Topic: Retailers make more profit than wholesalers during inflation. (Read 672 times)

If the wholesalers increase their prices, then so do the retailers. The consumers always pay elevated prices for goods so it isn't the retailers that are necessarily effected.

If sales volume decreases as a result of inflation because consumers are unwilling to pay the higher prices, then that's a different story. Most of the inflation you're seeing now is money printing. Demand was artificially increased because of how much money was circulating in the economy so both wholesalers and retailers raised their prices once they couldn't meet demand.

Not quite. Here you enter into a semi-vicious circle, because the materials that merchants raise their price as a result of inflation will also have to buy them at a higher price again when the quantity runs out, so practically the real capital value has decreased, because for example the capital that was It equals 100 pieces of the commodity for example before the price has been raised, it will be able to buy only 75 pieces after the price has been raised.

So practically it can be said that inflation is a loss for both the merchant and the buyer.

Sort of correction, they do buy perishable food in bulk, but they do not buy it right away, they just get the order in early. This means lets assume there are 100 farms that grow tomatoes, and this big grocery store like Walmart makes a deal with all 100 and tell them to give the store 10 kilograms per day for example, I am just giving an example, they pay beforehand, and they buy the rights to whatever grows and that way they do not get the food in a single day, but they get it 365 days constantly.

That's how it works, I worked in a huge grocery store chains office for a while, and that is how they did it for every product, they made contracts for bulk but they got the items piece by piece.

It's impossible to make such a wide and sweeping statement across all products, at least without evidence, because there are so many factors involved. We are currently in a time of massive inflation which is eating into the profit margins of producers, wholesalers and retailers. Ultimately it is producers and retailers who in most cases control the profit margins at all times because wholesalers are simply middle men who try to make money by buying in bulk amounts from suppliers. The overall state of the economy also plays a big factor because in recessions when times are tight then wholesalers often struggle to shift much stock and can be on the hook for inventory while retailers are ruthless in their pricing offer.

There is a say that 'the rich gets richer and the poor gets poorer'. Retailers are making more profit than the wholesalers and manufacturer during inflation. The poor always buy from retailers because they are the final consumers, while the rich buys in bulk this means they buy directly from the wholesalers. Last week the bakery in my area closed down,due to inflation in flour price,thinking this will be the solution. There was no bread for three days. After three days,the bakery opened and everybody was happy but this time,the bread price increased with 40 naira. A pack of 6 was sold at 410 naira wholesale price,80 naira for one retail price.This shows that the retailer gets 70 naira profit after selling a pack of 6 which is 480 naira. When the bakery reopened a pack of 6 is sold at 450 naira to the retailer, the retailer now sells 100 per one,i.e 600 for the pack.The wholesaler buys from the bakery at the rate of 360 naira for a pack before shutdown and sells 410 naira, after re-open he buys at 400 to sell at 450 naira.
 

 From calculation we can see that before the bakery shuts down,the wholesaler was making a profit of 14% but after the bakery reopened he makes a profit of 12%. The retailer was making a profit of 17% before shut down but after the bakery reopened, he makes a profit of 33% which is almost double of his profit.
 Is it that as long as you are selling essential commodities, inflation doesn't affects your business instead you make more profit.

I'll tell you the words of one of my friends
"If I sell 10 kilograms of nails, I will get some profit. Let it be $ 100 per batch. And I will have this profit quickly enough. But if I sell these 10 kilograms of nails by the piece, I will earn much more, but more slowly. I am nowhere I'm in no hurry

The only caveat is that this applies to goods of constant demand and with a long shelf life. That is why, for example, private grocery stores never buy a lot of perishable food.

I think a strategy that can make a retailer profitable is that he can sell in small quantities so that consumers can buy it, by retailing a lot of people can buy it and it's different from wholesalers who usually don't like people because they don't want a lot of stock, and I also prefer to buy retail for example daily needs rather than storing or being in stock.

We will see things like this from time to time where the retailer will get a bigger profit than the wholesaler or whatever it's called. This is a form of business that is carried out, the farther the goods sold by the factory (change hands), the more valuable the merchandise will be. For example, factory A produces bread and they sell it for say $2 to the first person, the first person will sell more than $2 to the third person, and so on.

In my opinion, it is normal for retailers to get a larger profit margin than wholesalers, but in general, wholesalers, of course, get a lot of profit accumulatively, and I think this is in accordance with the law of the market that those who are close to the final buyer can sell at a higher price. expensive.

The difference between wholesalers and retailers is a difference that can be seen immediately. The price offered will also be cheaper than retail sellers. But there is one thing that must be considered, when retailers buy, sometimes buy from wholesalers too, there will be a symbiosis of mutualism that is mutually beneficial to each other. Usually retailers will buy in large quantities so that it is more profitable for the first seller which I then call wholesalers, but those who buy from retailers will definitely not buy the same amount meaning that there will be a longer lag time for retailers to finish their wares.
In calculating the profit calculation it will be very clear that the last seller will benefit more than the first seller.
So what I want to convey here is, the first seller will not get more profit than the last seller, but they can sell more than the last seller. In an economy, I would generally prefer to make a small profit but sell more of my product and be a buyer center retailer, than to make a large profit but have few target customers, or take longer to get my product to market.

In my opinion, it is normal for retailers to get a larger profit margin than wholesalers, but in general, wholesalers, of course, get a lot of profit accumulatively, and I think this is by the law of the market that those who are close to the final buyer can sell at a higher price. expensive.

There is a say that 'the rich gets richer and the poor gets poorer'. Retailers are making more profit than the wholesalers and manufacturer during inflation. The poor always buy from retailers because they are the final consumers, while the rich buys in bulk this means they buy directly from the wholesalers. Last week the bakery in my area closed down,due to inflation in flour price,thinking this will be the solution. There was no bread for three days. After three days,the bakery opened and everybody was happy but this time,the bread price increased with 40 naira. A pack of 6 was sold at 410 naira wholesale price,80 naira for one retail price.This shows that the retailer gets 70 naira profit after selling a pack of 6 which is 480 naira. When the bakery reopened a pack of 6 is sold at 450 naira to the retailer, the retailer now sells 100 per one,i.e 600 for the pack.The wholesaler buys from the bakery at the rate of 360 naira for a pack before shutdown and sells 410 naira, after re-open he buys at 400 to sell at 450 naira.