Wholesale VS Retail: The Actual Difference Between

by Gert Erdmann Project Manager

Commercial distribution is the tool through which the manufacturing and distribution companies place goods and services on the market.

Distribution is also one of the 4Ps of the marketing mix and is considered as a set of independent institutions operating to make a product or service available to the consumer for use.

Channel management is very important in this field. And the case of distribution, therefore, corresponds to the set of relationships established between commercial intermediaries and industrial suppliers. Relationships are of 3 types: Logistic Relationship, Marketing Report and Negotiation Relationships.

Logistics relationships are mainly related to the transport and delivery of goods. Those of Marketing are instead attributable to the marketing policies followed by the two operators. It is necessary to underline that there is a profound lack of harmony between industrial marketing and commercial marketing; The first ones look for the high performance of a single product, while the latter are interested in the performance of assortment and point of sale.

Marketing relations are therefore a source of conflict between distributors and suppliers. A similar course for negotiating relations, based on the supply contract stipulated by the parties; here, in fact, discriminatory situations are created that are created and desired by the operator who can enjoy greater bargaining power towards the counterpart. It thus happens, for example, that a supplier industry, at the same volume, practices different prices to different commercial customers or applies different discounts in relation to the market shares of distributors. In this regard, Trade Marketing is a discipline that deals with studying and analyzing the complex aspects that exist in the relationship between industry and distribution.

In the distribution field, the intermediaries between producer and customer are the retailers, which are divided into product lines sold, for example, department stores, supermarkets hypermarkets; type of service: self-service, limited-service, full-service prices: discount-store, cash and carry. In this case, the receiver of the goods is a consumer or end user. Within this distribution typology, we can include: large-scale distribution, and this includes supermarkets, hypermarkets, discount stores and department stores, all characterized by vast sales areas where the goods are picked up by the buyer directly from the shelf. And then there is small distribution: most of these are small retail outlets with fixed offices (or in itinerant form). This distribution has evolved in the 90s with the birth of shopping centers, where, in structures composed of large spaces usually multi-story built ad hoc, are aggregated more retail stores diversified by type of goods and services present.

Another type of merchant is wholesalers, who are intermediaries who buy large quantities of goods from producers or other subjects, to sell them to other operators. It is not said that they only sell to retailers, as they could also sell to individuals or other wholesalers. The distinctive criterion is, therefore, the quantities of goods purchased. So, the receivers of the goods and services are those companies that use the good to work it or to resell it to the end user or to other companies similar to them. There are various online stores that provide the products at wholesale rates and one of the stores is reductiondiscount.fr that helps people to buy their stuff at reasonable rates

The activities related to commercial distribution necessarily imply the handling of goods. Therefore, the clear difference between retail and wholesale is that in the latter the diversifying and indispensable element is transport, while in the retail one the predominant element is the exposure of the product to ensure that traders have the right to sell or purchase, they need a specific contract named “Sales Concession Contract". The sales concession contract and the agency contract are among the most widespread forms of distribution organization. These contracts are joined by the fact that both the agent and the concessionaire assume the obligation to organize and promote, in an autonomous manner, sales in accordance with the policies of the manufacturer, integrating within the distribution network of the same. What mainly differentiates these two intermediaries is the fact that, while the agent undertakes, in the face of a commission, to promote the conclusion of contracts between the producer and the customers that the agent has procured, the concessionaire operates as buyer-reseller and its source of income is based on the difference between the purchase price and the resale price.

The sale concession is an instrument of particular importance for the organization of the distribution on the markets, both national and foreign, which differs from other non-integrated retailers (for example wholesalers), as it carries out an independent activity promotion and organization of sales of the grantor's products, in a given territory, which, in principle, is granted exclusively.