Retailers make more profit than wholesalers during inflation.

[Rruchi man]

The narrative of this topic may mean to some considering business that going into retail can be more profitable for them when compared to Wholesaling just as you have suggested. But for me wholesaling remains the best option because some other factors in business have not been considered and the example you have given to support your claim is not sufficient. Though it may seem that retailers can make more money simply because they can adjust their price for consumers during inflation, wholesalers also adjust their price for retailers so they can still afford the price from the industries/manufacturers. Retailers also increase cost to reflect the cost of transportation of their goods as well. So the profit that you think retailers make may not be so much since there are some cost like transportation that will be subtracted from whatever they make as profit.

[1715577537]

1715577537

[1715577537]

1715577537

[radjie]

It’s true situation at all the time,the retailer will face the people on the close end.So they can sell at any price they want.They can sell at any price or with any percentage of profit even a 300 percentage of price above the real price.The whole sale guy will gain profit immediately with less effort,but the retailer will hold the product and make the people to come and buy and earn huge from it.

This happen because it is more convenient for a person to buy in small number than in bulk, last year I want to buy goods in bulk since I will get more discount for it and I will have stock in my house but then inflation happen, I am not buying goods for pcs I know that merchant is actually getting more money in small orders but then I can't afford to buy many pieces right now because the price is higher than my budget. I doubt that normal  people in my country  can afford to buy bulk as well, I mean those normal wage earner those that are not poor nor rich.

the reason may be according to their individual needs and do not want to buy goods in large quantities because every consumer of course buys only when they need it.  in contrast to wholesalers who can stockpile goods in large quantities with cheaper purchases even though the profits are small but can attract customers to be able to take goods from them.  but when there is inflation, of course, not only in one item such as the raw material for bread flour mentioned by Op, but there is an increase in several other types of goods and of course wholesalers know in advance than retailers.  This situation will be exploited by retailers by looking for a larger profit percentage

[Doan9269]

The narrative of this topic may mean to some considering business that going into retail can be more profitable for them when compared to Wholesaling just as you have suggested

Let's picture it from the two ends and compare them together, wholesalers don't need to struggle before they make their sales, all they need is a warehouse and a huge capital, their target on profits is little amount but sinfe they deal with quantity then each item been sold will accumulate a good amount for profit realization, as for retailers, they buy little in quantity and have a direct sale with the consumers, this makes them have chances of manipulating price by hiking some, they also suffer the losses of damage and poor market sales whenever their inflation, this same inflation can favour them and also at the other end discomfort them in many ways, but i will also prefer wholesaling than retailing.

[noorman0]

Is it that as long as you are selling essential commodities, inflation doesn't affects your business instead you make more profit.

I own a retail store, and it's not like that in reality. I did increase the price of some goods because the prices of middlemen increased, it didn't mean I was taking advantage of this moment for a fleeting profit. However I think of consistent profits, at least maintaining the number of requests by adjusting prices that do not make my customers run to other stores.

[Reid]

I understand. It may be true but the retail seller here around me is still having troubles with their sales. The reason is the competition.
People will find a way to buy cheaper necessities and they will ask every retail shop about their prices so they could compare it to the nearest they have.
Stocks are also going down and it became a big problem for every retail shop. Their businesses are also in the brink of closing down because they cannot sell anything anymore and ordering it from far wholesalers will mean paying more.
Unless a consumer is forced to buy at a retail shop even at a high price there won't be sales.

[Agbe]

I see that you gave the analysis based on mathematical tools but it doesn't work in economics tools of analysis. There is no way a retailer makes profit more than a manufacturer and a wholesaler. A retailer always sells his or her goods based on the expenses done after purchasing the commodity. Like if a manufacturer sells bread to a wholesaler at the rate of $400 and the wholesaler also sell it at the rate of $410  to a retailer based on his or her expenses the retailer might finally sell it to the consumer at the rate of $600. The wholesaler still make more profit. Because the wholesaler bought it in a large quantities and sell it to different retailers while retailers bought it in a small quantities and remember the consumers are more than the total number of breads the retailer bought, so the profit is always shared between the manufacturer and the wholesaler although the retailer also make profit but can not compared to the wholesaler's profit.
But the consumers suffered the highest inflation in the world.

[Zanab247]

Retailers are making more profit than the wholesalers and manufacturer during inflation.

I disagree with you OP, because if wholesalers buy goods from the manufacturers in this inflation season, he or she will do some calculation to know how to sell the goods to retailers to make a suitable profits from the business.   Let me use this chain of distribution to show you how manufacturer and wholesalers earn well more than retailers, manufacturers will sell to wholesalers to make a good profits, and wholesalers will also sell to retailers to make a good profits , but retailers will sell to final consumer to make a little profits from their business.

[South Park]

Is it that as long as you are selling essential commodities, inflation doesn't affects your business instead you make more profit.

I feel like companies are using the rising inflation as an excuse to increase prices more than necessary and making things worse. Especially companies that sell essential commodities are aware that consumers can't stay away and have to keep buying no matter what the prices. The politicians keep talking about economy downturns and that things will get worse, yet many companies have strong revenues and pay their employees big bonuses. I wish the government would keep an closer eye that companies don't increase their prices too quickly. Every price raise that is not necessary except to make higher profits will increase the inflation even more. Once the overall inflation is above 10%, the government should step in. Otherwise we face the risk of a downward spiral.

Companies will always try to pass additional costs to the end consumer, this is just how it is, however I agree with you that with the excuse of the high inflation some businesses are raising their prices even more than what it is necessary to cover their additional costs, but there is nothing we can do, and if governments try to solve this then they will just make it worse as they always do, so the only thing we can do as customers is to identify the businesses which are employing those tactics and then never buy from them ever again.

[Fatunad]

Is it that as long as you are selling essential commodities, inflation doesn't affects your business instead you make more profit.

I feel like companies are using the rising inflation as an excuse to increase prices more than necessary and making things worse. Especially companies that sell essential commodities are aware that consumers can't stay away and have to keep buying no matter what the prices. The politicians keep talking about economy downturns and that things will get worse, yet many companies have strong revenues and pay their employees big bonuses. I wish the government would keep an closer eye that companies don't increase their prices too quickly. Every price raise that is not necessary except to make higher profits will increase the inflation even more. Once the overall inflation is above 10%, the government should step in. Otherwise we face the risk of a downward spiral.

Companies will always try to pass additional costs to the end consumer, this is just how it is, however I agree with you that with the excuse of the high inflation some businesses are raising their prices even more than what it is necessary to cover their additional costs, but there is nothing we can do, and if governments try to solve this then they will just make it worse as they always do, so the only thing we can do as customers is to identify the businesses which are employing those tactics and then never buy from them ever again.

Its always been like this and as a consumer then there's nothing we can do but to deal with those high prices if there's nowhere you could eventually go.If the herd or the community would be sticking out on a said retailers or even going into those wholesalers then for sure they cant really still avoid those high prices.There might be differences but we know that wholesalers cant really just provide out on small quantity incase you would be buying up something.Speaking about profitability in between these two wont really be that such a high issue or something that we could talk on.They are making money no matter what angle they would
make.Its up into some system or ways on how they would really be playing out those prices whether it is really just right or too much, there's nothing we can do.

[stompix]

I only know that a good part of the meat that should be destroyed comes to my country and the surrounding countries through various legal (but also illegal) channels and is then sold as fresh meat mainly in various retail chains.

If they label it as fresh meat and the only trick they apply to it is the ice sheet inside the package you can avoid that easily, I haven't seen in my life anybody doing a perfect cover, it will have at least some tiny white circles if that happens, well that meat is at least 1 year old and it has spent at least 3/4 of that in the freezer. If the dots are bigger than 2 cm, then it's 3 years. I advise everyone to not buy frozen meat, it's not worth it even looking at the price, the taste is not the same anyway even if they are both fresh and the risks are just too big, even unintentionally you have a malfunctioning freezer that can't keep the temperature and in one week after 7 cycles of frost defrost that's dog food.

But the things where you can't avoid it as a recycled ingredient are the salami and baloney, I haven't bought those from a market in years and I don't plan on.

I see that you gave the analysis based on mathematical tools but it doesn't work in economics tools of analysis. There is no way a retailer makes profit more than a manufacturer and a wholesaler.

There is no rule for any of them to make more than the others, it depends a lot on what you're selling, where you're selling, and from the start the margin rates of everyone. For raw food like fresh meat, everyone makes nearly the same, for exotic food imports the supplier of those will make more than everyone as he is the one at risk of ending with unsold expensive merchandise. The reseller of fish products will make a few pennies in Calais and a fortune per kilo sold in Wien, if we go into beverages, I can tell you for sure you can get the 2.5L bottle at 1.10 Euros directly from the producer while it can peak to 3.5 Euros on highway 24/7 shops.

It's not a rule for anything, producers can be forced to sell at a loss so they will lose 100 euros per ton instead of it rotting away and losing 300 euros, a wholesaler can end up with stocks and they will do the same, retailers might end with it rotting and nowhere to go even for half a price and take the loss also.
If things will be that simple Europe wouldn't be throwing away 150 million tons of food (officially) as I think the numbers are actually double.

[rby]

Is it that as long as you are selling essential commodities, inflation doesn't affects your business instead you make more profit.

I feel like companies are using the rising inflation as an excuse to increase prices more than necessary and making things worse. Especially companies that sell essential commodities are aware that consumers can't stay away and have to keep buying no matter what the prices. The politicians keep talking about economy downturns and that things will get worse, yet many companies have strong revenues and pay their employees big bonuses. I wish the government would keep an closer eye that companies don't increase their prices too quickly. Every price raise that is not necessary except to make higher profits will increase the inflation even more. Once the overall inflation is above 10%, the government should step in. Otherwise we face the risk of a downward spiral.

That is the reality,companies use the inflation as excuse to hike the price of goods and services. This happens especially in countries where there are no authority to regulate the buying and selling of goods. The companies take this advantage and rip the final consumers.

Op, you made a very nice analysis and to your environment and according to the factors in your calculation you are correct but you did not remember that wholesalers sell in bulk while retailers sell in ones. Don't undermine the profit in and mass sells.

[Tallupooh]

in these inflation times, many people prefer retail over wholesale. because the price is relatively cheap and affordable by the community.

However, I think retail and wholesale profits are the same. it's just that retail has more buyers.

[glendall]

In this case, at a glance, we see that retailers are more profitable than wholesalers, but in reality, wholesalers earn more profit than retailers
where wholesale providers must have calculated their initial capital in doing business, in contrast to retailers who only calculate final sales.
because in the trading dictionary they have counted up to the worst things like their product is defective until it doesn't sell or expires

[gantez]

in contrast to retailers who only calculate final sales.
because in the trading dictionary they have counted up to the worst things like their product is defective until it doesn't sell or expires

Defective product is not only against retailers but whole sellers also have that negative effect . The issue is not only on effect to retailer, a wholesale agent also will have shortage if his manufacturers supply bad product to him so it is the same but the remedy is their is opportunity to return defective product back if it is notice both retailer or wholesalers through the chain that is supplies. Know it that retailer making profit is same as for wholesaler making profit because it is increase in selling of the goods.

[Merit.s]

In business,it is normal that wholesalers make more profit than retailers,while manufacturers make more profit than the wholesalers. The wholesaler invest large into his business and gets good profit at the end of his supply. In business,the bigger you invest,the more profit you make but the retailers only have little funds to buy from the wholesaler,the quantity he can avoid and sometimes the retailers run into lost,if the price of goods has increased in the market without their knowledge.

[Mr.right85]

If retailers are getting the most profits, how then are the wholesalers still in business?

By your calculations, they just might when we look at selling in packs as is customary with wholesalers and selling in bits as it is with wholesalers but the profits is always determined by, how many packs or bits your able to sell and how frequent are you archiving this.

That's the drive for a thriving business and the retailer could be said to be running the show. There are few retailers out there which creates a little bit of monopoly compared to retailers that floods the street and compete largely for customers.
It's just business and they both have there place in the chain chain distribution.

[yhiaali3]

The same thing is happening here in my country and in many countries as well. Merchants monopolize basic commodities for a period of time, so they disappear from the market and their price rises, then they redistribute them again and sell them at a higher price.
Many people dispensed with many unnecessary goods, but basic commodities such as bread, oil, lentils, chickpeas, and others cannot be dispensed with, so major merchants control their prices.

 Is it that as long as you are selling essential commodities, inflation doesn't affects your business instead you make more profit.

Not quite. Here you enter into a semi-vicious circle, because the materials that merchants raise their price as a result of inflation will also have to buy them at a higher price again when the quantity runs out, so practically the real capital value has decreased, because for example the capital that was It equals 100 pieces of the commodity for example before the price has been raised, it will be able to buy only 75 pieces after the price has been raised.

So practically it can be said that inflation is a loss for both the merchant and the buyer.

[Lubang Bawah]

Retailers or the last seller can certainly interact directly with buyers so that they can get a greater opportunity to sell than wholesale and of course other things are retailers can sell with a small quantity so as to reach everyone so that it makes it easier for anyone to buy.

[Ani1985]

The narrative of this topic may mean to some considering business that going into retail can be more profitable for them when compared to Wholesaling just as you have suggested. But for me wholesaling remains the best option because some other factors in business have not been considered and the example you have given to support your claim is not sufficient. Though it may seem that retailers can make more money simply because they can adjust their price for consumers during inflation, wholesalers also adjust their price for retailers so they can still afford the price from the industries/manufacturers. Retailers also increase cost to reflect the cost of transportation of their goods as well. So the profit that you think retailers make may not be so much since there are some cost like transportation that will be subtracted from whatever they make as profit.

I think important factors that can determine why retailers can get greater profit is to get to know consumers, not everyone likes to buy in large quantities so they buy in small amounts that are affordable for consumers.

[TheGreatPython]

I think important factors that can determine why retailers can get greater profit is to get to know consumers, not everyone likes to buy in large quantities so they buy in small amounts that are affordable for consumers.

You are right when you say knowing customers. Usually, retailers are more exposed from the people, so they can always talk to them and then make friends. That customer will then feel at home or comfortable thinking that the seller looks so friendly so they will come back on that store.

What I notice about most wholesalers is that they only do their transactions online or thru call/text. They lack of real life presence with their customers. I think this is one of the reasons why they can attract less customers. Ordinary people buy on retail stores to save but those retail store owners can get their stocks from the wholesalers. Wholesalers are not zero in terms of profit.