Retailers

A retailer is a business or outlet that sells goods or services to the final consumer. It buys from producers or wholesalers and sells on in smaller quantities to customers, either from physical shops, online, or both.

Why producers use retailers

A producer can use a retailer to reach customers without dealing directly with every consumer. This can increase the producer's reach because the retailer already attracts customers to its shop or website. For example, a small producer of reusable water bottles, Clearwell, sells through Greenhouse Goods, a chain of eco-friendly shops. Shoppers already visit Greenhouse Goods, so Clearwell reaches more people than if it tried to find every customer itself.

Retailers can also give customers the chance to see and try a product before buying. In a shop, a customer can pick up a water bottle, check its size and feel the finish. This can build confidence and lead to more sales.

What producers give up

The retailer needs to make a profit, so it keeps a share of the final selling price. If Clearwell sells a bottle to Greenhouse Goods for £14 and the shop sells it to a customer for £20, the retailer keeps £6. Clearwell's revenue is lower for each bottle than if it sold direct at £20, so using a retailer is not automatically better — it depends on whether the extra sales make up for the smaller amount kept per sale.

Choosing the right retailer

A producer may choose a retailer whose image and target market match the product. A premium water bottle brand would fit better in a shop known for quality outdoor gear than in a budget discount store, because those customers are more likely to pay the higher price.