What is wholesale? (and how it differs from retail)

Retail is selling to the person who will use the product. Wholesale is selling in larger quantities, usually to someone who will sell it on, such as a boutique owner, a gift shop or a reseller with a following. The product is the same. The buyer, the quantity and the price per piece are different.

The simple example

Say your cotton tote bag has a retail price of Rs 400. A shopper buys one, pays Rs 400, and carries it home.

Now a gift shop owner wants 20 bags. You could offer a lot price of Rs 340 per bag if she takes all 20 together. Her total is Rs 6,800. The same 20 bags sold one by one at retail would bring in Rs 8,000, so you are giving up Rs 1,200 of revenue on that sale.

Why would you accept that? A few reasons, none of which are guaranteed:

• One order replaces 20 separate packing jobs and shipments.
• You get a single payment and fewer customer messages.
• The shop may reach buyers you cannot.

Those are trade-offs to weigh, not rules. I am using Rs 340 purely as an illustration. There is no standard wholesale discount, and the right figure depends on your cost, your time and your goals.

What really changes when you go wholesale

1. The price per piece falls, so your margin per piece falls. Check it before you agree. Wholesale versus retail profit comparison shows how to compare them properly.
2. Your per-order costs get spread across more pieces. Packing one box of 20 is cheaper per bag than 20 boxes of one.
3. The risk of unsold stock moves partly to the buyer, but your cash gets tied up if you must make 20 bags in advance.
4. Customer expectations shift. A reseller cares about consistent quality, repeat availability and delivery on time, because her customers are waiting.

Setting a minimum

A lot price only makes sense with a minimum. "Rs 340 per bag, minimum 20" is clear. "Rs 340 if you take a few" is not. State the minimum, and say what happens below it: they pay the retail price.

Keep retail and wholesale apart

Be careful that a wholesale price does not leak onto your public page and undercut your own retail sales. Many small sellers handle this by quoting wholesale only on request or by using a clear lot structure.

How Varchas handles lots

I checked the product editor in the admin. Under the Selling Mode section a product can be set to Normal, Bulk (with a minimum quantity) or Lots, where you set quantity and price rows. So the idea above, 20 pieces at a lower per-piece price, maps to a lot row. For the longer explanation see bulk orders and lot pricing and quantity tier pricing per unit maths.

A word on tax

How GST applies to a wholesale invoice versus a retail sale is a question for your CA. I will not guess at it here, and rules change. Read GST and selling online: the basics for the general picture, then confirm with them.

Next step

Take your best seller. Work out your cost per piece, then try three lot prices and see what is left of each. If one of them leaves you nothing, you have your answer before you ever quote a buyer.