Chapter 10

⮚ Trade refers to buying and selling of

goods and services with the aim of
earning profits.

PROFITS
 ⮚ It helps in making the
goods produced
available to the
ultimate consumers.

⮚ Hence, it removes
the hindrance of
person by creating a
link between the
producers and
consumers Link
When We Do ⮚ Trade within the
Trade within boundaries
India…..
⮚ NO Custom Duty/Import
Duty

⮚ Payments are done in

Indian Currency
“Rupees”
Internal Trade/ Home Trade/ Inland Trade /
Domestic Trade

Buying and selling of goods & services within the boundaries of

the nation.

Internal trade is free from custom duty or import duty

Payments in internal trade are made in national home

currency directly or through the national banking system.

Internal trade aims at equitable distribution within a nation

speedily and at reasonable cost of goods .
 Wholesale Trade
❑ Wholesale trade refers to
buying and selling of goods and
services in large quantities for
the purpose of resale or
intermediate use.

❑ Wholesaler buy goods

directly from the
manufacturer in bulk and sell
them in small quantities .
 ❑ The trader who deals in wholesale trade are
known as Wholesale Trader.

Manufacturers Retailers.

❑ They serve as an important link between the manufacturers and

the retailers.
Features of Wholesale Trade
▪ Provides link between the
manufacturer and the
retailer

▪ Wholesaler buys goods in bigger

lots and sell in smaller slots.

Wholesale trade requires large

amount of capital to maintain stock
and give credit to retailers.
 Wholesaler specializes in one
particular line of goods.

Profit margin is usually low to take

advantage of high turnover.

Bears the business risks by

Wholesaler performs a buying and selling goods in his
number of functions. own name
 Services of Wholesaler to Manufacturers

⮚ Facilitating large scale ⮚ Financial

production Assistance
⮚ Bearing Risk
⮚ Expert Advice

⮚ Help in the Marketing Function

⮚ Facilitate
Continuity ⮚ Storage
 Services of Wholesaler to Retailers

⮚ Availability of large ⮚ Marketing Support ⮚ Grant of credit to

variety of goods Like Advertisement retailers

⮚ Expert knowledge of Mkt ⮚ Saves Retailer from Assuming Risk of Spoilage,

Condition Related to Product obsolescence, Price and other damages
TRADE
 Retail Trades
Retail trade refers to buying of
goods and services in relatively
small quantities from wholesaler and
selling them to the ultimate
consumers .

The trader who

deals in retail trade
are known as
Retailers
 Features of Retail Trade
▪ Retailer is the
last link in the
distribution
chain

▪ Retailer buys and sells in

smaller quantities.

▪ Retailer deals in large

variety of goods.
▪ The area of operation of retailer
is limited to a locality
 Retailer sells goods to final
consumer for personal
consumption and not for resale.

Retailer maintains
direct and personal
contact with the
customers.

Retailing can also be done

through telephone, internet,
vending machines etc.
 Services of Retailer To Manufacturers
& Wholesalers
⮚ Enable Large Scale
Operations

⮚ Helps in
⮚ Personal Selling
Distribution of
Goods

⮚ Collecting Market Information

⮚ Help in Promotion
Services of Retailer To Consumers

⮚ Regular Availability of
Products
⮚ New Products Information
⮚ Convenience in Buying
⮚ Wide Selection
⮚ After-sales Services
⮚ Provide Credit Facilities
 Difference Between Wholesaler and Retailer
BASIS WHOLESALER
NATURE OF BUSINESS Wholesaler is the link
between retailer and
manufacturer
SCALE OF OPERATION Wholesaler operates on a
large scale as he buys and
sells goods in large
quantities
NUMBER OF ITEMS He deals in few items and
aims to specialize in one
line
CAPITAL He requires a large amount
of capital for his business
NATURE OF PAYMENT Most of the dealings are on
credit
WINDOW DISPLAY He does not need it as
he doesn’t require to
attract his clients
RETAILER
Retailer is the link between
consumers and wholesalers
Retailer operates on a small
scale as he buys and sells
goods on small quantities
He handles a large number
of items
He can manage with small
capital
Most of the dealings are on
cash
It is very much needed in
order to attract his
customers
 BASIS WHOLESALER RETAILER
AFTER-SALE SERVICE There is no arrangement of Retailer offers facilities of
any sort of after sale after sale service
service or repair service
PROFIT MARGIN Wholesaler sells at a very Retailer sells at a higher
low profit margin due to profit margin because of
fast turnover expenses on the window
shopping
SCOPE OF BUSINESS Business is spread over Local area is generally
several places covered in retail trade
 Types of Retail Trade
❖ Large Retailers
On the basis of ❖ Medium Retailers
Size of Business ❖ Small Retailers

❖ Sole trader
On the basis of
❖ Partnership Firm
Type
❖ Co-operative Store
of Ownership
❖ Company

❖ Specialty Store
On the basis of
❖ Supermarket
Merchandise handled
❖ Departmental Store

On the basis of
❖ Itinerant Retailers
Fixed place of
❖ Fixed Shop Retailers
Business
Fixed Shop Retailers

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 Characteristics of Fixed Shop
Retailers
⮚ They have greater resources and operate at a relatively large
scale as compared to itinerant traders.
⮚ They deal in different products including consumer
durables as well as non-durables
⮚ They provide various services to customers like home
delivery, repairs, guarantees etc.
⮚ As a result such retailers enjoy greater creditability in the
minds of customers.
⮚ However they vary from very small size to very large size .
 TYPES OF FIXED SHOP LARGE RETAILERS

DEPARTMENTAL STORES
❖ A departmental store is a large establishment, which sells a
wide variety of products and aims to satisfy all needs of
the customers at one roof
❖ The store is divided into number of departments and each
department deals in a particular variety of goods
❖ They satisfy diverse market segments with a wide variety
of goods and services.
❖ Everything From Pin To an Elephant Is the Spirit behind It
❖ In India real departmental stores have not yet come in a big
way. Still Big Bazaar, Reliance Fresh play an important role in
satisfying diverse needs of people.
Features of Departmental Store
Located at a Central Place in the city, so that people living in
different area may reach them easily
Centrally
located Number of Facilities & Services to the Higher Class Of
customers ,to whom price is of Secondary importance

Provision Generally formed as Joint Stock Company

Of Services because of Large Size
Corporate
Status All the purchases in a departmental
stores are made centrally by the
purchase dept.

Centralized
Purchasing
Elimination
Purchase Goods directly from Of
manufacturers Middlemen Large Variety
Of Goods
Customers can purchase almost all their requirements from
these stores.
 What is
YES!! These are WE GET MOST OF
Common THESE BRANDS
Chain Stores Or
aboutShops…
Multiple all STORES IN NAGPUR
these brands? AND OTHER CITIES
OF INDIA.
 Chain Stores or Multiple Stores

⮚ Chain Stores or Multiple Stores are networks

of retail shops, which are owned by the
single business enterprise.
⮚ These shops are spread over different
localities of the city or in different cities.
⮚ All the retail shops deal in similar line of
standardized and consumer products.
⮚ They all have identical merchandising
strategies, with identical products and displays.
⮚ Bata, Pizza Hut, Café Coffee Day are examples of
Chain Stores.
Features of Chain Stores
✔ Location – located in populated
localities
✔ Centralized Purchases – head office
makes all the purchases
✔ Centralized Control – controlled by H.O
which formulates policies & get them
implemented
✔ Cash sales – sales on cash basis.
Cash is deposited daily into the bank
A/c on behalf of H.O
✔ Regular inspection – H.O appoints
inspectors who inspects.
✔ Prices – Goods are sold at centrally
fixed price
✔ Window Dressing – stores are
decorated in same style