The Difference Between a Wholesaler & a Retailer

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Retail stores sell products directly to customers after buying them from wholesalers.
Retail stores sell products directly to customers after buying them from wholesalers. (Image: Jupiterimages/Polka Dot/Getty Images)

Wholesale and retail sales operations are divided in terms of who buys the products or services and for what purpose. The producer may have a choice in selling a product as a retailer or wholesaler depending on the ability to mass produce. Service providers commonly offer services via retail, but wholesalers sometimes market the businesses.

Producer Distribution

The maker of a product earns nothing for it until the item sells. Producers are able to sell products directly to the consumer at retail through websites, mail order campaigns, physical stores and sales representatives visiting potential buyers. Any producer who makes a large enough quantity can sell wholesale to brokers, other wholesalers or retail businesses that will sell the product to the customer.

Wholesaler

Wholesalers are either manufacturers who market their own goods to retailers and other distributors, or they are brokers who buy products in mass quantities and sell them to retailers. Products sell for less at wholesale but sell in larger quantities with less seller cost. A wholesaler does not pay rent for retail space or maintenance fees for website upkeep. The profit per unit is much lower but is multiplied by quantitative sales.

Retailer

Retailers sell products directly to the customers by fulfilling orders from a website or selling from stores. Retailers sometimes sell a company-produced product, or many different products from various producers. A retail sales operation involves buying from a producer or broker at a wholesale price. The general mark-up is 300 percent of the wholesale price for products sold in stores, at least 200 percent for website sales and drop-ship items.

Marketing Wholesale and Retail

Some producers and brokers make money selling products as a retailer or wholesaler through wholesale distribution and directly through a retail means. Large manufacturers are often able to set up retail locations nationwide to market products directly to customers, while producing some products for other companies to sell. Brokers who sell products in quantity to retailers are sometimes responsible for websites selling directly to consumers, and vendor operations at large events.

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