INTERNAL TRADE OR HOME TRADE Chapter - 7

INTERNAL TRADE - MEANING

  

Home trade, domestic trade, national trade Trade carried on between people of same country Features
1. 2. 3. 4. 5. 6.

Purchase & sales happens within the boundaries of the country Internal affair Factors that facilitate trade in same country No restrictions on movement of goods from one region another Payment in domestic or national currency 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. 2. 3. 4. 5. 6. 7. 8.

Large quantities Sale for purpose of resale Important in marketing process Requires huge financial resources Involves breaking the bulk Deal with one commodity or one line Profit margin very low 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.

2. 3.

4.

Merchant middleman between producers & retailers Intermediary between the two parties Specializes in one or few classes of goods Expert in the class of goods he deals in.

FUNCTIONS - WHOLESALER
1. 2. 3. 4. 5. 6.

Linking Assembling Storing Grading Packing & Labeling Transporting

Risk- bearing 8. Financing 9. Dispersing 10. Informing 11. Pricing 12. Equalizing prices
7.

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. 2. 3. 4. 5. 6. 7. 8. 9.

Buys goods from wholesalers Last link between producers and ultimate consumes Sold for final consumption and not resale Sells in small quantities or lots Deals in large variety of goods Have personal contact with consumers Sell according to tastes, needs of consumers Retail outlets placed near customers to save time and money of consumers Display of goods at retail stores - to get an idea - product

FUNCTIONS - RETAILER
1. 2. 3. 4. 5.

Connecting Link Assembling Storing Transporting Risk bearing

Grading 8. Selling 9. Financing 10. Sales promotion 11. Supplying Information

7.

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 RETAILERS
RETAILERS
ITINERANT OR MOBILE TRADERS HAWKERS STREET STALLS SECONDS SHOP SINGLE LINE STORES SPECIALITY SHOPS GENERAL STORES FIXED SHOPS

SMALL SHOPS

LARGE SHOPS

PEDLARS

MULTIPLE SHOPS DEPARTMENTAL STORES MAIL ORDER BUSINESS HOUSES

CONSUMERS CO-OPERATIVE STORES

CHEAP JACKS STREET VENDORS MARKET VENDORS

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. 2. 3. 4. 5. 6. 7. 8. 9.

Operate throughout the year or as seasonal traders Sell variety of goods of general demand fruits, vegetables, milk, etc., Operate with small stock Some traders - deliver goods at door - convenient Stocks limited disposed easily Generally cheap & low priced goods Price subject to bargaining No goodwill established 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 Types
1.

2.

Small Scale Retail Shops (or) Small Shops 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. 2. 3. 4. 5.

Street stalls (or) Street shops Seconds shop (or) Second-hand goods shop Single-line stores Speciality shops (or) Stores General shops (or) General stores

Advantages
1. 2. 3. 4. 5.

Easy to establish Capital small Limited stock from nearest wholesalers Reduce establishment charges Maintains personal contact & loyalty of customers Handicap of limited capital Limited organizing ability

Drawbacks
1. 2.

Present position
Most important type of retail organization

DIFFERENCE BETWEEN
1.

2.

3.

4.

GENERAL SHOPS Deal in variety of goods Established in residential localities Prices charged lower 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 RETAILERS
1. 2.

FIXED SHOPS
1. 2.

3. 4. 5.

6.

7. 8.

No fixed place of business Operate throughout or during a season Size, capital & stock less Prices lower No establishment expenses No particular line of business Cant offer many varieties Door-to-door delivery

3. 4. 5.

6.

7. 8.

Fixed place of business Operate throughout the year Size, capital & stock big Prices higher Have establishment expenses Stick to a particular line of business Can offer many varieties 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 Types
1. 2. 3. 4. 5.

Multiple shops Departmental stores Mail order business houses Consumers co-operative stores Supermarkets

DIFFERENCE BETWEEN
LARGE SCALE RETAILERS
1. 2.

SMALL RETAILERS
1. 2.

3.

4.

5. 6. 7. 8. 9.

10.

Large scale activities Can go without help of wholesalers Can provide many products wide choice Provide credit facilities to consumers Well spaced buildings Can withstand greater risk Efficient staff & management Bulk purchases Well developed system of advertising No personal contact

3.

4.

5. 6. 7. 8. 9.

10.

Small scale activities Cant go without help of wholesalers Cant provide many products wide choice Cant provide credit facilities to consumers Cant afford such premises Cant withstand greater risk Inefficient management Cant have bulk purchases Cant afford costly advertising campaign Better customer relations

DIFFERENCE BETWEEN
WHOLESALE TRADE
1. 2. 3. 4.

RETAIL TRADE
1. 2. 3. 4.

5.

6. 7. 8. 9. 10.

Marketing in large quantities Buys goods from producers Sells goods to retailers Connecting link between producers & retailers First link chain of distribution Scale of operations large Element of specialization Turnover high Credit sales to retailers Need more storage space

5.

6. 7. 8. 9. 10.

Marketing in small quantities Buys goods from wholesalers Sells goods to consumers Connecting link between wholesalers & consumers Last link chain of distribution Scale of operations small No element of specialization Turnover low Cash sales to consumers No need for large storage

DIFFERENCE BETWEEN
WHOLESALE TRADE
11. 12. 13. 14. 15. 16. 17.

RETAIL TRADE
11. 12. 13. 14. 15. 16. 17.

18. 19.

20.

Gets orders through traveling salesmen or post Conducted in central markets Requires large capital More risks Margin of profit high Purpose of resale Goods remain within channel of distribution Prices of goods lower Prices subject to big changes Undertaken by joint stock companies & big partnership firms

18. 19.

20.

Gets orders generally, only at the counter Conducted in local markets Requires not large capital Relatively less risks Margin of profit low Sale for final consumption Goods go out of the channel of distribution Prices of goods higher Prices not subject to big changes Undertaken by sole trading concerns & small partnership firms