You’ve likely heard the term “wholesaler” and “retailer” tossed around and used. Someone might have explained it to you as retail is “when you go to a store and buy something” and wholesale is”when the retail store restocks.”
But then you get confused because when you go to Costco and buy items directly you are being a retailer. But isn’t Costco a wholesale store?
It’s pretty simple but let’s go over the differences.
When Is It Wholesale?
To simplify matters, let’s first define wholesale:
The selling of goods in large quantities to be retailed by others.
The derivation of wholesale comes from Middle English and means “in large quantities.”
In business, when you hear the word wholesale, what’s normally being referred to is the organization one step before Walmart or Safeway that provides these stores with their products.
As a consumer, you most likely haven’t ever heard of these wholesale companies because you’ve never needed to have any interaction with them.
What Qualifies as Retail?
Retail is the sale of goods to the public in relatively small quantities for use or consumption rather than resell.
The differentiating factor here is that you as the consumer are the end-user of the product.
With wholesale, there is an added step put in between that comes before the end-user—the retail store.
Retail stores would be the ones you know by name and shop at daily such as Walmart, Target, Safeway, etc.
Costco does fit the definition of wholesale in terms of buying items “in large quantities” but they are selling directly to the public, not to another store. So technically, they don’t fit under the umbrella of what is typically referred to as wholesaler because you as the end-user are buying the products for direct use – not for resell.
Some Big, Some Small
A common misconception when it comes to wholesale is the size of a company required to be considered wholesale.
In terms of this, there is no size required. You could have one product line that you make from your basement and wholesale to Walmart and you would be considered a wholesaler. Any company who is selling their products directly to a retail store or to an individual for resale is considered a wholesaler.
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