In general, the distribution activities that we know are wholesale and retail. Both are goods distribution activities carried out by selling without making technical changes. The distinguishing factor between wholesale and retail lies in the intended buyer. Wholesale or wholesale trade is simply known as the activity of marketing goods in large parties and not in retail. In wholesale, the marketing objectives are carried out to retailers, industrial, commercial, industrial (professional users), or to other large traders. Whereas in retail trade, sales are aimed directly at consumers or Business to Consumer (B2C). so the ultimate goal is that the goods are directly consumed by consumers and not resold. So, what if business actors have both types of trade, can their business legality be combined? Or is there a difference between wholesale or wholesale trade and retail trade? So that you don’t misunderstand and take care of the legality, check out the full explanation below!
What is Wholesale or Wholesale Trade?
Wholesale, in this case, is the national and international wholesale trade carried out alone or on a fee or contract basis (commission trade). Wholesale or wholesale trade is the sale of goods and used goods to retailers, industrial, commercial, institutional, or professional users or other large traders, or who act as agents or brokers in the purchase or sale of goods, both individuals and companies. The main forms of this business activity are large trade traders or merchants, such as wholesalers, contractors, distributors, exporters, importers, cooperative associations, sales offices and sales branch offices (but not retailer shops) managed by units of industrial and mining companies. It also includes merchandise brokers, commission merchants and agents as well as collecting merchants, buyers and cooperative associations that are involved in the marketing of agricultural products. Wholesalers often physically collect, sort and separate the quality of bulk goods, unload from bulk and repack into smaller sizes, and engage in sales promotion for their customers and label design.
What is Retail Trade?
Whereas retail trade is the resale of both new and used goods, primarily to the general public for individual or household consumption or use, through shops, department stores, kiosks, mail-order houses, door-to-door sellers, itinerant traders, consumption cooperatives, auction houses, agents, and so on. Goods sold in this class are restricted to goods that are usually related to consumer goods or retail goods. This class also includes items such as personal computers, stationery, paintings, or frames. Some processing of goods may be included in this class, e.g., selection and repacking of goods, installation of household appliances and others. This class does not include selling agricultural products by farmers, industry and the sale of goods, which are generally classified as industry in classes such as trade in automobiles, motorcycles and parts, grains, crude oil, chemical industry, iron and steel industry machinery and equipment, rental of personal and household goods to the general public.
What are the Legal Requirements for Wholesale and Retail Businesses?
From the previous explanation, KH Pals can already understand the meaning and differences of wholesale and retail trade. However, in taking care of legality for trading business activities, KH Pals need to know that wholesale or wholesale trade and retail trade cannot be combined in one business, you know! Yes, this is because wholesale or wholesale trade business activities themselves have Indonesian Business Field Classification (KBLI) 46, and for retail trade KBLI 47. Both types of KBLI cannot be used in one business. This is as stipulated in Article 19 paragraph (1) of Regulation of the Minister of Trade (Permendag) No 66/2019 concerning Amendments to Permendag No 22/M-DAG/PER/3/2016 concerning General Provisions for the Distribution of Goods. The provision states that distributors, sub-distributors, wholesalers, wholesalers, agents, and sub-agents are prohibited from distributing goods at retail to consumers. Therefore, business actors must be careful and choose the right KBLI code for their business activities, because based on Government Regulation No. 29/2021 concerning the Implementation of the Trade Sector, it is stipulated that the retail trade business sector cannot be run simultaneously with the wholesale trade business.
What are the consequences of violating the legality requirements?
The difference in KBLI between the two wholesale and retail business fields is related to the issuance of the Business Identification Number (NIB) in the Online Single Submission (OSS) system. So, if business actors try to combine these two KBLI in one business when applying for an NIB, the NIB will not be issued. So that the business being run is the same as not having a business license. In addition to being constrained by the issuance of business legality, large trade business actors who sell goods at retail can also be subject to sanctions in the form of:
- Written reprimand;
- Withdrawal of goods from distribution;
- Temporary suspension of business activities;
- Warehouse closure;
- Fines;
- Revocation of business license.
Such sanctions can be applied either in stages or not.
KH Contact
Well, now you know the difference between wholesale and retail, including the provisions of business legality. For KH pals who are still confused about which KBLI code is right for your business, don’t hesitate to contact Kontrak Hukum. You can do business consultation anytime and anywhere with professional experts for free!
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Not only that, we also provide NIB creation services for your business legality, so there is no need to worry about mistakes in choosing KBLI. NIB is guaranteed to be published and safe.
What are you waiting for? Let’s fulfill your business legality easily and affordably with Kontrak Hukum! For information on legal services that suit your business needs, please visit the KH Services – Licensing and Taxation page. You can also contact us at Ask KH or via direct message (DM) to Instagram @kontrakhukum.
