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