Wholesale trade is the purchase and sale of goods. Workers in this activity provide communication between producers and consumers. Sometimes a whole organization becomes a client of a wholesale enterprise. It is essentially both a buyer and a consumer. But most often there is one or more intermediate links. As long as the goods finish all the way from the wholesaler to the consumer, they usually go through 2-3 intermediaries (retail).
Wholesale sales include any type of activity related to the sale of services and products to people who will resell them or use them for personal or business purposes.
What is wholesale?
Wholesale is one of the types economic activity facilitating networking between suppliers and customers. During their interaction, everyone has their own benefits. Buyers get affordable goods, sellers get profit.
At the moment, wholesale is developing very rapidly, suppliers and their area of activity are expanding day after day. This is due to constant profit, good income. In addition, the emergence of new suppliers is beneficial for buyers, as the range and competition between them is growing. This invariably leads to a decrease in the cost of production and, as a consequence, to a decrease in prices at the final outlets.
Wholesale does not have any fixed quantity of goods supplied. A contract is concluded between the supplier and customers, which indicates the amount and number of products. Unambiguously, we can only say that trade is carried out in batches. Usually the supply is oriented to subsequent resale to the final customer.
Wholesalers and their differences from retailers
A wholesaler is a company or individual representative who carries out the relevant activities. It provides its services not only to retail organizations, but also to manufacturers and their sales offices.
The wholesale center and the people conducting this activity differ from retail in some respects:
- Minimization of advertising. The wholesaler deals with professional customers who independently collect product information. Only end consumers are interested in advertising.
- The maximum size of transactions, as well as a large trading area. Compared with retailers, these parameters are several dozen (or even hundreds) times higher.
- Different positions regarding legal norms and taxation by the state.
Sometimes manufacturers bypass wholesalers and market their goods on their own. But this is mainly aimed at small enterprises. Large manufacturers prefer not to waste time searching for customers.
Wholesale and its essence
The wholesale center initially interacts with manufacturers. He goes to the sales office, where he "takes" a certain amount of production (sometimes all the goods). Then he goes to the retailers, distributing the party between them. Again, sometimes one representative or company takes all the goods. After that, the products are delivered directly to the sphere of personal consumption.
The most important task of this type of economic activity is the regulation of supply and demand.Trading centers, in fact, can successfully cope with it, since they are the so-called intermediate link. They hold some of the goods, then the demand for them will increase. Also, in order to increase supply, products are supplied to the market in abundance.
It should be noted that the activity of wholesale trade is significantly limited. She can only work with the data that she is given. It cannot influence the sphere of production or final marketing. And certainly it does not have any direct effect on consumers.
Wholesale Functions
Wholesalers are sources of communication between individual regions of the country, and also in the global sense, they facilitate interaction between states, both neighboring and remote. This is their main function. But there are secondary:
- Stimulating manufacturing enterprises regarding the creation of new products, the modernization of old models and the widespread adoption of modern technologies.
- Participation in the creation of an assortment of goods and services, monitoring the state of the market.
- Acceptance of commercial risk. Some products may become slow-moving. Therefore, there will be no demand for them among retailers. Return the invested funds will not succeed.
- Organization of warehouse operations, providing all conditions for the storage of certain products.
Finally, it must be pointed out that wholesale trade in products is intended for another function. She is engaged in the delivery of goods to the retail network. Otherwise, they will not see the end user.
Retail and Customer Service Levels
Wholesale and retail trade are very similar. Both of these concepts imply that activities related to the sale will be carried out. But retail is the sale of products to end consumers who will use it for personal purposes, far from commerce.
There are several levels of service in this activity:
- Self catering. It implies that a person will independently choose the goods and their names.
- Free selection of products. Indicates that the consumer will be offered a lot of goods of the same purpose, among them he will choose the ones that he likes best.
- Limited service.
- Full service (such as in a restaurant).
There are a huge number of enterprises engaged in retail trade. These include various shops, catering establishments and others.
Retail Features
Wholesale and retail trade have a number of functions that they perform in the market. Some of them are the same. But in most cases they differ, and significantly.
Retailers have features:
- Research and analysis of the commodity market.
- Setting retail prices, which includes not only cost, but also storage, advertising and / or transportation services.
- Determination of supply and demand for certain products.
- Payment for goods to wholesale suppliers or their intermediaries.
- Search for products in accordance with current demand.
- Formation of product selection.
As for the forms of retail, they can be divided into three main types: through courier delivery through real, virtual stores, as well as an independent shopping trip.
Point of sale in trading
The wholesale organization has several points through which the sale is carried out. These include storage facilities where goods are stored until they reach the next seller. These are also wholesale market outlets (not always). In fact, such a sales agent does not always require a point of sale, he can work directly with the manufacturer and subsequent seller.
Retail points of sale are more diverse.These are supermarkets and department stores, supermarkets of a wide profile (you can find all types of goods), combined stores (many products of the same profile), warehouses, trade through catalogs.
Wholesale and retail trade objects
Retail and wholesale trade in goods is carried out at various facilities. In the latter case, they include only warehouses. They can be universal, store, mixed and specialized. Wholesalers purchase (or rent) them, depending on the specifics of their activity.
To retail include:
- A mini-warehouse (in comparison with the wholesale one is small), which stores goods that may be required soon.
- Shop where products are sold.
- Warehouse where all other goods are located, usually not spoiling soon (canned goods, toys, furniture, etc.).
- Kiosk, stall, pavilion.
- Trade tent.
Almost all the objects that consumers meet can be attributed to retail.
The main difference between wholesale and retail
To understand the differences between the two types of trading, you need to turn to concepts. Wholesale trade is an activity whose feature is a unique category of customers. These include all business entities, including individuals and legal entities, as well as separate units. At the same time, trade is carried out in a non-standard way, there is no public contract. In retail, he is present. And this is the main difference. Therefore, if a company acquires several batches of monitors through accountable person then this deal has nothing to do with wholesale.
If the person is not an entrepreneur, and also purchases the goods on standard terms, then the sale is retail.
The question often arises: how many products do you need to buy in order to wholesale? There is no definite answer; quantitative criteria are simply absent here. The thing is in the contract: if it is public, then retail trade, if shipping - wholesale.
The most popular OKVED codes
In many areas, OKVED codes are used. Wholesale is no exception. Here they denote certain activities, products. When the code is indicated in the license (if one is required), then the company can not do anything else.
In retail, there are also OKVED codes (wholesale and its names coincide). The most popular of them can be found in the table below.
| Code | Kind of activity |
| 51.11.2 | Trade in agricultural and textile raw materials, semi-finished products |
| 51.14.1 | Computer trade |
| 51.15 | Trade in furniture, household and metal products |
| 51.15.3 | Trade in electrical goods |
| 51.17 | Trade in food products, including drinks |
Conclusion
Accounting in wholesale is a broad concept. It focuses on many areas, from the specification of the goods and ending with its quantity. That is, it is impossible to say unequivocally what accounting is.
Wholesale trade is the oldest type of economic activity. It originates in ancient Egypt and the Roman Empire. At least there are archaeological finds that indicate that wholesale trade was conducted in these territories (as well as retail). But it is likely that this type of activity appeared much earlier, just historians have not found evidence.
