference between the two is that retail involves movement of products from point A to point B. Retailers buy goods directly from producers, with the importer supplying the goods directly. Wholesale on the other hand involves indirect transfer of goods from the manufacturer to the retailer, with the manufacturer making the payment and the retailer repackaging the goods and selling them to the end-user. The difference between the two concepts therefore boils down to the process of transfer of value in retail from manufacturer to retailer. This form of sales enables retailers to improve their inventory levels, offer better prices to their customers and gain a competitive advantage over other retailers.

The development of the retail business is influenced by economic, social and political factors. For example, supply chain theory suggests that retailers increase sales when they adopt efficient supply chain management. This involves consolidation of all raw materials, replacing outdated or surplus equipment with modern and efficient equipment, reducing operating costs and streamlining operations to concentrate on improving customer satisfaction. These activities lead to an increase in customer loyalty and also to an increase in sales. On the other hand, some retailers prefer to concentrate on building brand equity. This involves taking care of the reputation of the company, creating new brands and marketing them successfully.

Online retailers have realized the potential of wholesale distribution to help reduce cost while increasing retail sales. This helps decrease operational expenses and thereby increase sales. Many online retailers sell directly to the end-users. Wholesale distribution requires substantial investments from wholesalers and drop shippers, but it is an excellent way to increase retail sales.

A retail store not only sells its own products but also acquires goods directly from manufacturers and distributors. The difference between an online retail store and a brick and mortar retail store is that in the latter case, consumers have to physically go to the store to purchase goods. This gives them an opportunity to examine and select the goods before purchasing them. In addition, they can get price quotes easily and can compare the same easily among different types of goods available in any retail store.

An important role has been played by different types of media in modernizing the retail sector. These include televisions, newspapers, magazines, books and websites. Different types of retailers have their own websites that enables people to access their websites, view the goods available for sale, place orders and pay through the website. This helps to increase sales and profits of the retailer. Thus, we can say that the Internet has changed the face of the retail industry in terms of helping small entrepreneurs and large retailers alike.