Wholesale vs. Retail: How to Choose (2026)

From factory floors to checkout counters, almost every sale runs through wholesale or retail. How do they work? Which ecommerce business model is for you? And can you blend the two to get the best of both worlds?

Understanding the difference can help you choose the right model, reach the right customers, and grow on your terms. Wholesale is a major part of the US economy, accounting for 4.7% of non-farm business sector employment, representing 6.3 million jobs, in 2024.

Ahead, learn everything you need to know about the two business models and their key differences so you can choose the right blend for your business.

What’s the difference between wholesale and retail?

Wholesale involves selling products to other businesses at discounted prices and in bulk. Retail involves selling products directly to consumers (DTC) at a retail price. 

Another way to explain the difference between wholesale and retail is to use the business terms business to business (B2B) and business to consumer (B2C). 

• Wholesalers are B2B because they sell to other businesses. 
• Retailers are B2C because they sell to individual consumers.

What is wholesale?

Merchant wholesalers purchase large quantities of inventory at low prices and then sell the products in smaller quantities at higher prices. For example, a wholesaler might buy 1,000 water bottles for $2 per bottle. This would cost them $2,000.

The wholesaler could then sell 50 water bottles to 20 different retailers for $6 per bottle—three times the price they originally paid. Once they deducted their expenses, such as warehousing and delivery, they’d profit.

But not every wholesaler buys and holds inventory. Distributors move products through the market. They handle basic supply chain tasks, like acquiring goods and breaking bulk into smaller shipments. They also help manufacturers reach more retailers and help retailers source wider assortments from fewer suppliers. 

Agents and brokers, on the other hand, negotiate purchases and sales and earn commissions. They never take title to the goods and don’t hold any wholesale products. Instead, brokers connect buyers and sellers on a deal-by-deal basis, while agents provide ongoing representation to buyers or sellers.

In sum, wholesalers:

• Buy products from manufacturers and distributors in bulk at a low cost
• Resell products to other businesses in smaller quantities at a higher price than they paid
• Don’t sell directly to end users

What is retail? 

A retailer buys goods in bulk from a wholesaler, manufacturer, or distributor and sells them to end users. They are the last link in the supply chain.

Whenever you buy something as a consumer—from the grocery store, hardware store, or clothes shop—you buy from a retailer. What’s more, retailers usually sell products individually.

For example, a retailer might purchase 100 watches from a wholesaler for $20 each and sell them to consumers for $55 each.

Simply put, retailers:

• Buy goods in bulk from a wholesaler or distributor.
• Market and sell individual products directly to end users.
• Control the customer experience.

Retailers come in many forms, each with varied product offerings, pricing, and locations. You can group them into categories like:

• Speciality stores. These retailers focus on a single product category or a narrow product line, such as auto parts, jewelry, or athletic gear. 
• Department stores. Retailers like Macy’s and Nordstrom sell a variety of product lines under one roof. They organize their products into departments such as apparel, cosmetics, shoes, and home goods. 
• Discount retailers. These retailers compete on low prices and high inventory turnover. Big box retailers like Walmart or TJ Maxx fall under this category. 
• Online retailers. Many direct-to-consumer brands sell only online, without intermediaries. Retailers like Allbirds and Gymshark started as DTC brands before expanding into physical retail stores. 
• Multichannel retailers. These companies sell through various online and in-person channels. Thanks to unified commerce, brands like Kylie Cosmetics and Princess Polly give shoppers multiple ways to browse and buy.

Comparison: wholesale vs. retail

Target audience

Wholesale businesses’ target customers, or target audience, buy products on behalf of a business, usually to resell in their stores at higher markups. These customers might be merchandisers, buyers, or store managers. Their goal is to turn a profit by reselling the inventory they buy. 

Retail brands, however, sell to end customers, whose challenges and purchase motivations can vary dramatically.

You can see this in action by comparing buyers for two hypothetical skin care brands. The wholesale customer wants to secure high-quality products they can turn a profit on, whereas the retail customer wants to minimize acne and improve skin hydration. 

Purchasing process

The wholesale purchase process is relatively formal. Transactions involve contracts, ongoing negotiations, and purchase orders. Given the high volume and value of goods exchanged, there’s emphasis on setting clear terms, prices, delivery schedules, and payment conditions. The average B2B purchase decision involves 13 stakeholders, according to Forrester.

Retail purchases are more straightforward. Customers, whether shopping online or in a retail store, choose what they want and pay for it. There’s usually just one decision maker (two if they’re sharing the item with someone). In this case, retailers focus on speed and convenience, which can mean offering a preferred payment method, such as Shop Pay.

Wholesale price vs retail price

Wholesale and retail businesses both make money by selling products at a higher price than they paid. This practice is called “markup.”

Businesses add markups to selling prices to cover their expenses and generate profit. In what’s called a “keystone markup,” a retailer doubles the wholesale cost to set the retail price, creating a 100% markup and roughly a 50% profit margin.

Wholesale historically runs on thinner margins because businesses optimize for volume over per-unit profit. For example, NYU Stern reports food wholesalers’ gross margin at 15.44% and retailer distributors’ at 30.57%. The right wholesale margin depends on your category, costs, and strategy, so build a target that reflects your own business realities.

Although there’s no hard and fast rule, generally speaking:

• Wholesalers often have 10% to 30% gross profit margins
• Retailers add a 30% to 50% markup on the wholesale price

💰 Calculate your margins with Shopify’s wholesale profit margin calculator. 

Transaction volume

Wholesalers handle large quantities of products, with each order worth a significant sum. They specialize in managing logistics, warehousing, and storage, and typically have fewer recurring customers than retailers. It can be challenging for wholesalers to lose a major client because of the high value of each transaction.

Retailers, on the other hand, specialize in smaller, individualized transactions. While the value per transaction is lower for retailers, their cumulative value is significant. Efficient inventory management and modern point-of-sale (POS) systems keep products flowing and customers satisfied. When stock, systems, or suppliers fall out of sync, even small disruptions can hurt the customer experience and stall sales.

💡Pro tip: Whether you sell B2B wholesale or retail, unify your inventory data with Shopify’s commerce operating platform. With a single source of truth for all your data, you can prevent stockouts and make smarter business decisions.

Inventory storage and warehousing

Most wholesalers have huge warehouses to store significant inventory. Good wholesale facilities prioritize efficient storage, easy bulk loading and unloading, and optimized logistics. The emphasis is less on aesthetics and more on functionality, safety, and volume management.

Retailers typically split inventory between a back-of-house stockroom and the sales floor. Stockrooms are smaller than wholesale warehouses and are designed for fast replenishment. On the floor, shelves, and racks, prioritize product presentation and easy customer access.

Range of products

Wholesalers typically stock a few products in large quantities. They focus on supplying bulk quantities of specific items to retailers or other businesses. 

Retailers cater to consumers’ diverse preferences by offering a wide variety of products. Seasonal trends, customer feedback, and market research influence their stock. 

Operating costs

Wholesale businesses typically face fewer expenses, since they sell in bulk to a small number of large, often repeat clients. Their primary operational focus falls on warehousing, shipping, and fulfillment. 

Retailers, by contrast, invest more heavily in marketing, merchandising, sales, and customer service to reach and convert individual shoppers. Both models still require disciplined management of inventory, cash flow, and staff to stay profitable.

Order fulfillment and shipping

Wholesale businesses sell in bulk. If you’re a wholesaler, you’ll need significant space to hold warehouse inventory. 

Since you’re dealing in large orders, and many carriers calculate shipping fees based on dimension and weight, you may need to pass on fees to your customers to protect your profit margins.

If you’re a retailer, however, you’ll ship items in smaller quantities (perhaps one or two at a time), and shipping will represent a smaller portion of your annual business expenses. You could incorporate shipping costs into product prices to offset free shipping incentives or other promotions. 

As a retailer, you don’t need as much space for inventory storage, as long as you’re balancing stock levels.

Location

Location is extremely important to wholesale and retail businesses for very different reasons. 

Retailers need to be where consumers are, often on high streets and in shopping malls. Unfortunately, these locations are typically quite expensive per square foot, due to high demand.

Wholesalers, on the other hand, require significant storage space. They often favor large facilities near major highway interchanges, airports, or other locations that support their shipping strategies.

Payment terms

Payment structures differ between wholesale and retail. Wholesalers tend to offer extended payment terms and invoice-based billing, while retailers focus on immediate transactions at checkout.

Some common approaches to wholesale payments include:

• Net 30 and net 60 invoice billing (i.e., businesses pay after delivery)
• Credit checks and trade references to reduce non-payment risk
• Small discounts for early payments
• Volume-based discounts or extended payment deadlines

Retail approaches include:

• Payment at the time of purchase
• Buy now, pay later options for higher-priced items 

Shopify Payments lets you accept B2B and B2C payments directly, without setting up a separate payment service. 

Depending on your business location, customers can pay with major credit cards, digital wallets (such as Apple Pay, Google Pay, and Shop Pay), and other payment methods popular in specific countries.

When is wholesale best?

Wholesale is the best path forward if you enjoy building partnerships with other brands. Wholesaling prioritizes volume and efficiency over marketing to individual consumers. If your strengths are in logistics warehouse operations, then wholesaling might be for you. 

You have strong relationship-building skills

Wholesale success depends on building and maintaining strong business relationships. You’ll work closely with a limited number of clients, developing deep relationships with retail partners that can lead to consistent, long-term revenue. These relationships require careful nurturing and trust-building, as losing even one major client can significantly impact your business.

You prefer to make fewer, higher-value sales

The wholesale model focuses on large transactions with established buyers rather than numerous small sales. Wholesale success means spending less time on customer acquisition and more time optimizing operations and fulfillment. Each sale requires careful attention to detail—from overseeing warehouse inventory to managing client orders and distributing wholesale products—as mistakes can be costly at this scale.

Pro tip: Shopify’s B2B commerce functionality encourages retention by offering personalized accounts for each wholesale customer. Let buyers view past purchases, save their credit card information, and easily reorder new inventory without the hassle of speaking with a salesperson first. 

“Customers used to be so frustrated by our platform that they’d rather call us on the phone to place orders,” says Nicholas Lachhman, associate ecommerce manager at Dermalogica Canada. “Now we’re seeing customers be so comfortable with the experience that they’re placing orders for thousands of dollars worth of product from their mobile phones.”

You want more security

Long-term relationships and repeat orders can create security and predictability.

It is still wise to spread your eggs across multiple baskets. If a single relationship sours or a client goes out of business, you could lose substantial revenue overnight.

When is retail best?

Retail is a better fit if you enjoy brand storytelling and want to connect with end users. Retail offers higher margins and more creative control over the shopping experience. Since DTC marketing tends to be trend-driven, you’ll have more opportunities to experiment with creative design and copy. 

You’re great at marketing

Retail success demands strong marketing and customer engagement skills. You’ll need to consistently attract new customers while keeping existing ones coming back. The retail model rewards creativity in promotion, merchandising, and customer experience. The ability to tell compelling brand stories and create engaging shopping experiences is crucial for standing out in a competitive market.

Retail offers creative freedom to experiment with marketing campaigns that engage your target market and drive foot traffic. Selling individually also offers opportunities for upselling, cross-selling, and bundling to maximize revenue.

You want more control 

Retail gives you direct control over how customers experience your brand. From product presentation to pricing strategy, you decide how to position and sell your products. Control extends to customer service, store environment, and marketing messages, allowing you to build and maintain a consistent brand identity.

Pro tip: With a robust system like Shopify POS, you can complete transactions across multiple channels—in-person, by phone, or online—from one platform. This unified approach means your inventory, customer data, and transactions sync automatically across channels, providing consistent experiences for you and your customers.

You want higher profit margins 

Wholesalers earn less per unit because they rely on economies of scale. If you can scale your retail business to sell the same quantities as a wholesaler, you’ll benefit from higher profit margins.

Can you do both wholesale and retail?

Plenty of large businesses sell wholesale and retail; many companies participate in every single aspect of the commerce supply chain.

Three examples of companies that do it all are Nike, Cartier, and Brooklinen. These businesses design, manufacture, distribute, wholesale, and retail their own products.

Brooklinen, for example, started as a direct-to-consumer (DTC) brand selling bed linens online. Over the years, it’s expanded into wholesale operations and now sells to hospitality businesses. Using B2B on Shopify, the brand created a seamless experience that lets wholesale buyers place bulk orders online, just like its retail customers. 

“On Shopify, our team has the liberty and the space to build relationships with customers, instead of just transacting with them. We spend more time understanding our customers and less on manual inputs. This allows us to provide exceptional experiences for our DTC, B2B customers, and retail customers alike,” says Nicolas Lukac, former director of emerging channels at Brooklinen.

👉 Read Brooklinen’s story

Sell through retail and wholesale on Shopify today 

Selling wholesale can be lucrative for online retailers. With wholesalers focusing on volume, efficiency, and strong customer relationships, the model can be a great sales channel for growing and established ecommerce brands. 

Shopify streamlines B2B ecommerce sales with tools for managing inventory, processing bulk orders, and maintaining customer relationships. You can make a password-protected wholesale page on your ecommerce site and sell directly to other businesses. Or, you can sell in bulk online through the wholesale marketplace Faire to reach a wider audience. 

That’s not to say you need to forgo retail sales entirely. Shopify lets you conduct B2B sales on the same unified platform that powers your DTC storefront. One login, one inventory system, and one customer profile give you a 360-degree view of your audiences—no matter who they are or how they buy. 

“For a high consideration proposition like The Conran Shop, its [unified commerce] enables customers to be much more seamless in the way they move between the online and in-store experience, whereas, before, it was totally separated,” says Richard Voyce, digital director at The Conran Shop, a brand that migrated to Shopify and saw a 54% increase in conversion rates while halving total cost of ownership.