What is the difference between wholesale and retail sales? - Alabama Department of Revenue (2024)

FAQs

What is the difference between wholesale and retail sales? - Alabama Department of Revenue? ›

Wholesale sales are sales of tangible personal property to licensed retail merchants, jobbers, dealers, or other wholesalers for resale. It does not include sales to users or consumers that are not for resale. Retail sales are sales of tangible personal property to consumers. Learn more about Sales & Use Tax accounts.

The percentage range varies by product, but wholesalers typically earn between 15% and 30% profit, while retailers typically earn between 20% and 50% profit on the wholesale price when selling products to consumers.

Wholesale involves selling bulk goods to other businesses at discounted prices. Retail involves selling products directly to consumers at a retail price. Another way of explaining the difference between wholesale and retail is by using the business terms “business-to-business” (B2B) and “business-to-consumer” (B2C).

The biggest difference between wholesale vs. retail is in the type of buyer. While retail involves selling products directly to the end consumer, wholesale involves selling products in bulk to other businesses such as retail stores.

The main difference between retailing and wholesaling is that: Wholesaling involves selling mainly to other merchants and business customers, but retailing involves selling mainly to final consumers.

Revenue encompasses all sources of income, including sales, but it can also include non-operating revenue like interest income, licensing fees, or rent received. On the other hand, sales are limited to the income generated solely from the core business activities.

It's also worthwhile to remind yourself of the difference between markup vs margin. The average retail price increase from a wholesale product is 30-50%, or at least 1.66 multiplied by the wholesale item's cost. The reason for this minimum is that it tends to cover expenses, generate profit, and also draw customers in.

Wholesalers sell large quantities of goods at a time. Retailers sell smaller quantities of goods to individual consumers. Wholesalers usually offer lower prices per unit due to the large quantities they purchase. Retailers often sell goods at higher prices to cover their overhead costs and make a profit.

Grocery, drug, clothing, and convenience stores are all examples of retail businesses. Customers at these stores can walk right in and make their purchases there, bypassing a middleman.

If you feel able to manage both wholesale and retail together, think about strategies that will allow you to grow the retail side of your business while being able to sell to retailers without competing against yourself.

Can wholesalers sell to the public? ›

While many wholesalers only sell to distributors, retailers, and resellers, there are a few that will sell directly to the public. Keep in mind that wholesalers only sell in bulk, so you will need to be prepared to make a big purchase in order to get the wholesale price.

Costco Wholesale is a multi-billion dollar global retailer with warehouse club operations in eight countries.

Direct-to-consumer sales refer to selling products directly to customers, bypassing any third-party business. Wholesaling refers to producers selling products in bulk to a retailer. The retailer essentially serves as the “middleman” in marketing and selling products for the manufacturer or brand.

Wholesale sales are sales of tangible personal property to licensed retail merchants, jobbers, dealers, or other wholesalers for resale. It does not include sales to users or consumers that are not for resale. Retail sales are sales of tangible personal property to consumers.

The difference between the wholesale and retail prices is known as the markup, and it varies depending on the type of product and the business strategy of the retailer. In some cases, the markup may be as high as 100% or more, whereas in others, it may be just a few percent.

Retailers sell products directly to final consumers, whereas wholesalers buy products from a producer and sell them to businesses.

However, generally retailers reap more profits than wholesalers. Wholesalers typically earn between 10% and 30% profit, while retailers earn between 20% and 50% profit on the wholesale price when selling the same products to their consumers.

Exploring profit margins on wholesale products

While the percentage range will vary depending on the product, wholesalers will usually make between 15% and 30% in profit, while retailers may typically make between 20% and 50% profit on the wholesale price when selling goods to consumers.

Wholesale pricing is what retailers pay when they buy a product from the manufacturer (usually in bulk). Retail pricing is what customers pay when they buy that same product from the retailer (usually in a much lower quantity).