If you ever get a chance to compare the Wholesale and retail prices of the products you will come to know wholesale prices are half of the retail price. This is because supply chain involves various parties and the product reaching the final consumer has to pass through various hands before reaching the end customer. The parties involved in supply chain include Manufacturers, wholesalers, retailers and end customers. The product passes step wise from each party and each party adds its profit in the price so the final product that reaches the end customers becomes almost double in price. The question here arises, if it is so, why not end customers buy directly at wholesale prices? This is because the phenomenon is not feasible for many reasons.
If end customers start buying directly from the wholesalers, the whole concept of wholesale trade becomes useless. They neither have enough sources nor need to purchase huge quantities. On the other hand, retailers also buy in small quantities yet in bigger quantities as compared to end users because they also don’t have resources or space to buy huge quantities. Yet many retailers can be seen operating in the markets who buy in bulk quantities because of their large scale of operation. Also, many Wholesale Suppliers can be seen who sell directly to the end customers and pass on their discounts to them. This is because bulk purchases facilitate both buyers as well as sellers.
How bulk purchases facilitate sellers?
Heavy purchases facilitate sellers in two ways:
First of all, Wholesale sellers mostly prefer selling in bulk to get rid of inventory management cost. If large quantities will remain in their stock for a longer period of time, they will occupy space in the warehouse. Besides that, their maintenance will also be required and seller will have to pay a price for it. So, sellers want to sell their stock in one go as compared to selling them in small quantities to avoid this cost.
Secondly, bulk quantities also reduce transportation cost for the sellers as selling bulk quantities to the customers requires fewer expenses to be spent on transportation as compared to management of smaller deliveries.
How bulk purchases facilitate buyers?
Buyers prefer buying in bulk as it is much economical for them as compared to purchasing smaller quantities. Purchase of bulk quantities increases the volume of purchase and the seller can easily manage to offer very high discounts. If you own a retail business, sourcing products in bulk purchases allows you to sell the products ahead at very good prices which bring unbelievable revenues to you. Even if you want to stay ahead of your competition by entering into price wars, bulk purchases allow you to pass on maximum discounts to your client and hence you can easily survive effectively in the market.
So, either you are a seller or buyer, bulk purchases is a beneficial transaction for you. But remember! Bulk purchases are not for the end customers as they don’t need large quantities.

Author's Bio: 

William King is the director of Wholesale, Manufacturers, Wholesale Clothing and Wholesale Suppliers. He has 18 years of experience in the marketing and trading industries and has been helping retailers and startups with their product sourcing, promotion, marketing and supply chain requirements.