Chapter10 Internal Trade - 1.3

Class 11
Business Studies
Chapter - 10
Internal Trade
Ajith Kanthi Wayanad

www.hssplustwo.blogspot.com
Tra d e
Tra d e
Trade means buying and selling of goods, which
involves the exchange of commodities for money or
money’s worth
On the basis of scale of operation, internal trade can be

divided into
Wholesale trade and Retail trade
Wholesale
Trade
W h o l e s a l e Trade
Buying and selling in large quantities
A wholesaler buys goods directly from the producers and sells
them to the retailers
One who deals in wholesale trade is known as

wholesaler or wholesale dealer
S e r v i c e s of
W h o l e s a l e r s to
M a n u f a c t u r e r s or
Producers
S e r v i c e of W h o l e s a l e r s t o P r o d u c e r s
1 Facilitating large scale production
Bulk orders from wholesalers enable to produce in

large quantity
2 Bearing risk
They purchase the entire goods immediately
on production
They take the risk of change in demand, spoilage,

damage, theft etc. during transportation and storage
3 Financial assistance
Wholesalers purchase on cash basis and sometimes they may

give advance payment for bulk purchases
4 Expert advice
Wholesalers are in constant touch with the retailers, they can

collect information about the tastes and fashion of consumers
and passes it on to producers
5 Helps in marketing
Wholesalers take care of distribution of goods, market

research, transportation, warehousing etc.
6 Facilitates continuity of production
Wholesalers purchase goods on a real time basis as and when

they produce goods
It helps the manufacturers to carry out continuous
production
7 Storage
The burden of storing goods passes to the

wholesalers
1) Facilitating large scale production
2) Bearing risk
3) Financial assistance
4) Expert advice
5) Helps in marketing
6) Facilitates continuity of production
7) Storage
S e r v i c e s of
W h o l e s a l e r s to
Re ta il e rs

S e r v i c e of W h o l e s a l e r s t o Retai l ers
1 Availability of goods
Retailers get goods as and when they required as there is a large

quantity stored by wholesalers
2 Marketing support
Wholesaler takes all the burden of advertisement and sales

promotion activities, and the retailer enjoys the
benefit
3 Providing credit facilities
It enables the retailers to conduct their business without

much investment in working capital
4 Specialized knowledge
Wholesalers can give expert advice on their products
as they are dealing only a limited line of
goods
They also inform the retailers about new products, their

uses, quality, prices etc.
5 Risk sharing
The risk of retailers gets reduced as most of the burden of

marketing such as price fluctuation, loss of goods in
transit, storage etc. is born by the wholesalers.
1) Availability of goods
2) Marketing support
3) Providing credit facilities
4) Specialized knowledge
5) Risk sharing
Retail
Trad
e
Retail Trade
Buying and selling of goods in small
quantities
A retail trader buys goods from the wholesalers and

sells them to the customers
Retail Trade
Retail trade includes all activities directly
related to sale of goods or services to
ultimate consumers for consumption
S e r v i c e s of
R e ta il e rs to
M a n u f a c t u r e r s or
Wholesalers
Ser v i c e of Retail ers to P r o d u c e r s
1 Helps in distribution
Retailers help in distribution of goods to the ultimate

consumers who are scattered over the world
Ser v i c e of Retail ers t o P r o d u c e r s
2 Personal selling
Most of the consumer goods requires personal selling,

wholesalers and producers are free from this task as it is
undertaken by the retailers
3 Large scale operations
Manufacturers and wholesalers are free from the trouble of

making individual sales to consumers in small
quantities
This enables them to operate on large scale
4 Collecting market information
Since the retailers are in constant touch with the

consumers, they can collect reliable market information,
which can be passed to the wholesalers and
manufacturers
5 Help in sales promotion
Retailers also undertake advertisement and other
sales promotion activities to increase their sales
It helps the wholesalers and manufacturers in promoting the

sales of their products
S e r v i c e s of Retail ers to P r o d u c e r s
1) Helps in distribution
2) Personal selling
3) Large scale operations
4) Collecting market information
5) Help in sales promotion
S e r v i c e s of
Re ta il e rs
to
Consumers
Ser v i c e of Retail ers to C o n s u m e r s
1 Regular availability of products
Most often the retailers holds sufficient stock of
goods from various producers and wholesalers
It ensures ready and regular supply of goods

2 New products information
By arranging proper display and through personal selling

efforts, the retailers provide relevant information about the
new products and their features to the consumers
3 Convenience in buying
Retailer sells goods in small quantities and they have set up

their stores in residential areas which are very near to
the consumers
4 Wide selection
The retailer has a large variety of goods from

different manufactures
5 Provide credit facilities
The retailers often provide credit facilities to regular

and trusted customers
S e r v i c e s of Retail ers to C o n s u m e r s
1) Regular availability of products
2) New products information
3) Convenience in buying
4) Wide selection
5) Provide credit facilities
Types of Retail Trade
Itinerant Traders Fixed Shop

Itinerant Traders

Itinerant Traders
Traders are having no fixed place of business
Eg: Hawkers, street traders etc.

Characteristics of
Itinerant Traders
Characteristics of Itinerant Traders
a Small scale operation
Due to limited resource

b Deal in consumer products
Usually they deal in consumer goods of daily use Eg:

Fruits, vegetables, fish, stationery etc.
c Door step service
They provide goods at the door step of the

consumers
d Limited stock
As they have no fixed place to operate, they do their

business with limited stock only
a) Small scale operation
b) Deal in consumer products
c) Door step service
d) Limited stock
Kinds of Itinerant Traders
Kinds of Itinerant Traders
1.Hawkers and Peddlers
2.Market Traders
3.Street Traders / Pavement Traders

4.Cheap Jacks
H a w k e r s a n d Pe d d l e r s
Hawkers are the traders
who carry their products
on
carts or bicycles
Peddlers carry their products

on their back or head or in
baskets or shoulder bags
Features of Hawkers
and Peddlers
Features of Hawkers and Peddlers
●
Generally dealing non-standardized
and
low value goods.
●
Operatesexhibition
areas, mainly ongrounds, public
streets of places
residential
etc.
●
Suppl the goods at the
door
y step of the consumers.
M a r k e t Traders
These traders sell their articles on fixed
days in different market places
Features of
Market Traders
Features of Market Traders
a)They deal in one particular line of goods. Eg:
toys, garments, crockery etc.
b) Sell products on fixed days in the market.
c)Dealing in Low priced goods.
d) They move from one market to another.

S t r e e t Traders / Pa v e m e n t Traders
These traders generally arrange their articles
at busy street corners, near railway stations
etc.
Features of
Street Traders
Features of Street Traders
a) They sell consumer items of daily use.

b) Generally operates near public places.
c) Donot change their places of
business
frequently.
C h e a p Jacks
They usually, hire small shops for a short period of
time
Depending upon the scope of sale they keep shifting
from one locality to another
Features of
Cheap Jacks
Features of Cheap Jacks
a) They deal in consumer items.
b)Also provide services like repairing watches, shoes,

buckets etc.
c)Move from one area to another depending on sales

potential.
d)They also sells goods in temporary sheds during

festivals.
Itinerant Traders
At a glance
Hawkers and Peddlers

Market Traders
Street Traders / Pavement Traders
Cheap Jacks
Fixed Shop Retailers

Fixed S h o p Retailers
These retailers are those who carry on business by

maintaining a fixed place of business to sell their
goods
They do not move from one place to another

Fixed S h o p Retailers
Depending upon the size of operations,
they can be of two types
Small scale Retailers Large scale retailers

Fe a t u r e s of
Fixed S h o p
Re ta il e rs
Fixed S h o p Retail ers - Fe a t u r es
a Large resources
They have a lot of goods compared to itinerant
traders
b Deal in different products
They deal consumer goods, both

durables and non-durables
c Credibility
They have greater credibility in the minds of
consumers as they provide services like home
delivery, guarantees, repairs, credit facility etc.
Types of
Fixed S h o p
Re ta il e rs
Large
Small
Scale Scale
Small
Scale
General Retailers Second Hand
Stores Goods Shop
Speciality Street Stall

Shops Holders
S m a l l S c a l e Retailers
They are running their business on a small

scale and deal in a limited line of goods
S m a l l S c a l e Ret a i lers
a General Stores
They are selling all general items of goods such as
groceries, stationery, oils, etc.
Customers can buy most of their requirements at one place
They may also provide free home delivery, credit facilities etc.
to regular customers
Features of General Stores
●
They stock variety of goods for to day
day requirement.
●
Open for long hours based on the convenience of
consumers.
Features of General Stores
●
Provide credit facilities to regular customers.
●
Located near residential area.
●
Provide service like home delivery etc.
b Speciality Shops
They are specialized in a single product of a
certain line
Also known as Single Line Stores
E.g. kids wear shop, computer shop, bookshop etc.

Features of Speciality Shops
●
Specialize in one product only.
●
Located in central places.
●
Keep all brands of a particular product.
c Street Stall Holders
They are generally located at street
crossings or in the main street
They usually display their goods on a table, stand or

by fixing a shelf on the wall
Features of Street Stall Holders
●
Deal in cheaper goods. Eg: toys, soft drinks,
hosiery items etc.
●
They mainly attract floating customers.
●
The stall is housed in very small area.
●
Found in high customer traffic area.
d Second hand goods shop
They are dealing in second hand goods such as
books, furniture, clothes, used cars and other
household items
Features of Second Hand Goods Shop
●
Usually found in busy streets.
●
Helpful for low income group.
●
They often sell antique items and rare object
of
historical value.
Departmental Vendin
Stores Large M
g achine
Scale
Retailers
Multiple Super
Shops Bazar
Consumer
Mail Order
Co-op
Houses
Stores
L a r g e S c a l e Ret a i lers
Large scale retailing may be defined as retail trade

involving operations on a large scale and sale of
goods in small quantities
Departmental
Stores

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a Departmental Stores
It is a large scale retail shop selling a wide variety of goods in
different departments under one roof and one management
Textile Department Consumer Goods Department
Each department deals in separate line of goods like

stationery, books, furniture, clothing, footwear etc.
L a r g e S c a l e Retailers
Features of Departmental Stores
●
Additional facilities like restaurant, telephone
booth, rest room, play area etc.
●
Usually located in central place of a big city.
●
Large scale retail organization, generally formed as
joint stock companies.
●
Play Area for
Children
Features of Departmental Stores
●
Elimination of middlemen – They are
making their purchases directly from the producers.
●
Centralized purchases and decentralized selling.
Advantages of Departmental Stores
●
Central location attracts more and more customers.
●
Shopping convenience to the customers as they get
different products under one roof.
●
Consumer services are
provided like free home
delivery, telephone facilities,
restaurants, rest rooms etc.
Advantages of Departmental Stores
●
Economies of large scaleoperation in the
matterof transportation, advertising, purchase etc.
●
Automatic mutual
advertisement – One
department advertises
the other.
Limitations of Departmental Stores
●
Lack of personal attention – as they have to handle a
very large number of customers daily.
●
High Operating Cost – due to heavy rent,
salaries of experts etc.
● High possibility of loss – Lack of personal
They incur high loss due to attention
change in taste and fashion
of consumers, as
they have a large
quantity of stock.
Limitations of Departmental Stores
● Inconvenient Location – The central location of the store
make it inconvenient for the consumers who reside away
from it, also it suffers from traffic problems and parking
difficulties.
●
Huge investment –
It requires heavy investment
for establishment and
maintenance.
Multiple Shops
or
Chain Stores

b Multiple Shops / Chain Stores
It is a system of branch shops operated under a
centralized management and dealing in similar line of
goods
Branches of the shop are
located throughout the
nation under the same
name and management
and they specialize in one
or two lines of goods
Multiple Shops
Multiple shops are organized by the manufacturers to
eliminate middlemen
Eg. Bata Shoe company, Bombay Dyeing Show Rooms, Big

Bazar, Coffee Day, Raymonds, KFC etc.
Multiple Shops
In a multiple shop there is uniformity in
advertisement, window display and interior display
of goods etc.
Features of Multiple Shops
●
Convenient location for consumers.
●
Centralized buying and decentralized selling.
●
Centralized management and unified system
of control.
Convenient
location
Features of Multiple Shops
●
Follows cash and carry principle.
●
Uniformity in shop’s design and lay-out.
●
Proper inspection from head office ensures the
smooth functioning.
Advantages of Multiple Shops
●
Economies of large scale buying – Centralized
purchase attracts higher discount, low transportation
cost, common advertisement etc.
●
Elimination of middlemen – Direct bulk purchase from
producers.
●
No bad debts – They follow cash and carry system.
Advantages of Multiple Shops
●
Diffusion of risk – Loss in one shop may be
compensated by the profits in other shops.
●
Low cost – Low cost of operation because
of economies of scale.
●
Flexibility – Unprofitablebranches can be
shifted to somewhere else.
Limitations of Multiple Shops
●
Limited choice – they deal in one or two lines of goods.
● Lack of initiative and motivation – Due to centralized
control, there is only less chance for initiatives from the
part of the branch managers.
Limitations of Multiple Shops
●
No personal contact due to large scale operations.
●
Risk due to change in taste and fashion
lead to great loss.
Differences B e t w e e n
Departmental
Stores &
Multiple S h o p s
D e p a r t m e n t a l S t o r e s V s . Mu l ti p l e S h o p s
1 Location
Departmental Stores Multiple Shops
Central location Not necessary

D e p a r t m e n t a l S t o r e s V s . M u l ti p l e S h o p s
2 Variety of goods
Limited variety of
Large variety of
goods from a
goods from different
specific producer
producers
only
3 Services offered
Additional facilities
No such additional
like restaurants, play
facilities are
zone, alteration of
provided
garments etc.
4 Pricing policy

No uniform pricing
policies, instead they Fixed price and uniform
are giving discounts to pricing policies are
clear the stocks in followed
special occasions
5 Class of customers

Suitable for middle and
High income group who
low income group who
care more for the
are more concern about
services rather than the
quality products at
price of products
reasonable price
6 Credit facilities
Sometimes to Strictly on cash

regular customers basis
Mail Order
Houses
c Mail Order Houses
It is a form of retailing where the business
transactions are done through post or by mail
There is not direct personal contact between the

buyer and the seller
Mail Order Houses
Under this system, receipt of orders, delivery of
goods and payment etc. are done through the mail
E.g. VPP (Value Payable Post). This system is also

called shopping by post.
Mail Order Houses – Mode of Operation
1. Giving advertisement in various media.
2.Preparing a mailing list of prospective customers.

(Data may be collected from telephone directories,
social media etc.)
3.Approaching the
prospective customers by
sending circulars, catalogues
etc. by post.
Mail Order Houses – Mode of Operation
4.Receiving of orders from
customers.
5.Execution of orders by sending the
goods through post office.
6.Receiving payment – It may be in different forms
such as advance payment at the time of placing orders,
VPP or payment through bank.
Suitability of Goods for Mail Order Houses
1.Graded and standardized goods.
2.Easily transported at low cost. Eg: light in weight.
3. Goods having ready demand in the market.

Suitability of Goods for Mail Order Houses
4.They should be available in large
throughout the year.
quantity
5.Goods which are having least competition in the
market.
6.Goods which are not available in the

local market.
Advantages of Mail Order Houses
1.Limited capital – It does not huge
require buildings, furniture etc.
2. Elimination of middlemen – Hence the cost of
operation is minimized
3. No bad debt – No credit facilities are allowed to
customers.
Advantages of Mail Order Houses
4. Wide reach – The area of operation is
not limited.
5. Convenience in buying – i.e. delivery of goods
are made at the door steps.
Limitations of Mail Order Houses
1. No personal contact – Customers do not have a
chance to examine the products.
2. High promotion cost – Heavy expenses
on advertising.
3.No after-sales service. ice
erv
s S
ale
4.No credit facilities. er S
Aft
No
Limitations of Mail Order Houses
5.Delay in delivery.
6. Possibility of abuse – Dishonest traders may
cheat the customers.
5.High dependence on postal
services – Success of the
business depends on the efficiency
of postal department.
Consumers'
Cooperative
Stores

d Consumers’ Co-operative Stores
It is a retail store formed and run by
consumers on co-operative principles
- op
Co ore
St
These stores are owned and managed by consumers so as to
make goods available at a reasonable price
Consumers’ Co-operative Stores
Dealing in all types of consumer goods of daily use
such as grocery, stationery, dress materials etc.
Consumers’ Co-operative Stores
Capital is raised by the issue of shares
to the members
management is vested in the hands of Board of Directors It

should be registered under the Co-operative Societies Act
Advantages of
Consumers’ Co-operative
Stores
1. Easy to – Any ten may
formtogether and people form come
formalities. a society with limited
2. Limited liability – Liability of members is limited.
3. Democratic management – It is based
on democratic principles.
Advantages of
Stores
4. Low price – by eliminating middlemen.
5. Cash sales – No chance for bad debt due
to cash and carry system.
6. Convenient location – Usually set up in
public places.
Limitations of
Stores
1. Lack of initiative – The persons who manage and work on
honorary basis may not take much initiative for the success of
business.
2. Shortage of funds – Difficulty in raising capital.
Limitations of
Stores
3. Lack of patronage – All members may not be in
touch with the organization regularly.
4. Lack of training and expertise in management.
Super Bazaar
(Super Market)

e Super Bazaar (Super Market)
Large scale retail store selling a wide variety
of
consumer goods.
The most distinctive feature is the absence of salesmen and shop

assistants to help the customers in selecting the goods
Hence they are also called ‘Self Service Stores’
Super Bazaar (Super Market)
Various products are arranged in well marked
divisions or departments
on open shelves
They are neatly

packed and the weight,
price, quality etc. are
marked on the packets
Features of Super Bazaar (Super Market)
1.Wide variety – Buyers can purchase a wide variety of
products under one roof.
2.Self service – Super markets functions on the
principle of self service which results in lower operating
cost.
Features of Super Bazaar (Super Market)
3.Low price – Because of bulk purchase and lower
operating cost, they can sell their products at low price
than other retail shops.
4.Cash basis – This feature helps them to eliminate bad
debts.
5.Centrally located –
Generally located at central
place of a city.
Advantages of Super Bazaar
1.One roof and low cost – This is convenient
as well as economical to the buyers.
2.Central location – So that it is easily accessible to
the people.
3.Wide selection – They offer wide variety of goods
from different producers.
Advantages of Super Bazaar
4. No bad debt – They follow cash and carry system.
5.Economies of large scale – It enjoys the benefits
of large scale operations.
Limitations of Super Bazaar
1.No credit – It restricts the purchasing power of

consumers.
2.No personal attention – Due to the absence of
salesmen, the items which need personal attention may
not be sold out .
Limitations of Super Bazaar
3.Mishandling of goods – Consumers may handle
the goods kept in the shelves carelessly.
4.High overhead expense – High rent due to prime
location, heavy administrative cost etc.
5.Huge capital requirement –
Establishment and running cost is
relatively high.
Vending
Machine

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f Vending Machine
These are coin operated machines found very
suitable in selling products like hot beverages,
platform tickets, soft drinks, newspaper etc.
ATM (Automated Teller Machine)

is also a vending machine in
banking business
Features of Vending Machine
1.They are suitable for selling pre-packed items
of low priced products, with uniform size and weight.
2.Initial cost of the machine, maintenance charges etc.
are high.
Features of Vending Machine
3. Consumers cannot see product before
the
buying.
4.No return of goods is possible.
G o o d s and Service
Tax
G o o d s a n d S e r v i c e Tax
1. Introduced by Government of India on 1st July 2017
2. One Nation One Tax
3.It is a destination based single tax on the supply of goods and

services from the manufacturer to the consumer
4.Replaced multiple taxes levied by and state

central governments
5.Reduced tax burden by eliminating tax on tax

6.GST consists of CGST and SGST, which are applicable in case
of intra-state supply of goods and services and IGST in case of
inter-state supply of goods and services
7.Tax liabilit arises

when y taxable
the the limit
person crosses
of 20 lakhs turn
over per year.
Fe a t u r e s of
Fe a t u r es of G o o d s a n d Ser v i c e Tax
a)GST is applicable to the whole country
including Jammu and Kashmir.
b) It is a destination based consumption tax.
c)Import of goods are treated as inter-state supplies and

hence IGST is applicable for for such goods.
d)CGST, SGST and IGST are levied at rates mutually agreed

by the Centre and the State based on the recommendations of
GST Council.
e) There are four tax slabs: 5%, 12%, 18% and 28%
f) Export and supplies to SEZ are zero-rated.
g)Tax payer can remit the tax amount through different

payment gateways such as Net Banking, Debit/Credit Card,
NEFT (National Electronic Fund Transfer) and RTGS (Real
Time Gross Settlement.
R o l e of
Commerce and
Industry
Association
in P r o m o t i o n of
Internal Trade
P r o m o t i o n of Internal Trade
The Chambers of Commerce and Industry was formed as
an association of business and industrial houses to promote
and protect their common interest and goals
They play an important role in strengthening internal trade and

overall economic activity
Examples:
1. CII (Confederation of Indian Industry)
2.FICCI (Federation of Indian Chambers of Commerce and
Industry)
3.ASSOCHAM (Associated Chamber of Commerce
and Industry)
Role of Commerce and Industry Association
1. Helps in many activities relating interstate movement of
goods.
2. To ensure that octroi and other local levies are charged
reasonably.
3. Helps in harmonization of GST and VAT (Value
Added Tax).
4. Helps in marketing of agro products and related issues.
Role of Commerce and Industry Association
5. Interacting with the government to take action against those
who violates rules relating to weights and measures and
prevention of duplication of brands.
6. Promoting sound infrastructure.
7. Interact with the government on issues of labour laws.
Prepared by: Ajith Kanthi @ Ajith P
P
SKMJ HSS Kalpetta Wayanad Kerala
Ph: 9446162771, 7907712665
www. hssplustwo.blogspot.com
For latest updates, visit: HssVoice Blog


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Class 11

Ajith Kanthi Wayanad

On the basis of scale of operation, internal trade can be

One who deals in wholesale trade is known as

Bulk orders from wholesalers enable to produce in

They take the risk of change in demand, spoilage,

Wholesalers purchase on cash basis and sometimes they may

Wholesalers are in constant touch with the retailers, they can

Wholesalers take care of distribution of goods, market

Wholesalers purchase goods on a real time basis as and when

The burden of storing goods passes to the

Ajith Kanthi Wayanad

Retailers get goods as and when they required as there is a large

Wholesaler takes all the burden of advertisement and sales

It enables the retailers to conduct their business without

They also inform the retailers about new products, their

The risk of retailers gets reduced as most of the burden of

A retail trader buys goods from the wholesalers and

Retailers help in distribution of goods to the ultimate

Most of the consumer goods requires personal selling,

Manufacturers and wholesalers are free from the trouble of

Since the retailers are in constant touch with the

It helps the wholesalers and manufacturers in promoting the

It ensures ready and regular supply of goods

By arranging proper display and through personal selling

Retailer sells goods in small quantities and they have set up

The retailer has a large variety of goods from

The retailers often provide credit facilities to regular

Itinerant Traders Fixed Shop

Ajith Kanthi Wayanad

Traders are having no fixed place of business

Eg: Hawkers, street traders etc.

Due to limited resource

Usually they deal in consumer goods of daily use Eg:

They provide goods at the door step of the

As they have no fixed place to operate, they do their

3.Street Traders / Pavement Traders

Peddlers carry their products

c)Dealing in Low priced goods.

d) They move from one market to another.

a) They sell consumer items of daily use.

b)Also provide services like repairing watches, shoes,

c)Move from one area to another depending on sales

d)They also sells goods in temporary sheds during

Hawkers and Peddlers

Ajith Kanthi Wayanad

These retailers are those who carry on business by

They do not move from one place to another

Small scale Retailers Large scale retailers

They deal consumer goods, both

Speciality Street Stall

They are running their business on a small

E.g. kids wear shop, computer shop, bookshop etc.

They usually display their goods on a table, stand or

Large scale retailing may be defined as retail trade

Ajith Kanthi Wayanad

Textile Department Consumer Goods Department

Each department deals in separate line of goods like

Ajith Kanthi Wayanad

Eg. Bata Shoe company, Bombay Dyeing Show Rooms, Big

Departmental Stores Multiple Shops

Central location Not necessary

Departmental Stores Multiple Shops