26 Nov 2010

Pros and cons of retail vs. wholesale selling

Comments Off Supply Chain

Let’s begin the today’s post with an assumption of being a manufacturer. Just imagine a manufacturer has crafted an outclass wholesale product and marketed it well. It means he has found a small niche in which he wants to excel and he is ready to enter in business. Here comes the stage where he must decide the quantity sales so this is the topic he must deal with. This is the time when a manufacturer must decide what will be more advantageous for him, to be a wholesale seller or a retail seller. The rules of both fields are already decided so the entrants must play accordingly. Let’s describe briefly what are the pros and cons of retail and wholesale selling.

Retail Selling

Retail sale is a type of sales that is made directly to the end users and in relatively small quantities whether at a physical store or online store. It means you allow your customers to buy the variety of products in small quantity.

Pros of Selling Retail

The first and foremost advantage of retail business is that small amount of capital is required. Retailer buys products, sells them, gets immediate cash back and gets profit margin. It’s a win win situation.

The premium advantage of retail selling is face to face interaction with your customers. If the customers are not satisfied about certain pricing or a product, you can change the product or adjust the pricing to increase your sale.

Retail sellers can offer a variety of goods within same product line. Variety is a great edge of retail selling. Thus different customers choose different products out of so many options, which is great.

Cons of Selling Retail

A retailer must consider the seasonal trends and sell products depending on the time of year. If you won’t be careful about trends you will loose customers and sale as well.

Sometimes, retail business requires a physical store setup and it also includes a schedule to let your customers know the timings and special sales promotions.

Wholesale Selling

Wholesale selling is entirely different from retail selling in having narrow range of products but in large quantities. If a manufacturer sells the products to a middleman who sells them to the consumers to sell further, this is wholesale selling.

Pros of selling Wholesale

Wholesale selling involves taking multitude of orders and making money for volume.

Pricing plays a crucial role as prices of a single item bought in wholesale is far less than that the same item bought in retail.

You have loyal customers in wholesale selling who always place large orders and they keep on coming back to you every time they need the product.

Profit making is much faster and larger than retail selling.

Cons of Selling wholesale

Seasonal trends must be followed in wholesale selling also unless you are going to sell most wanted items that are sold anytime in a year.

You need to market your products on a larger scale to get more orders from wholesalers.

You must need to sell your products at good prices to get more customers and larger orders.

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