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Wholesale price

Definition updated on November 2023

What is the concept of wholesale price and how does it affect distribution and retailing?

The price at which manufacturers or large distributors sell their products in bulk to retailers or other business entities. This price is typically lower than the retail price, which is the price consumers see in stores or online. The reason for the lower wholesale price is because it doesn't include the markup that retailers add to cover their operational costs, profit margins, and other expenses. For instance, in the sneaker industry, a brand might produce a sneaker for a certain cost and then sell it in large quantities to retailers at the wholesale price. The retailers, in turn, will add their markup and sell the sneaker to the final consumer at a higher price. It's essential to understand that the wholesale price is a foundational element in the retail ecosystem. Retailers base their pricing strategies on the wholesale price, ensuring they cover their costs and make a profit. For sneaker resellers, understanding the wholesale price can provide insights into the market and potential profit margins, especially when they can source sneakers below the typical retail price. However, direct access to wholesale prices is generally reserved for businesses that buy in large volumes, not individual consumers or small-scale resellers.

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