Saturday, 2 June 2018

retail vs wholesale in grocery business

Merely in 4-5 months I got to know the difference between wholesale and retail in grocery business. So mainly my journey from engineering class to a retail store started when I had to sit on our family retail store of groceries due to some free time after the completion of degree and before finding a job.

Retail definition:-
Retail business mainly deals with selling goods to the customers directly. As the customer can visit the store and choose the product to buy and can pay the owner of the store for that product.

Wholesale definition:-
In contrast to retail business, wholesale business deals with selling goods to the retailers and big box stores in bulk rather than to the customers. They purchase from the manufacturers directly in bulk amount so they manage to get the products in lower price.

Profit margin:-
The margin is usually low in wholesale business as they sell the goods in bulk rather than to customers.
Two terms I came across while in retail business were:

  1. Margin: This means how much % profit you can make by selling that item. It is calculated as     Sold price=[[Cost price/[100+profit%]]*100]
  2. Flat: This also means profit% but it is calculated as                                                                 Sold price=Cost price-[[margin/100]*Cost price]
  3. c.d.: I also came across this term also and as much I understood from this its actually an extra amount that wholesalers usually charge to the retailers while billing the purchased goods and this amount is not actually paid by retailers as while paying the amount they pay the amount of goods deducting the cd amount and its also shown on payment receipts that a particular amount is deducted as cd from the billing amount.
Net Profit:-
This usually depends upon the person running the business. As both wholesale as well as retail business both are profitable as long as they are getting orders from their customers or clients.
             The profit margins are less in wholesale but they supply in bulk so they make large profit by even small profit margin.
             The margins are high in retail but they don't supply in bulk so they can make equal profit by even serving a lot less customers.

Retail benefits over wholesale business:-
  • Profit margins are high.
  • More control over the product it means where we have sold the product, where it is used and when we have sold.
  • Face to face customer interaction.
  • Don't have that stress to meet the orders in so much bulky amount.
Wholesale benefits over retail business:-

  •  Not always need to have the inventory. As firstly we can collect the orders from our clients then after that we can decide in what amount we have to purchase the goods so as to meet the demand which is contrary to retail as there we have to keep the inventory always as the customer will not wait and will go to other retail shop where they find the same product.
  • Don't have to sit and wait for customers to come as we can go to different retailers and can collect the orders from them.
  • This business is usually done by receiving order calls so we dont have to be present on our store as long as we are working.

So according to my advice you can do any kind of business as both are profitable and need  hardwork. Your choice depends upon what business suits your personality or needs. Read the above article carefully so after that you can decide what you have to do.

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