Retailing is a distribution channel function where one organization buys products from supplying firms or manufactures the product themselves, and then sells these directly to consumers. A retailer is a reseller (i.e., obtains product from one party in order to sell to another) from which a consumer purchases products. According to the 2017 U.S. Economic Census for Retail Trade, in the U.S. alone there are over 1 million retail outlets that generate over $5 trillion in annual sales and employ nearly 16 million.
In the majority of retail situations, the organization from which a consumer makes purchases is a reseller of products obtained from others and is not the product manufacturer. But as we discussed in the Distribution Decisions Tutorial, some manufacturers also operate their own retail outlets in a corporate channel arrangement. While consumers are the retailer’s buyers, a consumer does not always buy from retailers. For instance, when a consumer purchases from another consumer (e.g., eBay), the consumer purchase would not be classified as a retail purchase. This distinction can get confusing but in the U.S. and other countries, the dividing line is whether the one selling to consumers is classified as a business (e.g., legal and tax purposes) or is selling as a hobby without a legal business standing.