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Wholesalers and Retailers
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Wholesalers and traders apply different rules
in order to make a profit on the goods they sell.
In the case of wholesalers, they work on a slim profit margin but sell in
higher quantities. So for instance a wholesaler will sell 100 x of Product A
to a retailer, each with a £1 profit. This would give the wholesaler a £100
profit from a single sale.
In contrast, the retailer cannot sell items in bulk so has to rely on a
higher markup on each item in order to ensure a good profit margin even if
not all of a line sold. So a shop might sell Product A with a £5 markup
instead of the wholesalers £1.
The result is that wholesalers need to sell a higher volume of products at a
lower margin, whereas the retailer sells a smaller volume at a higher price
to allow for any unsold stock.
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