Retail and wholesale businesses are often looked at in isolation. However, more business owners are beginning to see that there is a thin line between the two and are beginning to explore their options in terms of both forms of business.
Retail involves selling to the final consumer directly while wholesale involves selling to other businesses smaller than your own, at a price that allows them to turn some profit when they go on to sell to the final consumer.
Many business owners are now embracing a business model that allows them to take care of all categories of customers including retailers and wholesalers. One type of this
business model is known as the front end and back end combination. The front end is the retail side of the business while the back end is the wholesale side of the business which largely caters for the front end.
There are several advantages to running the front end and back end combination. First of all, your retail front gets cheaper prices as the prices are determined solely by you. Additionally, you don’t have to call and request for new stock, pay shipping fees or wait in line for delivery whilst running the risk of losing your customers to other businesses. You are always in control of your stock on the retail front.
In many cases however, companies deploying this model make more money from the back end operations especially if there is a good number of retail points other than the in-house retail point reliant on the company’s wholesale operations. However, the front end or retail end of the business remains a veritable tool for building customer relations and entrenching the business name in the mind of consumers.
Good examples of businesses that combine wholesale and retail include clothes manufacturing with local retail shops in front displaying goods in counters and displayed on slatwall hooks, and with a huge export arm getting the garments into foreign stores for further retail opportunities.
Also breweries with restaurants and bars in front, shopping centres that manufacture their own goods etc Combining the front end and back end model for your business is a perfect way to steal a march on the competition. You don’t always have to run the business from the same location. The concept alone is what you should be focusing on as it is one that can save you money that can be passed on to the customer ensuring more sales.