Definition: A retailer is a company that buys products from a manufacturer or wholesaler and sells them to end users or customers. In a sense, a retailer is an intermediary or middleman that customers use to get products from the manufacturers.
What Does Retailer Mean?
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The retail system has been in place forever. It works like this. Manufacturers design and produce goods and products, but they rarely ever market and sell them to customers directly. Being able to produce goods is much different than being able to sell the goods to end-users. This is why most manufacturers stick to producing.
Retailers are experts in marketing, sales, merchandise inventory, and knowing their customers. They purchase the goods from the manufacturers at cost and market them to consumers at retail prices. The retail price can be anywhere from 10 percent to 50 percent higher than the manufacturer cost. You can think of this as a marketing and advertising fee. Retailers spend millions of dollars on marketing campaigns to help sell products they carry. These advertising budgets come from the markup on the goods.
Example
A good example of a tradition retailer is Best Buy. It purchases goods from manufacturers like Sony and Whirlpool at cost and sell them to consumers at a higher price. For the most part, Best Buy doesn’t manufacture any of the products it carries.
More modern companies have decided to blend the traditional roles of retailers and manufacturers. Apple, for example, is both a manufacturer and retailer of its products. Starting in the 1990s, Apple built retail locations around the world to help market and sell its products. This way Apple cuts out the middleman and can earn the retail markup price itself instead of another company. Since then, Apple has authorized other retailers, like Best Buy, to also sell their goods.
