Wholesale Vs Retail

Retail vs Wholesale: Understanding the Differences and Benefits of Each

Many businesses wonder what really sets wholesale business and retail companies apart from one another, so we’ve dedicated an entire chapter in this article to take you through the pros and cons of each business model in more detail.

Wholesale vs Retail: Which one is for you?

You have a product, and it’s a good one. You may be looking at the best way to take that product to market, or you may already be selling it in small quantities and are now planning for growth.

Essentially there are two main ways to sell your product – either as a wholesaler, or as a retailer. Each has its benefits and potential pitfalls. When choosing the most appropriate avenue to market, you must consider which model fits best with:

• Your strengths and personality as a business owner
• The brand identity of your business and its product or products
• How best to reach your target market

Let’s discuss this in detail…

Digital Operations Platform

Powerful rule-based automation engine to get more orders out the door faster

Book My Free Demo

What’s in this article?

You have put your all into developing your business and you want your product to get to its target market in the most effective way possible. The question is: do you want to be a retail business, or join the wholesale market?

The choice of retail vs wholesale, or even a bit of both is a big decision. Read this article to discover the options available to reach your customers and help decide what is the best business model for your business.

We will focus on:

• What are the differences between wholesale suppliers and retail businesses?
• Why being a wholesaler might suit you?
• Why being a retailer might suit you?
• Can wholesalers sell products via retail and vice versa?
• What do you need to know for multichannel retailing?
• What else do you need to consider?

Wholesale vs Retail

First things first, what is the difference between a wholesale and a retail? And why are those differences important?

What is wholesale?

A wholesaler is a person or company who sells products in bulk to various outlets or retailers for onward sale, either directly or through a middleman. Wholesalers are able to sell their products for a lower price as they are selling in bulk, which reduces the handling time and costs involved.

They usually provide large quantities of goods, but can take on orders for smaller quantities as well. The wholesaler may also be the manufacturer or producer of the product, but they don’t have to be.

What is retail?

A retailer is a person or a company who sells products directly to their customers for a profit. The retailer may be the manufacturer of the product, or may acquire relevant products from a distributor or a wholesaler. The products they sell will be at a higher price than they would be from a wholesaler, due to markups.

Why Wholesaling Might Suit You

Being a wholesaler gives you access to a diverse range of outlets and allows you to reach a large customer base. Offering your product as wholesale allows a larger audience access to your wares, therefore you are able to grow your business quickly.

This can drive interest for your product and can make you attractive to retail stores who can see that there is a solid audience for your goods and are more likely to want to stock your product.

1. Brand Awareness

Acting as a wholesaler is a great way to build awareness for your product. Instead of consumers having to purchase exclusively from a particular shop, be it an e-commerce store or brick and mortar, consumers can see your product in a variety of outlets. It can allow a wide range of consumers who might otherwise not have been aware of your product to build a relationship with it.

Digital Operations Platform designed for retail and wholesale

Top-notch service including project scoping, implementation, and training

Book A Demo

2. Drop-Shipping

3. Global Expansion

When selling wholesale products, it’s much faster and easier to expand into global markets. Any growth and expansion is defined primarily by your relationship with those clients who buy goods from you. If they sell globally, then so will you as you’re just getting the goods to where they need to sell them.

Ensure your accounting system is setup to allow for multicurrency transactions so that you can clients can place purchase orders in multiple currencies.

Another part to this is that when selling via wholesale, you will be shipping your goods internationally as one large container, as opposed to sending hundreds of individual retail packages. For a small business looking to grow, this can be a cheaper way of selling internationally.

Potential Pitfalls

A wholesaler is not able to be as responsive to the changing needs and desires of the end-user. Whereas a retailer is at the front line of building a relationship with the consumer, a wholesaler is at least one step away and relies heavily on market research and feedback from retailers to stay ahead of the game.

1. Retaining Brand Identity

By trusting your product to a retailer, you’re putting faith in their ability to retain the brand identity of your product. You don’t want to supply something to Walmart, and have consumers think of it as Walmart’s own product!

It may not always be possible to have control over how your product is merchandised, any discounted prices they choose, or what competitive products it’s displayed alongside.

2. Marketing Your Product

As a wholesaler, you still have responsibility for marketing your product to consumers. You cannot expect the retailer to do all of the work for two reasons:

1. You need consistency of message regarding product placement and brand identity of your product. You cannot expect each retailer to market the product as they choose while still retaining any consistency in message.

2. Retailers need to be able to find you. With so many online stores offering their products to trade customers, you need to stand out. Having a better price than your competitors, simple distribution channels, and great product lines is no good if no-one knows about it.

3. Warehouse Space

Selling wholesale means that you will likely be selling your products in large quantities to many different retailers and distributors. This means you need to ensure you have plenty of warehouse storage space to facilitate those sales.

Whilst we’re on the subject, it’s also important to ensure your warehouse processes are streamlined and efficient to help minimize any packing errors or wasted time locating goods in your warehouse. Handling bulk quantities can be tricky, and it’s important everything makes its way to the end consumer in a timely fashion.

The inventory in your warehouse should integrate seamlessly with your wholesale management platform, so that you always know how many of each item is in your warehouse, ready for those large wholesale orders you’re going to be fulfilling.

Why Retail Might Suit You

Operating as a retailer is ideal if you want to retain complete control of your product lines and you enjoy having a hands on relationship with your customers. There is a lot to think about if you’re in this position, but you are able to be responsive to the demands of your customers and their potentially changing needs and desires.

1. Targeted Consumer Base

You’re able to specifically target a tailored consumer base. By being the retailer, you can personally select the marketing channels that are most likely to reach customers who need and want your product. You can also choose the best type of store for your needs – a brick and mortar shop, an online store, or both.

2. Personal Connection

Without a middleman, you can get to know your customer base in great detail. One of the key differences to wholesaling is that you get to deal with them directly. This means you can get a sense of their preferences and their habits, and your business can respond quickly to that.

Reporting in your business system is also very handy here – with various customer, sales and product reports, you can very quickly see what are your best sellers versus no sellers. This lets you order large quantities of what works, and get rid of what doesn’t.

By tracking retail sales, you’ll also be able to see who your best customers are, so perhaps you could target them with a personalized offer? On the other hand, you can also see which customers haven’t bought from you in say 3 months; you may want to send them a personalized email in order to get them buying from you again. Knowing your customers based on their buying habits allows you to personalize your service, which your customers will notice and appreciate!

3. Control Over Brand Identity

Having control allows you to ensure that your brand identity isn’t diluted and isn’t damaged. You’re in control of the retail price, where your product is seen, how it’s presented and what other products it’s displayed alongside. You are in control of the marketing of the product, so can ensure that the messages being put out to the world are consistent with how you want your product to be viewed.

4. Price and Profit Margin

When developing your retail strategy, you can decide for yourself what price you are going to sell goods for and at what profit margin. All of that profit will sit directly with you and won’t be shared with a wholesaler. Use the margin reports in your system to ensure your products are making you the best margins possible and make changes if needed.

You should also keep an eye on your margins across your sales channels as each platform will incur different costs, such as eBay or Amazon fees. And don’t forget your landed costs such as insurance, shipping and taxes! You’ll need to be on top of all of these to ensure your profits are accurate and growing.

Adopt an integrated accounting system to gain real-time view of your business performance

Can Wholesalers Sell Retail and
Vice Versa?

Why not have the best of both worlds? It could be the perfect answer to both keep control of the business from start to finish, maintain your own virtual or brick and mortar shop and to grow the business quickly, all at the same time.

In theory, it sounds like an ideal answer for many companies who are able to handle the sale of goods over multiple channels at once, and that want to retain direct contact with the consumer. However, there are a number of issues, both positive and negative, to bear in mind before going down this path.

Digital Operations Platform designed for retail and wholesale

Automate the ordinary, act on the exceptional

Book A Demo

1. Competing Against Yourself

By being both retailer and wholesaler, you’re at risk of directly competing against your own resellers, therefore you’re competing against your own product. It’s essential that you don’t undercut the resale price, as this would damage your wholesale relationship with them and retailers would be reluctant to take your inventory in the future.

Keep an eye on those all important reports! You should have separate price lists based on either vendor, sales channel, or both. This will ensure you’re not setting such a low price you end up undercutting your competition, or damaging your own profits.

2. Different Ranges of Products

One way to avoid directly competing against your resellers would be to offer one line of products in your own outlets, and to offer a different range of products for wholesale. This could be completely different items, or the same product in different designs, colors or sizes. This is easy to do through effective product and SKU tracking so that you know which outlet has which items and how well they’re selling.

3. Profit Margins

If choosing to sell via wholesale as well as retail, you need to be sure that your wholesale prices cover your costs and still make a profit. This is where understanding your true inventory costs comes in.

For instance, landed costs are often those hidden costs that you may not always think about, such as insurance, fees and taxes. You should always take these into account when pricing products, as well as the usual costs for shipping goods out to your customers, and receiving goods into your warehouse.

Having a grip on all of these inventory costs before pricing your products will ensure you are making the most profit, in line with the items you sell and who your target market is.

Choosing the Right Channel for Your Business

When choosing the most appropriate avenue to market, you must consider which model fits best with:

1. Your strengths and personality as a business owner
2. The brand identity of your business and its product or products
3. How best to reach your target market

Remember to evaluate the strengths of your product and your employees and assess the avenues open to you. Also take into account how much control of the product you want to retain, and how much face-to-face contact with the consumer you need or want to have.

Here are a few other starting points:

• If choosing to become a wholesaler, prioritize selling to retailers by providing your resellers with the best service to allow them to grow their business and trust you as a repeat supplier.
• If choosing to focus on retail, prioritize the channels that will grow your business to reduce the need to rely on resellers to provide you with turnover.
• If you feel able to manage both wholesale and retail together, think about strategies that will allow you to grow the retail side of your business while being able to sell to retailers without competing against yourself.

Conclusion: Wholesaling or Retail?

By successfully supporting all of our customers, we have developed extensive experience in meeting the diverse needs of both types of seller. We hope that now you feel a little more prepared to make the right decision for your business. By picking the model that suits you best, your business will thrive.

Wholesale Vs Retail

Wholesale sales are sales of tangible personal property to licensed retail merchants, jobbers, dealers, or other wholesalers for resale. It does not include sales to users or consumers that are not for resale. Retail sales are sales of tangible personal property to consumers. Learn more about Sales Use Tax accounts.

Related FAQs in Entity Registration

No. The request number lets you know that the application has been submitted via the web. This number can be used to call and check the status of the application. The Account Number is the ten-digit series of numbers and letters assigned by the Alabama Department of Revenue (ADOR). You can find your Account Number on any correspondence that you have received from the ADOR.

Rental tax is a privilege tax levied on the lessor for the leasing or renting of tangible personal property. Lodgings tax is a privilege tax on persons, firms, and corporations engaged in renting or furnishing rooms, lodgings, or other accommodations to transients for periods of less than 180 days of continuous occupation and applies to all charges for providing such accommodations. This tax also applies to charges for personal property used or furnished in such rooms or lodgings. Learn more about Sales Use Tax accounts.

Employment

• Careers at aldor
• human resources
• state job application
• state personnel
• internship

Legal

• Legal Division
• Public Records Request

To report a criminal tax violation,
please call 251-344-4737

Wholesale vs Retail: What’s the Difference?

Wondering whether to go wholesale or retail? Both are two popular ways to sell, but they each cater to different customer needs and business goals.

by Stella Logan Jan 08, 2025 — 6 min read

Table of contents

Wondering whether to go wholesale or retail? Both are two popular ways to sell, but they each cater to different customer needs and business goals. Whether you’re just starting out or expanding, understanding the differences can help you decide which path to take for your business – or if you’re ready to do both.

Key differences explained

When it comes to retail vs wholesale, the main difference is who you’re selling to and how you do it. Wholesalers are business-to-business (B2B), focusing on bulk sales to other businesses. Retailers, on the other hand, are business-to-consumer (B2C) – selling directly to the end customer, typically at a higher price per item.

This difference shapes everything from pricing strategies to marketing approaches. Let’s go into more detail with some of these below.

Audience and sales volume

Wholesalers have a particular kind of audience – other businesses. Their typical customers might be retail stores, restaurants or other manufacturers. Since their customers are looking to buy in bulk, wholesalers sell large quantities, making fewer but larger transactions.

Retailers, however, are all about the individual shopper. From those browsing a boutique in person to those scrolling online, retail caters to the needs and desires of everyday consumers. Because of this, retailers usually see more frequent transactions but in smaller quantities.

The difference in audience also influences how each business operates. Wholesalers build relationships with a smaller, stable group of clients, while retailers are constantly finding ways to attract a rotating cast of new and returning customers.

Pricing and markups

The way wholesale and retail handle pricing reflects the different roles they play in the market. Wholesalers usually offer bulk discounts, essentially rewarding businesses for buying in large quantities. The margins might be thinner per item, but those high-volume sales add up.

In contrast, retailers charge higher prices for individual items. This is where the concept of markup comes into play. A retailer might buy a product from a wholesaler for $10 and sell it to a customer for $20. The markup covers operating costs and turns a profit, making retail a higher-margin business on a per-item basis. Retail prices are also flexible, allowing for adjustments based on demand, seasonality or trends.

Marketing and branding focus

Wholesalers and retailers also approach marketing from completely different angles. Wholesalers focus on building trust and long-term relationships with other businesses. Think trade shows, professional networks and industry-specific outreach.

Meanwhile, retailers need to capture the hearts of everyday shoppers. Their marketing is about brand-building and customer engagement. Whether through social media, loyalty programs, promotions or user-friendly websites, their goal is to make shopping as enjoyable as possible and encourage repeat customers.

Turn first-time customers into regulars

Pros and cons of wholesale

Wholesale offers several advantages and considerations to keep in mind:

Pros:

• You get to enjoy high-volume sales, which can provide a sense of stability.
• A smaller, steady client base means you spend less time chasing new leads.
• Demand tends to be predictable, making it easier to manage inventory.

Cons:

• Lower profit margins per item can make it slower to grow quickly.
• You’re reliant on B2B relationships, which can take time to establish and maintain.
• Warehousing and other high operational costs are an important aspect to plan for.

Pros and cons of retail

Retail also comes with opportunities for growth, with some things to consider:

Pros:

• Higher profit margins per item mean more flexibility in pricing.
• Having a direct relationship with your customers helps build loyalty and gather valuable feedback.
• Pricing can be adjusted more easily to reflect demand or trends.

Cons:

• Managing inventory for a wide range of products can be challenging.
• Attracting customers often requires effective marketing efforts.
• Competition is strong, especially in the eCommerce space.

Types of wholesalers

There are a few different types of wholesalers, each playing a unique role in getting products from point A to point B.

Distributors act as a go-between for manufacturers and retailers, handling logistics, storage and often marketing to get products into stores. Merchant wholesalers buy goods in bulk, and then store and sell them to other businesses, usually in large quantities. Agents, on the other hand, don’t handle the products themselves but connect buyers to sellers, earning a commission on sales.

For example: A distributor buys wine directly from a vineyard, stores it, and sells it to bottle shops and other retailers. A merchant wholesaler buys wine in bulk from multiple vineyards, stores it in their warehouse, and sells it in large quantities to businesses like retailers and restaurants. An agent helps arrange a sale between the vineyard and buyers, and earns a cut for their role in the deal.

Types of retailers

Retail businesses come in different shapes and sizes, too. Traditional brick-and-mortar stores offer the in-person shopping experience, with customers enjoying the immediate satisfaction of finding what they’re looking for. Then, there are online retailers, which have grown in popularity thanks to the rise of the internet and changing consumer habits. These provide convenience and variety, letting customers shop anytime, anywhere.

The rise of eCommerce has also made way for the direct-to-consumer (DTC) model, where brands or providers sell directly to customers and skip the middleman. This can be seen in everything from fashion brands selling online, to subscription services that send curated boxes of goodies right to your doorstep each month.

This year, over 17 million Australians shopped online monthly – nearly double the number from 2020. It’s no surprise, then, that many retailers have adapted by embracing a hybrid model. Selling online while maintaining a physical store lets you cater to both shopping preferences: people who like to shop from the comfort of their homes and those who still love the personal, tactile experience of in-store shopping.

Build a free online store or eCommerce website

Should you choose wholesale, retail or both?

Or why not do both? By offering wholesale and retail, you can reach both businesses and individual customers, giving you more ways to make sales. This hybrid approach also helps provide a buffer – if one side of your business slows down, the other can help balance it out. For everything to run smoothly, though, you’ll need a reliable system in place to manage pricing, stock levels and customer relationships across your wholesale and retail operations.

What do you need to know about multichannel retailing?

If you’re considering both wholesale and retail, a multichannel retailing strategy is worth exploring – selling your products through multiple channels.

Picture a plant shop that sells potted indoor plants, planters and gardening accessories. They’ve got a lush, plant-filled shopfront. But that’s not all – their website lets shoppers order plants for delivery to their door. Over on Instagram, they drop rare, exclusive plants, with shoppable posts. And on the wholesale side, they’re supplying plants to garden centres and offices, bringing a bit (or a lot!) of green to both homes and businesses.

Each of these channels taps into a different customer base, giving your products more exposure and more opportunities to grow your sales.

Fulfilment solutions for wholesale and retail

Whether you’re selling one or selling one hundred, there’s a fulfilment solution to suit how you do business.

For wholesalers, warehousing or fulfilment centres are ideal for managing bulk inventory. These centres not only store your products but can also pick, pack and ship them directly to your customers, saving you time and effort. Or you might choose dropshipping to keep costs down, with products shipped directly from the supplier to the customer, removing the need for storage.

For retail businesses, managing smaller, more frequent orders is easier with tools like point-of-sale (POS) systems and real-time inventory tracking. Square lets you streamline both wholesale and retail fulfilment all under one system, keeping everything organised, efficient and moving along smoothly, no matter the size of your operation.