Commerce · Ch 22 — Types of Trade
Wholesale Trade and Retail Trade — A Comparison
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Wholesale Trade and Retail Trade — A Comparison
Although wholesale trade and retail trade are both branches of internal trade and together form a single continuous chain of distribution from the producer to the final consumer, they differ from one another on several practical grounds. Comparing them side by side makes the distinction between the two much easier to remember and to apply to real examples.
The table below sets out the principal points of difference between wholesale trade and retail trade.
| Basis of Distinction | Wholesale Trade | Retail Trade |
|---|---|---|
| Scale of operation | Large-scale — goods are bought and sold in bulk quantities | Small-scale — goods are sold in small quantities suited to individual/household needs |
| Capital required | Generally larger, since bulk buying and warehousing tie up more funds | Generally smaller, since stock is held and sold in small quantities |
| Variety of goods dealt in | Narrow — usually one line or a limited range of related goods | Wide — often a broad assortment of different goods to meet varied consumer needs |
| Location of business | Central wholesale markets or commercial hubs, not necessarily close to final consumers | Close to residential areas, marketplaces, or high-footfall streets, near the final consumers |
| Contact with final consumer | Little or no direct contact; deals mainly with retailers and other business buyers | Direct, frequent, and personal contact with the final consumer |
| Position in the chain of distribution | The middle link, between the producer and the retailer | The final/last link, connecting the trade chain to the final consumer |
| Credit extended | Often extends trade credit to retailers | May or may not extend credit to individual consumers, and typically for smaller amounts |
Definition 1Chain of Distribution
The sequence of intermediaries — typically producer, wholesaler, retailer, and finally consumer — through which goods pass on their way from the point of production to t …