The growth of retail and wholesale markets is increasing faster as compared to past years. Both of these industries are an integral part of the supply chain. The growth is increasing due to high customer demand. The wholesale and retail trade provides goods and services to the customer as per their availability. The retailers and wholesalers can operate as organisations, companies, sole traders, or partnership firms. The retail business consists of retailers that are independent organisations in the chain of distribution. They purchase goods and services from wholesalers and sell them to customers either online or physically.
The risk of goods and inventories is borne by retailers and wholesalers directly. The retail industry and wholesale industry reduce the time and number of transactions between customers and manufacturers. Customers can directly purchase the goods and services from retailers and wholesalers. Let us study it in more detail.
The retail business consists of retailers that are independent organisations in the chain of distribution. They purchase goods and services from wholesalers and sell them directly to customers at their location or nearby areas. The retailers purchase goods and services in bulk from large organisations, manufacturers, and wholesalers. Wholesalers are independent organisations who purchase goods and services from manufacturers and factories and sell to resellers or retailers. Both the retail and wholesale businesses generate high-risk factors of goods and inventories. The retailers and wholesalers take ownership of the risk generated by the business.
Some of the retail business examples include motor vehicle and parts dealers, e-commerce and non-store retailers, pop stores, department stores, gasoline stations, food and beverage stores, furniture store, electronics store, sports shops, bookstores, clothing and clothing accessories stores, home furnishing stores, hypermarkets and supermarkets, musical instruments stores, health and medicine stores, appliances store, pharmacies, landscaping stores, etc.
Types of Retail Trade:
The types of retail business are divided into two parts, but these two parts are further divided into multiple parts. The two types of retail trade are as follows:
- Itinerant retailers
- Fixed Shops
1. Itinerant Retailers
Itinerant retailers are the small retailers that don't have a permanent business centre. They constantly move from one place to another. It is also known as a mobile business centre. These retailers will come and sell you the goods and services, and move to another place, as they keep shifting their shop from one place to another. The procedure will be repeated every day. Itinerant retailing is a small-scale business sector; that is why it is easy for them to move and cover a large and diverse consumer base. The investment is meagre as compared to other large-scale businesses. Some retail industry examples include fruits, vegetables, festive products and stalls, cosmetic products, Holi colours stalls, etc.
The itinerant retailers are further categorised into four major types, i.e.,
- Street Traders
- Market Traders
- Peddlers and Hawkers
- Cheap Jacks
2. Fixed Shops
Fixed shops are another type of retail trade business. As the name suggests, they are fixed shops and stay in one place. They don't move from one place to another, unlike itinerant retailers. The fixed shops can be medium-scale to large-scale businesses depending on the business owner's capital and requirement. These shops can be seasonal in nature. However, they have fixed business centres and run their daily transactions from that place only.
How does the retail industry work?
Retail businesses work on the customer's requirements. Retailers purchase goods and services from wholesalers and sell them to consumers. The quantity of the goods is determined based on customers' demands. There are several methods by which the customers can buy goods and services from retailers:
- Counter Services – Customers can purchase goods and services from the counter itself, i.e., by physically visiting the store or shop. The buyer cannot go and grab things on its own unless it is a supermarket. So, the buyer has to go to the counter and ask for the goods and services they need. It is known as counter service. The retail industry examples of this type include jewellery stores, chemist stores, stationery shops, etc.
- Delivery Services – The next is delivery services. The goods and services will be shipped directly to your doorstep. You don't have to go to the shops and buy them physically. You can either call the shop owners and give him the list of requirements or select the products online via the website. Online shopping has grown tremendously over the last couple of years. Most people order food and groceries online to save time and money. The examples include Big Basket, Zomato, Swiggy, Uber, etc. If you want to buy instant food, you can search for various local shops using Zomato and Swiggy. There are three modes in which delivery services operate:
- Door to door sales
- Second-Hand retail
Wholesalers are independent organisations who purchase goods and services from manufacturers and factories and sell to resellers or retailers. The wholesalers can be organisations, partnership firms, and sole traders. Wholesalers purchase the goods from manufacturers, store them in the warehouses, and then sell them to retailers in bulk or large quantities. The purchase of goods is arranged by the wholesale agents, brokers, or retailers themselves. The brokers, middlemen, and agents charge a minimal fee for the arrangement. The wholesale business examples include electronic markets, food markets, etc. The types of wholesale business include the following:
- Durable goods merchant wholesalers
- Wholesale electronic markets
- Non-durable goods merchant wholesalers
Thus, to conclude, we can say that retail and wholesale businesses are different. The retail business consists of retailers that are independent organisations in the chain of distribution. They purchase goods and services from wholesalers and sell them to customers either online or physically. On the other hand, Wholesalers are independent organisations who buy goods and services from manufacturers and factories and sell to resellers or retailers.
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Q. How can I start a retail business?
Ans. The retail business involves many steps for establishment. The steps for starting a retail business are as follows:
- Make a business plan
- Choose the type of business
- Select a location
- Do market research
- Research your competitors
- Advertise and promote
- Launch the business
Q. What are the benefits of wholesale business?
Ans. The wholesale business has many benefits, such as:
- Save money – buying goods and services in bulk saves a lot of money to wholesalers, often 50%.
- Brand creation allows wholesalers to create a brand and sell it in supermarkets, shopping malls, and grocery stores for many customers.
- Diversification – The wholesale business also provides diversification to the customers. They get more options to choose from.
- Supply network – It also helps to build the supply network in the business.
Q. What are the functions of the wholesale business?
Ans. The functions of wholesale business are as follows:
- Buying and Assembling the products
- Warehousing the goods and services
- Risk bearing