What is cash-and-carry and how this model can be advantageous

Wholesale and retail is nothing more than a business that combines characteristics of both wholesale and retail, hence its name. The focus of this business model is to offer wholesale prices, but with a marketing method closer to that practiced in retail.

Have you ever heard of wholesale? In short, it is a modern way of commerce that combines characteristics of the two most well-known and traditional ways of marketing today: wholesale and retail.

The new purchasing behavior on the part of the public has made cash and carry to become popular not only in US, but throughout the world. As this is one of the fastest growing sectors in the country in recent times, in this text you will find all the most relevant information about it. Follow along!

What is wholesale?

Wholesale and retail is nothing more than a business that combines characteristics of both wholesale and retail , hence its name. The focus of this business model is to offer wholesale prices, but with a marketing method closer to that practiced in retail.

This means that in wholesale sales are made to individuals and legal entities in the same establishment. In other words, the retailer can sell both to small retailers and to the end consumer . In the latter, however, to access the lowest prices, you need to purchase a minimum quantity of the product.

What is the origin of the attack?

Cash and carry is an old concept and began to emerge in Germany in 1964 through the “cash and carry” concept, an idea promoted by professor Otto Beisheim who strategically combined what worked in the two management models that already existed.

The phrase means “pay and take” in free translation. with other words, with this style of business, the consumer had a simpler environment — with less intermediation from salesmen — allowing them to locate what they wanted in a more objective manner.

Differences between wholesale and retail:

It’s also important to understand how wholesale and retail differ, right? From this, it becomes easier to understand the benefits that wholesale can provide for your online sales!

Wholesale

• Target audience: wholesale focuses mainly on sales to other businesses, such as retailers, industries and professionals who need large quantities;
• Quantity of sales: wholesale transactions involve high volumes of products. These bulk sales allow for lower prices, benefiting buyers looking for inventory;
• Prices: due to the high sales volume, wholesale prices are significantly lower. This is due to economies of scale and lower cost per unit;
• Customer Relationships: Wholesale relationships are often long-term, with a focus on ongoing business partnerships.

Retail

• Target audience: retail aims to serve the end consumer. These are individual purchases or in small quantities, suitable for personal or domestic use;
• Quantity of sales: unlike wholesale, retail operates with lower volume sales. Each transaction generally involves limited quantities, tailored to the needs of the end consumer;
• Pricing: In retail, prices are higher per unit compared to wholesale. This reflects additional costs such as marketing, storage and product presentation;

Shopping experience: retail focuses on the consumer experience, offering personalized service, attractive shopping environments and additional services such as after-sales and support.

How does wholesale work?

Wholesale, as previously stated, has as its main focus the low prices typical of wholesale with services more similar to those found in retail. In this modality, sales are high — which ends up compensating for the lower prices — and the distribution point and the sales point are generally in the same place.

In times of income stagnation, for example, or of greater family debt and inflation, people from lower classes do not want to stop consuming the products they have become accustomed to over the years. One way to try to overcome this problem is to buy these items at a lower price at wholesale.

How does online wholesale work?

Online wholesale combines the benefits of wholesale and retail, offering products in large quantities at competitive prices to make online sales . A tactic that allows consumers to take advantage of discounts normally reserved only for large volume purchases.

This model is ideal for entrepreneurs who want to set up an online store, as it offers a flexible structure, adaptable to different types of merchandise, in addition to a variety of segments that can be explored. Thus, the entrepreneur has an e-commerce for different audiences.

The benefits of this model are several:

• Savings: for consumers, this option offers lower prices compared to traditional retail, in addition to discounts on volume purchases, benefiting those who visit that store on a recurring basis;
• Low costs: from the entrepreneurs’ point of view, it is an opportunity to have a virtual store with a lower operating cost than if you had a physical establishment;
• Reach: also for entrepreneurs, the greater market reach, as it is e-commerce, also needs to be considered, further expanding the chances of increasing your online sales;
• Diversity: for both consumers and entrepreneurs, the diversity of products that this model provides is another attraction, whether for those who want to find a very specific item, or to put techniques such as cross-selling into practice.

What are the characteristics of wholesale?

This business model stands out from others due to its characteristics. Find out what they are below.

• Low price

When we say that low prices are a characteristic of cash and carry, it does not mean that we are saying that it is unfair to the competition. What actually happens is that this type of establishment has a more simplified structure — more on this below —, slightly leaner operational processes and purchases in larger quantities, which ends up resulting in a more competitive price.

• Self-service

Another great feature of cash-and-carry is self-service. The customer chooses what they want with minimal intervention from an employee . This provides more privacy and autonomy for the public, but also allows the establishment to maintain a reduced team, which results in lower operating costs.

• Simplified structure

The structure of an wholesale store is generally more simplified and these stores are located in warehouses or warehouses. Furthermore, they have a wider space for the circulation of machines and customers. Everything inside the space is more rustic — the floor, for example, needs to support a large volume of traffic and more volumes of merchandise.

What are the advantages of wholesale?

Now that you know what wholesale is, the characteristics of this business model and how it works, you need to find out what advantages it offers. Check out what they are below.

• Reduction in rental costs

In cash and carry, products are stored and sold in the storage warehouses themselves. In this way, rental costs for these items are reduced, which means prices can become more attractive for consumers looking for cheaper goods.

In this model, items are sold in larger quantities, which means that the financial return is very interesting for entrepreneurs who invest in this business — regardless of the market and product niche chosen.

• Practicality of logistics flow

In this mode of commerce, the logistics flow becomes more practical — as well as cheaper . This is because cash and carry reduces the steps related to transportation. Because of this, traders save money and the time of employees involved in the logistics process.

• Decrease in transport costs

Reducing transportation costs is an advantage — as well as a consequence — of this type of enterprise. This is because the products are sold in the same place where they are stored.

This means that there is no expense in moving items that remain in stock until they are actually sold to the direct public — which involves store owners, suppliers of other businesses and end consumers.

What is the profile of the wholesale consumer?

As you now know what an wholesale store is and how this type of commerce works, it is easier to view the consumer profile. In general, the target audience is divided into two groups.

The first of these are legal entities, that is, local businesses and small companies that take advantage of the discounts offered. The second are end consumers who look for lower prices in these establishments.