Retail and Wholesale Trade
Retail and wholesale trade covers functions, types and services. You should compare a retailer’s and a wholesaler’s role and choose a format for a given market.
Core rules
- Retailing sells to final consumers for personal use. Formats: department store, supermarket, convenience store, specialty store, discount store, chain store, franchise, e-tail and informal kirana.
- Retail functions: assortment, convenience, service, credit, display, after-sales support and information.
- Wholesaling sells to retailers, industrial buyers or other wholesalers. Functions: bulk breaking, assorting, warehousing, transport, financing or credit, risk bearing, market information and promotion support.
- Wholesalers may run cash-and-carry outlets; they do not normally sell to final households.
- Both must manage location, assortment, price, service and inventory turnover.
Worked example
A kirana owner buys 20 cases of biscuits from a wholesaler who gives 15 days’ credit and replaces damaged packs. Reasoning: the wholesaler performs bulk breaking, credit and risk bearing, which the small retailer cannot do alone. If the kirana instead buys directly from the company, it may get a lower price but must pay cash and store more stock. The channel choice depends on order size, working capital and delivery frequency, not merely on price.
Traps
Do not say wholesalers are unnecessary because of e-commerce; many small retailers still need credit and small lots. Do not confuse a retailer’s final consumer with a wholesaler’s business buyer. Do not choose a department store for a low-margin daily need without checking footfall and cost.