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Are you considering whether to go wholesale versus retail? They’re both proven ways to sell products and make a profit, but they reach different customers and require different operational setups. Here, you’ll learn the differences between retail vs. wholesale and get practical tips on running your own wholesale or retail business – or even both.
What’s the difference between wholesale and retail?
Wholesale and retail differ by who you sell to, how much you sell at once and how you handle orders. Wholesalers operate a business-to-business (B2B) model, selling products in larger quantities, usually at a lower price to other businesses. Retailers operate a business-to-consumer (B2C) model, selling products individually to the general public, usually in a smaller quantity and at a higher price.
For example, a wholesaler might sell a bulk shipment of shampoos to a hair salon, which then sells each bottle at a higher retail price to its clients.
What is retail and how does it work?
Retail works by buying products in bulk from a supplier (such as a wholesaler), then selling them to consumers, piece by piece, at a profit. It could be via a physical shop, an online store or a combination of both. Retailers focus on curating appealing products, presenting them well, making checkout simple and delivering an enjoyable shopping experience overall.
What is wholesale and how does it work?
Wholesale involves buying large batches of products from makers, storing them and selling them in bulk to other businesses at a profit. It acts as the link between production and retail by getting products from manufacturers into the hands of businesses that will use or sell them. Orders tend to be larger, sometimes pallets or large cartons, and cheaper than the retail price.
Below is a quick snapshot of wholesale vs. retail trade:
| Feature | Wholesale | Retail |
| Buyer | Other businesses | Everyday shoppers |
| Typical order size | Large quantities | Single items or small quantities |
| Unit price | Lower per item | Higher per item |
| Marketing style | Product reliability, B2B communication | Brand story, customer experience |
| Fulfilment focus | Warehousing, bulk shipping | Packaging, delivery speed, presentation |
Comparing wholesale vs. retail
Audience and sales volume
Wholesalers have a particular kind of audience: other businesses. Their customers might be retailers, distributors, restaurants, online stores or other commercial operations. Since their customers are looking to buy in bulk, orders tend to move a decent amount of inventory each time.
Retailers, however, are all about the individual consumer. From those browsing a boutique in person to those scrolling online, retail caters to the needs and desires of everyday shoppers. Transactions are typically smaller in quantity, and sales can fluctuate with trends and seasonal factors.
The difference in audience between wholesale versus retail also influences how each business operates. Wholesalers build relationships with a stable group of clients, while retailers are constantly finding ways to attract a rotating cast of new and returning customers.
Pricing and markups
Wholesale pricing is designed to be attractive for bulk buyers, offering lower costs per item and discounts for purchasing in larger quantities. Selling in bulk means each product costs less than it would at retail, and bigger orders often come with extra savings. Wholesalers rely on these larger volumes to make a profit, adding a small markup to cover costs like storage, packing and shipping while keeping prices competitive.
Since retail products are sold individually, each item needs to bring in enough profit on its own. Retailers add a higher markup per item to cover operating expenses (such as rent, staff wages, shipping materials, display and marketing costs) while still generating a profit. The markup often leaves room for promotions and for adjusting prices based on demand, trends or seasons.
Marketing and branding focus
Wholesalers focus on building trust and long-term relationships with other businesses. Their marketing often highlights the reliability and reputation of their brand. It can involve trade shows, professional networks, product samples or catalogues that showcase your brand’s quality and consistency, and help potential buyers feel comfortable about adding your products to their shelves.
Meanwhile, retailers try to capture the hearts of everyday shoppers. Their marketing is about brand-building and customer engagement. You might engage customers using signage, social media, loyalty programs, email marketing or promotions. The aim is to create an enjoyable shopping experience that reinforces your brand and encourages return visits.
Turn first-time customers into regulars
Building loyalty in wholesale comes down to reliability. Delivering on time, keeping quality consistent, communicating lead times, and giving an early heads-up on low stock or new items helps buyers trust you. When businesses know they can depend on you, they’re more likely to return and recommend you to others.
In retail, repeat visits come from the experience you create for each shopper. Friendly and helpful service, clear product info, easy checkout, prompt delivery and attention to individual preferences all leave a strong impression on buyers. Over time, these small touches can foster brand loyalty.
Should I do wholesale, retail or both?
Wholesale works well if you like thinking in bigger numbers. You’re dealing with larger orders and more consistent flows. It’s ideal for building steady B2B relationships, and it can simplify your inventory if you’re sending bulk shipments rather than juggling lots of small orders. Profit margins per item might be lower, but the volume helps balance that.
If you enjoy engaging with individual customers and seeing their reactions in real time, you might prefer retail. You can shape your brand and experiment with products. Margins are higher, but you’ll need to invest more in customer engagement and marketing.
Or why not offer both? You could offer a product direct-to-consumer through your store while also supplying businesses that need it in larger amounts. Selling wholesale and retail diversifies your sales by reaching both businesses and individual customers. Wholesale can help stabilise revenue, while retail builds brand recognition and customer insight. Running both also helps create a buffer if one side slows down.
Pros and cons of wholesale
When weighing wholesale vs. retail, it helps to understand the strengths and challenges that come with supplying products in larger volumes.
Pros:
- Large orders help shape predictable income patterns
- Stable buyer relationships can reduce the need for constant marketing
- Regular ordering cycles can simplify inventory forecasting
- Order fulfilment is more efficient per unit
Cons:
- Purchasing stock in bulk requires more upfront capital
- Lower profit margins per item might make it slower to grow quickly
- You need storage space and strong logistics to handle large volumes
- Warehousing and freight costs are higher
Pros and cons of retail
Looking at retail vs. wholesale gives you a clearer picture of what it takes to manage smaller, more frequent customer orders.
Pros:
- Selling items individually allows for higher profit margins per item
- Having a direct relationship with customers helps you build brand loyalty and gather valuable feedback quickly
- Pricing can be adjusted more easily in response to demand
- You have more flexibility to experiment with new ideas, products or bundles
Cons:
- Managing inventory for a wide range of products can be challenging without a good system in place
- Attracting customers often requires effective marketing efforts
- Front-facing customer service adds to operational work
- Managing many small orders increases the workload for packing and dispatch
Types of wholesalers
There are several types of wholesalers, each playing a role in getting products from point A to point B.
- Merchant wholesalers buy large volumes of stock from a mix of brands, store it in their own warehouse and resell it to retailers. They usually focus on bulk supply, variety and competitive pricing.
- Distributors work closely with manufacturers, often holding the rights to sell a brand in a specific region. They bring stock into the area, store it and sell it directly to retailers. They often provide additional support, such as product knowledge, marketing materials or training, to help retailers sell products consistently and effectively.
- Wholesale agents or brokers don’t store any stock. Instead, they connect suppliers with buyers, help negotiate details and earn a commission when a sale goes through.
Take, for example, a vineyard producing wine. A merchant wholesaler buys in bulk from that vineyard and other vineyards, stores the wine in a large warehouse, and sells it to restaurants and liquor stores across the country. A distributor focuses on a city area, visiting local bottle shops, running tastings, and helping with marketing, promotions and educating buyers. A wholesale agent arranges a sale between the vineyard and new buyers, and earns a cut for their role in the deal.
Types of retailers
Retailers operate in several formats, each offering a different way for customers to shop.
- Brick-and-mortar shops let customers visit a shop in person, where they can touch, try and buy products on the spot, with staff available to offer help when needed.
- Online retailers sell products through eCommerce websites or apps, providing convenience for shoppers who prefer browsing and buying from home at any time.
- Direct-to-consumer (DTC) brands sell their branded products directly to customers through their own store or website rather than supplying their products to another retailer. For example, a pet-treat business might sell its treats and subscription boxes through its online store rather than sending stock to pet stores to sell on their shelves.
- Pop-up stores and market stalls set up a small, temporary shop, allowing brands to reach new audiences or test new products in different locations.
- Hybrid retailers offer both a physical and online store, allowing customers to choose whether to shop in person or online.
In 2024, over 17 million Australians shopped online monthly, nearly double the number from 2020. It’s no surprise, then, that many retailers have adopted a mix of selling in person and online. Doing both lets you cater to a broader range of shopping preferences: people who like to shop from the comfort of their homes and those who still love the personal, tactile experience of in-store shopping.
What do you need to know about multichannel retailing?
Multichannel retailing means selling in more than one place at once. Picture this: a nursery sells plants, pots and gardening accessories. They’ve got a lush, plant-filled shopfront that people can visit. Their website also lets shoppers order plants for delivery to their doorstep. Over on Instagram, they drop rare releases with shoppable posts. And on top of all that, they’re supplying wholesale plants to garden centres.
The beauty of multichannel retailing is that it lets you meet customers where they like to shop. Each channel can tap into a different customer base, giving your products greater exposure. This approach works best when everything stays aligned, with consistent pricing and synced stock levels across your channels. Multichannel inventory management helps avoid awkward moments where something sells out in one place while still appearing available in another.
Fulfilment solutions for wholesale and retail
Fulfilment is about keeping orders moving smoothly from shelf to customer. Whether you’re selling one or selling one hundred, there are approaches that fit the way your business runs.
Wholesale fulfilment involves preparing larger orders efficiently. Having ample storage, organising goods and keeping track of inventory make it easier to locate products. Many wholesalers use B2B eCommerce stores so buyers can place orders directly, while invoicing tools help manage billing and payment terms. Partnering with a reliable courier or freight company helps manage bulk shipments. Third-party fulfilment centres can also assist; they store your products and pick, pack and ship them directly to your buyers. Dropshipping is another option where products are sent directly from the supplier to your customer without you needing to store them.
Retail fulfilment focuses on turning around small orders quickly. Storing products on clearly labelled shelving or in containers helps streamline order picking. Shipping options suited to small parcels, including tracking and printable labels, help save time, while ready-to-ship packaging (think self-sealing satchels and flat-pack boxes) can speed up packing. A point-of-sale system that syncs orders with stock levels, integrates with shipping providers and sends automated notifications to customers can make fulfilling orders more manageable, even during busy periods.
For businesses combining wholesale and retail, using a single system such as Square makes order management much simpler. Square supports multichannel sales, tracks inventory across channels, handles both small and bulk orders, and automates discounts based on quantity. Whether you’re sending a single item or a large shipment, you can keep both your retail and wholesale operations running seamlessly.
FAQs about wholesale vs. retail trade
Can a wholesaler sell directly to consumers?
While wholesalers usually focus on selling to businesses, offering products directly to consumers is also an option. Some wholesalers run a retail shopfront or an online store alongside their wholesale operations, while others open their doors for occasional warehouse sales or special events to help clear stock or reach new shoppers. Both approaches let you connect with a broader audience without needing to change the core wholesale side of the business.
What is the typical markup in retail compared to wholesale?
Markups vary by industry, but they’re generally higher in retail than in wholesale. Broadly, retail markups can range from 50% to 100%, with some categories like fashion or small accessories going higher (100% to 150% or more). Wholesale markups tend to be narrower because wholesalers sell in volume and compete on price, with typical ranges of roughly 10% to 50%. The exact markup depends on the category you sell in, your cost of goods and your operating costs.
Can a retailer also offer wholesale?
Many businesses successfully operate both retail and wholesale. For example, a coffee roastery can supply wholesale beans to cafes while also selling smaller bags to retail customers through an online store or a market stall. Managing both sides works best when you use a system like Square, which handles synced inventory across multiple locations, automated discounting, multiple payment options, integrated online sales and invoicing. It helps keep everything running efficiently as your business grows.
Is it better to buy wholesale or retail?
If you prefer larger quantities at a lower price per unit, buying wholesale makes sense. Buying retail works well when you want the flexibility to choose smaller amounts or want to try a product before committing to a large purchase. The right choice also depends on how much storage you have available, your budget and the intended product use.
Is it better to be a retailer or wholesaler?
The choice depends on your preference and resources. Retail might suit those who like building a brand, connecting with customers and experimenting with ideas. Wholesale may be better suited to those who prefer bigger orders, steady relationships with business buyers and stable reordering. Some business owners combine retail and wholesale to create multiple income streams.
