eCommerce is a largely successful business. Many consumers need products but want to shop from the convenience of their homes.
No matter what niche you’re in, an online store can bring you success. But there are two main business models an eCommerce company can choose: retail or wholesale.
The business model you choose will greatly impact your business.
Retail and wholesale companies deal with many business aspects differently, such as handling orders and even interacting with customers. But knowing which is better for your business can be tricky.
If you want to know the difference between wholesale vs retail, here’s your guide.
Retail
When you host your own shop, you’re likely selling retail.
This is the preferred option for those who make their own products and sell them, not going through a middle-man or another store. But retailers can also work with wholesalers, which will be explained in the wholesale section.
Retail stores also have smaller amounts of products. They’re usually in niche industries or sell a very specific type of product. This means they need to increase the price of each individual product to ensure a good ROI.
But retailers have more control. You can monitor when sales occur, your store location, and you even control the price of the product. If you have other staff, you control who you hire and how they contribute.
You also have control over other business aspects, such as marketing. You’re the one running the show; whether you do marketing in-house or outsource, you’re the one who controls all marketing efforts.
A retailer also receives benefits from the customers. A retailer is the one who interacts with customers. If there’s a question or a complaint, they communicate with the store.
This helps when your customers have suggestions, and you can implement them into your products.
This increases customer loyalty and will help your store gain a following.
The easiest way to look at retail is you’re building a consumer brand. You’re the store customers know to turn to when they need different products.
Is Retail Right for You?
When you run a retail business, you’re the one-man/woman show. The reason why is simple: retail is about the business as much as it is about the product.
Whether your store is physical or online, you control everything. Some business owners love this power, but others don’t.
Some business owners also don’t have the skill or power to control multiple areas of their business.
If your business is successful, this usually isn’t a problem — you can hire or outsource talent. But if your business doesn’t generate the revenue, you could have a hard time keeping up in a retail world.
As a retailer, you also have to be open to change. Since you’re the one controlling your products, you need to pay attention to different factors such as pricing and craftsmanship.
If you’re open to risk-taking, this shouldn’t be a problem. But if you prefer the safe approach, retail isn’t right for you.
As well as entrepreneur skills, you should also have sales, customer service, and understanding of the retail industry. This will help your store thrive.
Wholesale
Wholesalers are the ones who work with the retailers. You have a large bulk of products and you can sell them at a low price.
A wholesaler has two options: you can sell them to customers or you can sale them to a retailer, such as the one described.
The easiest model to think is a brand selling their own products and selling them to a retailer. For example, a makeup brand can sell their own products on their website. But they can also sell their products to a retailer makeup store.
This is a convenient way to make lots of money if you make your own products or have connections with product creators. Since you have several revenue streams, you’re guaranteed a great ROI.
Another difference between wholesale and retail is the price. Wholesalers can sell products at a lower price than retailers. Since their ROI isn’t at stake, they can get away with selling products at a minimum market value.
But a wholesale company isn’t a one-man/woman show. You’ll need a warehouse for your inventory, a courier service to ship products, and staff for many areas such as customer service, marketing, and sales.
Is Wholesale Right for You?
Unless you enjoy being the boss, wholesale can be challenging. But if you have an entrepreneurial spirit but want to be more hands-on with your company, wholesale may not satisfy you.
Wholesale work won’t seem much like owning a store. You’ll handle more logistics, manufacturing, management, and other practical business aspects such as managing your properties and employees.
Managing your products is what you’ll do the most. You’ll have a huge warehouse full of inventory. You’ll have to track the sales, how much product you have, what should be liquidated, and what new orders you’re expecting.
You’ll also have to manage your finances, pay attention to sales numbers and do more technical research on your market. To someone who enjoys marketing their products, these tasks will be really boring.
If you enjoy the service industry, wholesale isn’t right for you.
As a wholesaler, you will meet with people. But they won’t be friendly customers — they will be retailers who want to do business with you. In this sense, you’ll have to approach this situation differently than you do with a customer.
Now You Know Wholesale Vs Retail
If your dream is to have a store, you should know the different business models. Most commerce owners don’t know the difference between wholesale vs retail. But this difference can completely change your store.
If you prefer being hands-on and dealing with the public, retail works best for you. But if you would rather have a consistent revenue stream while focusing on technical commerce details, wholesale is right for you.
No business model is better than the other. It all depends on your business and your preference.
Do you need to buy wholesale merchandise for your retail store? Look at our products.