Choosing an ERP system: retail vs wholesaler

At their core, retailers and wholesalers are two merchandise vendors both focused on selling goods on to make a profit. However, managing them individually often highlights big differences with how the two handle their processes.

Retailers are all-encompassing and need to be masters of all trades. Retailers offer B2C services often with many customers with lower order value.

Wholesalers are generally dealing with B2B customers with larger volume orders. Wholesalers must deal with large quantities of items and be adept at striking deals and ensuring a pipeline of goods moves as it should throughout a variety of different channels.

Regardless of which avenue you choose to sell by, both will benefit greatly from having a complete stock management software to maintain order. Without a system to manage stock levels, returns, accounts, all aspects of business, how can any business hope to keep track of what’s going on? How do they know if they’re generating a profit?

Retailer needs

Working in retail means you’re in the heart of the action. Selling directly to the customer and being customer-facing, retailers have a real opportunity to gain valuable insight into what their customers want.

Unfortunately for retailers, this also means they must deal with returns, complaints, and criticism. Retailers must handle this feedback effectively so unhappy customers don’t turn to voicing their discontent online. It’s also particularly useful for businesses to keep a log of any complaints, this allows for quick identification of any emerging patterns. 

Check out our retail ERP comparison guide for more on retail ERP systems

Working as a retailer also means greater control. Sellers have the final say over how, where, and when their product is sold. While this creative control allows you to decide how your business is run, it also means a lot of additional responsibility and many tasks to juggle. Therefore, for retailers, having some form of software to manage these areas is key to business success. Software that can not only keep track of orders, returns and stock levels, but also handle additional tasks such as marketing, billing, and sales.

Wholesaler needs

Wholesalers occupy a more “middleman” position within the market, between manufacturers and retailers. This means they are not responsible for the sale of the final product along the chain. Despite this middleman route seeming more ‘risk free’, Wholesaling is not without its own challenges. Keeping track of stock in large warehouses can be a daunting task but keeping track of returns and damaged items is equally important for a business to remain profitable.

Due to rapid advancements in technology, retailers now have direct access to wholesale marketplaces, meaning retailers can cut out the wholesale middleman completely. 

Though inventory issues can affect both retailers and wholesalers, it’s fundamental that wholesalers have complete control over what’s coming in and out of the business. Most ERP systems can offer multiple variants of price lists, maximizing purchasing power and ensuring businesses can accurately measure their margins. A feature such as integrated accounts can also ensure orders will never be sent to customers over their credit limit.

One of the biggest issues to face wholesalers in the modern market is keeping up with growth. As a business expands it can become harder to stay on top of tasks as well as ensuring the business is maximizing revenues and profits. Ultimately, this issue would also be solved by implementing a stock management system that has the capability to cope with growth.

An ERP system for both?

Regardless of whether you choose to sell goods directly to the customer as a retailer, or to a retailer from the manufacturer as a wholesaler, each method shares the notion that robust software can be the solution to their problems. In fact, despite wholesalers and retailers facing different challenges, both avenues require similar functionality from an ERP system to succeed.

Both retail and wholesale also need to ensure they have accurate stock levels to fulfill orders. If a customer orders a product online, and it’s not in stock, they are likely to be let down by this experience and opt to go for a competitor. For Wholesalers, having inaccurate stock levels could mean losing large accounts if a customer goes to a competitor. Both also need a system whereby data can be accurately recorded and readily available so that business owners can analyze this and take necessary action.

For retailers, creating and maintaining a database of customers is also crucial for success and growth. Being able to send customers offers and content targeted specifically to their needs can be the difference in making extra sales. For wholesalers, having a customer database makes reordering quick and effective, meaning the customer is less likely to try and source the goods themselves via a wholesale marketplace.

Check out the Khaos Control blog for further insight.

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Mike Cockfield

About the author…

Mike Cockfield is the MD at Khaos Control

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Mike Cockfield

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