Debitoor Dictionary

Accounting terms explained in a simple way

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  1. Manufacturer
  2. Merchandise
  3. Wholesaler

Retailer - What is a retailer?

A retailer is a company that sells goods to consumers for a profit.

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Retailers primarily sell goods, but some retailers may also offer services. For example, many shops that sell computers also offer insurance or repair services.

Traditionally, retailers needed to have a physical location such as a shop, a vending machine, or a market stall; today, it is common for retailers to sell online. It is also common for retailers to sell through multiple channels - e.g. a physical store and a website.

Different types of retailers

Some of the main types of retailers include:

  • Food retailers, which sell perishable, edible products. For example, a greengrocer or butcher.
  • Softline retailers. which sell goods that have a limited lifespan (usually less than three years), such as clothes, stationary, toiletries, medicines, or cosmetics. For example, a clothing store.
  • Hardline retailers, which sell goods that are more durable and have a longer lifespan (over three years), such as furniture, electronics, automobiles, or appliances. For example, a car dealership.
  • Specialist retailers, which sell products that are usually related to the arts, such as paintings, books, musical instruments, or crafts. For example, a gift shop or antiques shop.
  • Convenience retailers, which sell a mix of products, including food products, consumable household products (such as cleaning products or toiletries), and sometimes a range of hard and soft goods. For example, many modern supermarkets.

Retailers vs. manufacturers

The most obvious difference between a retailer and a manufacturer is that manufacturers create goods, whereas retailers usually purchase completed products.

Another key difference is the way that retailers and manufacturers handle inventory, which is also known as stock. Because manufacturers transform parts or materials into complete products, it is important to categorise different types of inventory. On the other hand, because retailers purchase goods in their completed state and ready for resale, they do not need to differentiate between different types of stock. Instead, everything in a retailer's inventory is classified as merchandise.

Retailers vs. wholesalers

Both retailers and wholesalers make a profit by purchasing finished goods from manufacturers to sell on at a higher price - this is known as a markup.

There are, however, some differences between retailers and wholesalers. Firstly, retailers primarily sell directly to consumers (i.e. the public), whereas wholesalers sell to other businesses. Secondly, the products sold by retailers are usually intended for use or consumption, whereas the products sold by wholesalers are intended to be resold. Finally, retailers usually sell products at a higher price per unit than wholesalers.