Advantages of retail business

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What are the advantages and disadvantages of retail business?  1- Lower capital requirements Retail business does not require a huge investment to start. Retailers buy goods from wholesalers in small quantities and sell them to end customers. You don't need a lot of space to store goods. Therefore, you can start a retail business with little investments. 2- More profit margin There is a fixed profit margin for wholesalers. Generally, they earn 3% to 8% profit on the sale. But there is no fixed margin for retailers, the profit margin for retailers may reach 20% in some cases. 3- Credit facilities Another benefit for retailers is that they get credit facilities from wholesalers.


But they sell the products for cash which helps in maintaining adequate liquidity in the business. 4- Better relationships with customers Retail is dir related to customers. Retailers can understand customers' interests, preferences, and purchasing phone number database behavior. Which helps build a better loyalty relationship with customers. 5- Not taking responsibility In case of defective products, the manufacturer must replace the product. Therefore, retail traders do not need to bear the loss. Disadvantages of retail trade 1- High marketing cost Retailers should invest in store decoration and merchandise display to attract more customers.

   


Therefore, it requires more marketing or advertising cost than wholesalers. 2- Selling skill is required It requires good selling skill to attract customers. Retailers must possess the art of good communication and persuasive power to influence consumers. 3- Very high competition Another disadvantage of retail business is that there is intense competition in the market because many retailers sell similar types of products. Therefore, it is difficult to survive in a competitive environment. 4- There is no economy in purchasing Retailers buy small quantities of products from wholesalers. Therefore, they lose the opportunity to enjoy economic benefits in the purchase. 5- It requires a suitable location It's difficult to know where to start a retail store. Requires high density space with fewer competitors. What are the most prominent challenges in retail trade?