INTERNAL TRADEINTERNAL TRADEOROR
HOME TRADEHOME TRADEChapter - 7Chapter - 7
INTERNAL TRADE - MEANING Home trade, domestic trade, national trade Trade carried on between people of same
country Features
1. Purchase & sales happens within the boundaries of the country
2. Internal affair3. Factors that facilitate trade – in same country4. No restrictions on movement of goods from one
region – another5. Payment – in domestic or national currency6. Types – Wholesale trade & Retail trade
WHOLESALE TRADE (OR) WHOLESALING
Buying & selling of goods in large quantities Sold to industrial users or institutional buyers Wholesalers buy from producers & sells -
retailers or dealers Specializes in one line or limited variety Should have ample resources
FEATURES - WHOLESALING
1. Large quantities2. Sale for purpose of resale3. Important in marketing process4. Requires huge financial resources5. Involves breaking the bulk6. Deal with one commodity or one line7. Profit margin – very low8. Provide credit facilities - retailers
WHOLESALER - MEANING
A person who is engaged in wholesale trade
He buys goods in large quantities from producers
And sells them in small quantities to retailers
Purpose for resale to final consumers
FEATURES - WHOLESALER
1. Merchant middleman between producers & retailers
2. Intermediary between the two parties
3. Specializes in one or few classes of goods
4. Expert in the class of goods he deals in.
FUNCTIONS - WHOLESALER
1. Linking
2. Assembling
3. Storing
4. Grading
5. Packing & Labeling
6. Transporting
7. Risk- bearing
8. Financing
9. Dispersing
10. Informing
11. Pricing
12. Equalizing prices
RETAIL TRADE (OR) RETAILING
Selling directly to ultimate consumers who have a demand for products & services for personal use
Smooth & efficient supply to consumers Characteristic Features
1. selling of varied types of goods
2. in small quantities
3. to final consumers
SERVICES TO MANUFACTURERS Collects small orders from retailers & places bulk order
with manufacturers – relief from expense with small orders
Provided with ready market - can concentrate on production than distribution
Relief from expense & risk of holding large stocks of goods
Benefit of large scale production Reduces advertising & selling expenses Carry on production with less capital & better circulation
of capital Enables to produce goods to meet requirements of
consumers Relief from collecting raw materials from small producers
over wide area
SERVICES TO RETAILERS
Ready supply of goods – relief from holding large stocks of goods
Can quickly obtain supplies Credit facility – less capital Expert advice as to quality and quantity New types of products – expansion of
business Relief from losses due to fluctuation of
prices
RETAILER - MEANING A person who is engaged in retail trade He buys goods in from wholesalers And cuts and sells them in small quantities
to ultimate consumers
FEATURES - RETAILER 1. Buys goods from wholesalers2. Last link between producers and ultimate
consumes3. Sold for final consumption and not resale4. Sells in small quantities or lots5. Deals in large variety of goods6. Have personal contact with consumers7. Sell according to tastes, needs of consumers8. Retail outlets placed near customers to save
time and money of consumers9. Display of goods at retail stores - to get an
idea - product
FUNCTIONS - RETAILER
1. Connecting Link
2. Assembling
3. Storing
4. Transporting
5. Risk – bearing
7. Grading
8. Selling
9. Financing
10. Sales promotion
11. Supplying Information
SERVICES TO CONSUMERS Relief from stocking goods at home in bulk Wide choice of goods Expert guidance in selecting from variety Enables purchase of latest type of goods Relief from traveling long distance for purchases Credit facility – regular customers Attends complaints of consumers on product
promptly Other services – free delivery, after sales service,
etc.,
SERVICES TO MANUFACTURERS
Relief from task of collecting and executing large number of small orders from the consumers
Free from problem of distribution & concentrate on production
Enables to produce goods according to needs of consumers
TYPES OF RETAILERSRETAILERS
ITINERANT OR
MOBILE TRADERSFIXED SHOPS
HAWKERS
PEDLARS
CHEAP JACKS
STREET VENDORS
MARKET VENDORS
SMALL SHOPS LARGE SHOPS
STREET STALLS
SECONDS SHOP
SINGLE – LINE STORES
SPECIALITY SHOPS
GENERAL STORES
MULTIPLE SHOPS
DEPARTMENTAL STORES
MAIL ORDER BUSINESS HOUSES
CONSUMER’S CO-OPERATIVE STORES
SUPERMARKETS
ITINERANT OR MOBILE TRADERS
They do not have a fixed place of business
They move from one place to another to sell goods
FEATURES – ITINERANT RETAILERS
1. Operate throughout the year or as seasonal traders
2. Sell – variety of goods of general demand – fruits, vegetables, milk, etc.,
3. Operate with small stock4. Some traders - deliver goods at door - convenient5. Stocks limited – disposed easily6. Generally cheap & low priced goods7. Price subject to bargaining8. No goodwill established9. Very low capital investment
TYPES OF ITINERANT RETAILERS Hawkers Pedlars Cheap jacks Street vendors Market vendors
Hawker – carry goods in wheeled vehicles or pack animals from door to door
Pedlars – carry goods on heads or backs from door to door
Cheap Jacks – who hire small shops temporarily to sell goods
Street Vendors – who sell goods in street corners or pavements – busy street
Market Vendors – who sell goods at different places on certain days – market days (E.g. Wednesday market etc.,) – main shops closed
FIXED SHOPS Retail shops which
carry on business from definite or fixed premises in the market
Types1. Small Scale Retail
Shops (or) Small Shops
2. Large Scale Retail Shops (or) Large Shops
SMALL SCALE RETAILERS Unit stores which conduct business from
properly established shops Small capital, small stock & small turnover Types
1. Street stalls (or) Street shops
2. Seconds shop (or) Second-hand goods shop
3. Single-line stores
4. Speciality shops (or) Stores
5. General shops (or) General stores
Advantages1. Easy to establish2. Capital – small3. Limited stock from nearest wholesalers4. Reduce establishment charges5. Maintains personal contact & loyalty of
customers Drawbacks
1. Handicap of limited capital2. Limited organizing ability
Present positionMost important type of retail organization
DIFFERENCE BETWEEN
GENERAL SHOPS
1. Deal in variety of goods
2. Established in residential localities
3. Prices charged – lower
4. No expert advice from owners
SPECIALITY SHOPS
1. Deal with only one type of goods
2. Established in busy shopping centers
3. Prices – higher
4. Expert advice from owners
DIFFERENCE BETWEEN
ITINERANT RETAILERS1. No fixed place of business
2. Operate throughout or during a season
3. Size, capital & stock – less
4. Prices – lower
5. No establishment expenses
6. No particular line of business
7. Can’t offer many varieties
8. Door-to-door delivery
FIXED SHOPS1. Fixed place of business
2. Operate throughout the year
3. Size, capital & stock – big
4. Prices – higher
5. Have establishment expenses
6. Stick to a particular line of business
7. Can offer many varieties
8. No door-to-door delivery
LARGE SCALE RETAILERS
Large sized fixed shops established with large amount of capital
Located in important places & markets of towns & cities
Types1. Multiple shops
2. Departmental stores
3. Mail order business houses
4. Consumer’s co-operative stores
5. Supermarkets
DIFFERENCE BETWEENLARGE SCALE RETAILERS
1. Large scale activities
2. Can go without help of wholesalers
3. Can provide many products – wide choice
4. Provide credit facilities to consumers
5. Well spaced buildings
6. Can withstand greater risk
7. Efficient staff & management
8. Bulk purchases
9. Well developed system of advertising
10. No personal contact
SMALL RETAILERS1. Small scale activities
2. Can’t go without help of wholesalers
3. Can’t provide many products – wide choice
4. Can’t provide credit facilities to consumers
5. Can’t afford such premises
6. Can’t withstand greater risk
7. Inefficient management
8. Can’t have bulk purchases
9. Can’t afford costly advertising campaign
10. Better customer relations
DIFFERENCE BETWEEN
WHOLESALE TRADE1. Marketing in large quantities
2. Buys goods from producers
3. Sells goods to retailers
4. Connecting link between producers & retailers
5. First link – chain of distribution
6. Scale of operations – large
7. Element of specialization
8. Turnover –high
9. Credit sales to retailers
10. Need more storage space
RETAIL TRADE1. Marketing in small quantities
2. Buys goods from wholesalers
3. Sells goods to consumers
4. Connecting link between wholesalers & consumers
5. Last link – chain of distribution
6. Scale of operations – small
7. No element of specialization
8. Turnover –low
9. Cash sales to consumers
10. No need for large storage
DIFFERENCE BETWEENWHOLESALE TRADE
11. Gets orders through traveling salesmen or post
12. Conducted in central markets
13. Requires large capital
14. More risks
15. Margin of profit – high
16. Purpose of resale
17. Goods remain within channel of distribution
18. Prices of goods – lower
19. Prices – subject to big changes
20. Undertaken by joint stock companies & big partnership firms
RETAIL TRADE11. Gets orders generally, only at
the counter
12. Conducted in local markets
13. Requires – not large capital
14. Relatively less risks
15. Margin of profit – low
16. Sale for final consumption
17. Goods go out of the channel of distribution
18. Prices of goods – higher
19. Prices – not subject to big changes
20. Undertaken by sole trading concerns & small partnership firms