Professional Documents
Culture Documents
Tm~C' cJn he defined ,ls bU\ 111g and sclltng of good~ und s~rv1cc!. with the obJecl1ve of earning
profits lt_ 1s the oldest p1ofcss1011 m the world . Trndcrc, 111 the cnrl1cr doy!t (even now tn towns and
remote \tllagcs) used to , tstt places and sell their goods like fruits, a!,!,ortme~t of toys and balloons,
, cgetabks. etc to customers on Lhc1r route. t lowcvcr, m modern limes, the importance of trade has
b1.-cn increased as nc,, products arc bemg developed everyday, consumers ~ave higher expectations
and want to choose from a ,vidc variety of products. Trade helps in makmg the goods produced
a, ailable to ultimate consumers or users. It means, trade removes the hindrance of person by creating
3 link bct"ecn producers and consumers. The people who are engaged in trade are known as traders
or mtcrmedianes middlemen. .
On the basis of geographical area covered, trade may be classified int~ (i) I~te:13al trade; and (ii)
E.,temal trade. Internal trade means buying and selling of goods and se~1ces withm_the geographical
boundaries of a nation. On the other hand external trade refers to buymg and selling of goods and
services between people or organisation beionging to different countries. However, in this chapter, we
shall discuss the meaning, nature and purpose of various types of internal trade.
Wholesale Trade
When goods are purchased and sold in large quantities, it is called wholesale trade. A wholesaler buys
goods of specific line (e.g., sugar, book, cloth, etc.) in huge quantities from the manufacturers, stores it
in the large godowns and sells these goods in smaller quantities to the retailers. A wholesaler acts as a
middleman between the producer or manufacturer and the retailer. Traders dealing in wholesale trade are
known as wholesale traders or wholesalers.
Functions of Wholesalers
A wholesaler performs the following functions:
□ They generally take the title of the goods and bear the business risks by purchasing and selling
the goods in their own name.
O They undertake various activities like grading of products, packing into smaller lots, storage,
transportation, promotion of goods, coTlectfon of market information, collection of small and
scattered orders of retailers, and distribution of supplies to them.
Internal Trade
1,irgc ._, k f I
lhl.' tl.'l,11k1, ol rna1nlatn111g o ,HIIC c m cl I nd r ( Irr f 1
Jh\.'' ,11,o i\.'l tl'H .' 0
t
J {ll thl.'111
WhOlesalers
'D I c sci , ice , th . , ,.11( r
ler.; pro , 1di..: , ,m ou s \ alu ahl lh r
c m,m ula c.;lu rcr ' .ic, we ll
10 c1
1
1\,1i:~,
Manufacturers
on : Wholcs·ilcr., . e num r
iting La rge Se n le Pro du cti
,tP to Facilit.ilcn m large ' collcc..i., ,mc.111 ord er frc,m a larg ble the
- reta . and ma ke pu rch ase s qua,ntttics from lhc ma nuf act urc rc. ·r ht , ena d
01 to un der tak e pro duc tio n d f
facturers O n af arge scale an mm1m1sc c<> 1 " produ ctio n an
1nanu obtain adv ant age of Lhe econo111 1es o scale.
11enc-....
, Bearing Ri sk : Th e wh ole sal ers purcfiase goods 111 1arge qtlnnl1l1c., from m an ufa ctu rer and
in r· ollage etc.
lot of nsk s suc h as risk of fall P tees, loss by fire, theft, !>p d h sed b
bear . ers gen era lly ma ke cas h pay me ts fi th y
cia l Su pp ort : Wh ole sal ed gboo hsempur cTha ....r. e,
3 fin anand e adv anc e mo ney for the b lk dners orl p ace y t . er1;;1or
them som eti me s eve n giv . u or
1 to
.
mv est les ser cap ita l in the ir business.
nianufacturers 1ave tact with the retailers they pro
1,1 de
th ole sal ers are in dir ect con
4. E:-q>ert ~d vic e :_ As e wh
and pre fer enc es of the consumers. ma rket
valuable informat,~1: about_ ~~
cha ng es in tas tes
orrnation hel ps
itiv e act1 v1t 1es , et~ . to_ the manufacturers. Such market mf s of the
conditions, com pet
te pro du cti on rn acc ord anc e with the changing requirement
the manufacturers to reg ula
market. these are produced
nu ity : Th ~ w? ole sal ers pur chase lhe goods as and when
5. Facilitate C~ ~ti mt y of production.
and thus facilitates the con tm factory and sto re
ers tak e del ive ry of goo ds when these are produced in the for sto rag e
6 Storage : Wh ole sal uce s the bur den of manufacturers of providing
. Th is red
them in the ir wa reh ou ses s.
facilities for the finished go od ma kes it possible for the ma nu fac
tur er
e pre sen ce of wh ole sal ers
7. Physical Di str ibu tio n : Th retailers Th e
ly wi th a few wh ole sal ers rather than a large nu mb er of ble m of
to have con tac t on
pro du cts to the wh ole sal ers saves him sel f from the pro
manufacturer by sel lin g his
distribution.
the
Semces to Retailers
s are exp ect ed to off er a large var iet y of pro du cts to
Av ail abi lity of Go od s : Re
tai ler to the ret ail ers
l.
sal ers pro vid es the pro du cts to different ma nu fac tur ers .
customers. Th e wh ole
n of col lec tin g the pro duc ts from var iou s ma nu fac tur ers
and saves the m from the bu rde un der tak mg
Th e wh ole sal ers pro vid e ma rketing sup po rt to ret ail ers by od s
2. Marketing Su pp or t :
pro mo tio nal act ivi tie s to ind uce cus tom ers to bu y the go
advertisements and oth er sal es anc ial support to ret ail ers by sel lin g
the m go od s
ole sal ers pro vid e fin
3. Grant of Cr ed it : Th e wh ng capital.
nee d no t ma int ain huge wo rki
on credit. Th ere for e, ret ail ers vid e val uab le inf orm ati on to the ret atl ers
ab ou t
e wh ole sal ers pro 1l
4. Specialised Kn ow led ge : Th , qua lity , etc . Th ey ma y als o adv ice on set up of the reta
pri ces
the new pro du cts , the ir use s,
outlet. large qu ant itie s
wh ole sal ers pu rch ase go od s from U1e ma nu fac tur ers m ns k o{
5. Risk Sh ari ng : Th e ret ail ers . It sav es the ret ail ers from ass um ing
s to the
and sell them in sm all qu ant itie
de ma nd fluctuations, etc.
spoilage of go od s, pri ce an d
,~ii Trade s fro m a
lin g of go od s in sm all qu ant itie s A ret ml er bu ys go od
sel
•ho Retail trade me ans bu yin g and su'!1er~. Th e tra der en ga ge d m a ret ail tra de 1s
kn ow n as
ultin: iate co~
fel;Jj::;aler 3 ?d sel ls. the m lo the s
· Retail trade 1s the fin al sta ge m the distnbut1on of go od
In f('t:ul l"'a<k there ,m.· dtlkrcnt ",1 ys of selling the g oodr;
"" Pcr-.onalh on doo1 lo-door hosts (e.g.. sn le of cosmc l1cs/dclcrgcnl powder. etc.).
~ On telephone (cg. sale of Sona Slim Belt),
• B) , cndmg macluncs (cg., ATM 111 the bank mg sector lo withdraw money),
• ln a store (e.g., sale of mobile phones at llotspot); etc.
Infernal Trade
, • lktJ1lc11, Pl m lul
.1
I f ll: r-..,,1 Ie '-en 1c. 1f requ,rc;d. c g, home d I ,very
r~p,tir ol g1,1>J-. 111 1:,i,c of durable 1tc1m lih rd11p1.:ritor \ ( • etc.
~omctimc.,, rd<11kr, prm 1dc rn.:d1t Jac1l1ty tn their regular cu tomen
~ Thi" cnJbk.., th e cu,tomcr, to 1nc1c,l\c their c..011-.umpt1on lc\ cl ind c.tanclard of hvmg
RETAIL TRADE
rfl'ES of
tr.tdc 111,l) be clm,~ificd llllo l\\ o mam cutegonc~
~ctJI1 '
r--- I
lunerant Retailers
L::=----- IFixed Shop Reta1lers i
1 R I ers
laneraot retail~rs arc those traders wbo keep on moving with their merchandise (goods) from place-
..,,Jace 10 seU theJJ goods. They do not have a fixed place of business to operate from. The) are aJso
:;.icd mobile vendors.
B11rn1ess Srudies
,1 a..~ I I) th 1, 1 lww lmdct s me the 11mnll 1cln1lcr<1 who open their <:hops 11
t~ c;uc:h nc; wcckf,, ~ cltlicrcn1
phh '-" ('1' h,,.,I ,l ", 1 h,, , sell thc11 prodm ll!l nt pl't 1odiuil rnnrl<c I I ,,, ,ortn1gh tly
\"r mont I 'I'
.,,r, ,.,,,,,,!,,
\\l'l'kl ) m111kc1s 111c lll·ld on I fl,H·d c11y nnc P<>pulnrJy k
i"0
1 ''- lli\\\\l ,,1 'd,\\ It"-,· I\ tm1p.ul Bn1n111 on t ucsdny ',h11111 B11✓
1 1r on Suturd ny Sorn 1 "'n by
lll'aar on
\ lond ,, '-'tC
Pixed shop retaile rs can be classif ied into two catego ries:
cl'y~c of Fixed ShoJ> Retnilo~ F
lntn·n al fi •udr'
J
◄
Shop Small Rcto1tcrs
1 n General .,tores arc mosl commonly found m . a local market and resr'dent ra I
colonies. These shops carry .,lock of a variety of productr, required to ,atisfy the day-to-day
requirements of the customers. The goods which arc sold at these ,hop ~ are butter. bread,
ft . e,
eggs. toothbrush, toothpast shav111g cream , hair fixer, eIect rrc bulb ' bJ!,CUJ ts. , oap",,, shampoos•
stationery items. so .dnnk.s, .confectionery, grocery items, etc. These store"' remain open for
tong hours at convenient timings and often provide credit facilrt,es to .,ome of their regular
customers.
2. ~pccrn!1t 1 '-)ho J • Speciality shops are generally located in a central place (mostly m urban
areas) m order to attract. large number of customers. These shops are specialised m single
yroduct o?ly. The; provide a lar~e variety of one product to the customers. For example,
'mas' 1lmps--selimg men s wear, toys, cfitfdren's garments, school uniforms, college books, etc.
3. Street St;11J Holden/S treet Shops : These are small retailers commonly found at street
crossing~ or . on comers. of colonies or other places where flow of population is heavy and
lation
deal mamly tn low quality goods like toys, hosiery products, pan, cigarettes, etc. They handle
low goods on a very small scale since the total area covered by a stall is very limited. They get
their supplies from local suppliers as well as wholesalers.
4. Secondha nd Goods Shop : Such shops deal in second-hand or used goods, such as books.
furruture, clothes, etc. The prices of goods sold by them is usually low. These shops are mainl)'
for the people who are financially weak and cannot afford to buy new products. These shops
ir of buy goods mostly from private and public auctions. Sometimes people from high income group
eriod also visit such shops in search of rare books, antique items, etc. These shops may be located
other at street crossings or in busy streets in the form of a stall having very little structure (e.g., a
ce as table or a temporary platform to display the books) or may have reasonable good infrastructure
(e.g., to sell old furniture or used cars/scooters/motor cycles).
,5. Single Line Stores : These stores are situated at central locations and deal in a single product
have line such as books, medicines, watches, readyrnade garments, stationery, shoes, tyres, etc. These
e-to- shops keep a wide variety of items of the same line. For example, a store dealing in shoes
will have all types and different designs of shoes for children, gents and ladies.
Note: Single line stores deal in general line of products (e.g., a shop dealing in books) while speciality--...
arge stores deal in a specific line of products (e.g., a shop dealing in children books).
mall
fixed Shop Large Retailers
etc.J Departmental Stores
A departmental store is a large retail store offering a wide variety of consumer products, classified
airs, mto we]) defined departments under one roof. It bas separate departments for different kinds of products.
ers. Por example, there may be separate departments for toiletries, medicines, groceries, electronics, clothing
and dress material within a store.
Examples:
I. 'Akberally' in Mumbai. 2. 'Spencers ' in Chennai.
Features
I. Departmental stores provide various services and facilities such as rest rooms, telephone booths,
free home delivery, restaurant, travel and information bureau, parking, etc.
2. They are centrally located in the heart of a city. Hence, they cater to a large number of
customers.
JI 339 Business Studies
..
• uq,anm~•111 .,t\11 l 1111 rchni.cs rnoods dircl'lly l1<Hll 111111111/i1clu1crs. I here/ore
\ __.
m,d,1k O\l II I II el
•rnrn 11
4 In ikpartmcnt,,I .,10rc, thl' purl'lrnscs nrL' rnndc cc11t111lly hy the rurc:ha!lc dcparltncnt
thr ,:ik, <ll each dcpnrtmcnt nrc dcccntrnliNcd.
, . A, the we of departmental .,,orc:i 111 very large, lllhercd
they arc gcncrully formed fl\ ,
c~mp,m) managed hy the bourd of directors. There is
manager and sc, crnl department managers.
u managing director acis,~tcd ~tt 1tock
genc,~ r
Chi St t • •~ulti plf Shops
Cham !ltore~ or multiple shops are networks of retai
l shops, established in localitre\
N: rent parb of the country. • .
These are owned an d operated by same organisat
dwe
merchandismg stn1teg1es,. d d' ion and having'Prtad
.d in
with identical products an 1splay. , enttc r
Th~e retail shops nonnally deal in standardise and a
branded consumer products which ha .
:-.J.!es tumo\ er Ve rapid
&le-;·
I NiruJa's 2. McDonald's
3. Bata shoe stores
4. Reliance fresh 5. Raymonds 6. DCM
Futures
I. Multiple shops are located in fairly populous
localities, where sufficient number of customers
can be approached.
2. The manufacturing/procurement of merchandise
is centralised at the head office, from where
the goods are transferred to all the branches as per
their requirements.
3. Each retail shop is under the direct supervisi
on and control of a Branch Manager, who s
responsible for its day-to-day management. He has 1
to send daily report to the head office
regarding sales, cash deposits and the stock requirem
ents.
4. All stores are controlled by the head office, whic
h is concerned with formulating the policies
and getting them implemented.
5. The prices charged for goods sold in chain store
s are same everywhere and goods are sold on
cash and carry basis.
6. An inspector is appointed by the head office to
make day to day supervision of the shops,
regarding quality of customer service provided, adhe
on. rence to policies of head office, and so
7. Chain stores have the same decoration, layout, displ
ay, etc.
8, Chain stores specialise in
one line of business only. For example, all Bata Shop
and other related items like boot polish, socks, etc. s sell footwear
----•
"\ High d J~, ndt P;;:'-':;:,;pJ.k:-~- - - - - ~ ~ ~ ~ ~ - - - - -
IJ ~ ot eu, roml't
0
4- l
nie l incom e grouf15.
-.:::....-.!.,.;.___ __ ___
, ~t"\ ,~~ Offe~d departmental store~ ~e-+1--
mJn) sen ices to thetr c The) pro,, ~ 'e'I}'
' ustom e~ hie ~~n ICC:-. It mc:lu d=se -.::.:ra--::::1!::::
restau rants tra l
· ' e and informanon I
and repairs. if the sold -
burea u. teleph one b be defean-c .
•• ootb, resL-rooms. turn out to
1
pariun .:::,
0 etc. 1
I
1
t
~or. 1tio o . al s ores may adopt
Diffe rent department All multiple shops ha~e umfo:-r:i:::
dtffierent decoration and a·tsp1a) sty1es. ; decoration and dtspla ) st) le.
1
,
of gooels. 1,.i v-f ore _ . d lme of goods. :'1-:o
":flex ibilit ) _ - Yariety
Deal. .m. lame Deal m limite
fleXIbil1t) of operation· &.
scope 1or fl ex1_b 1_I_
it} .
imder de
S. Ad, ertisement A d~partinental store undertakes The multiple shops
advertisement m a -,; ,.Jc
adYertJsement at the local level.
geographicaJ area.
all the shops.
9. Risk Risk is more as it center ed on one store Risk is di,i ded o, er
only.
goods onl~
lli. Credit Facili ties Depar tment al stores proYid e credit Multiple shops sell
basis.
facilit ies ro regula r and reputed I on cash and Ca.II}
custo mers.
C-'...:• ~ouses
throug h mail. This ty}X of tradin g
\bil order houses are the retail outlet s that sell their products
c. ...'lo no personal conta ct bet"e en the buyers and the sellers.
· ~ Procedure
F:n Step Advertisements to provide information about the produ
cts.
through ad, ertisemeots in ne" sp.1._pers
For obtaimog orders , poten tial custo mers are appro ached
a-- ~aazm es. circulars. catalo gues. etc. sent to them b)
post Ad,·ertisemeots Ca.IT) all the rele, 3Dt
. terms of paym ent ere.
c::cr.muon about the produ ct like pnce. features. deln el) terms
S Receiving Payments.
The payment can be recel\ ed m three clifferent " a) s:
(i:. 1 Goods ma) be sent b) Value Payab le Post (\ 'PP). m
"h1cb goods .ire sem throu gh po~t and
are dell\e red to the custo mer onl) "hen the full pl)"ID
ent 1s mJde.
lo the 1.ustomer onl) "hen be p..1} ,
(bJ The eoods ma, be sent throu gh bank. but are dell\ ered
1-.. no n,l llf had debt
.he full amoun~ for the goods . In thrs arran geme nt lhere