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Internal trade | Business Studies | Class 11

Internal trade Means, Buying, and selling products or services within the boundaries of the country. There are two types of Internal trade Internal trade consists of Wholesale Trade, Retail Trade.


Wholesale trade

  • Buying and selling of goods and services in Large Quantities.

  • They mainly deal in offering goods and services directly from the manufacturers to the Retailer and Ultimate Customers.

  • As Compared to retailers and manufacturers, they store goods in large quantities to remove hindrances of time and easily available goods.

  • Goods are to be contained for purpose of distribution and re-sale or to the ultimate customer goods transferred to the retailer for the only purpose of resale to the Customer.

  • Any Industrials, institutions, and Retailers are the target audience of wholesalers.

  • Provides a Link between Manufacturer and retailer by mostly purchasing goods from the manufacturer and transferring them to the retailer or customer, it helps in containing the information of market situation and demand.

Retail trade

  • Selling of goods and services to the Ultimate Customer not for Purpose of Resale.

  • Provide a link between the Manufacturer and the customer. Same as a wholesaler, it also helps in the transfer of market situation and demand for particular goods or their consumer taste and preference.

  • They can try Different ways of selling Like advertisements, posters, banners, etc

  • There are many types of retail Trade

  • Mostly wholesaler gives goods and services on credit bases

  • The following retail Trade types are on the basis of size Large, medium, and small.

    • On the basis of type of Ownership are Sole trader, partnership, and Cooperative society and company.

    • On the basis of Merchandise handled are Specialty stores, supermarkets, and departmental stores.

    • On the basis of fixed place trade are Itinerant Retailers and Fixed Shop Retailer


There are some Services that are offered by wholesalers to Manufacturers and retailers.


Services to manufacturer by wholesaler

  • Take small orders from the retailer and pass those to the manufacturer to produce the units required.

  • There are many risks that have to bear by wholesalers regarding goods warehouse, theft fall in Price, loss by fire, etc

  • Wholesaler provides financial assistance to the manufacturer by payment in advance to order, and make payment in cash, etc

  • Provides advice to manufacturers regarding consumer taste preference of particular goods demand, etc.

  • Provides distribution network of a particular retailer, customer, etc


Services to retailer by wholesaler

  • Availability of Goods, Maintaining adequate Stock and Making available of verities of goods.

  • Promotion of goods by retailers leads to a direct effect on the demand for products.

  • For giving preference for the fulfillment of demand of customer firstly


There are some services offered by Retailers to manufacturers, wholesalers and customers are follow:


Services to manufacturer and wholesaler by retailer

  • Distribution of commodities: By dispersing the network, they assist in establishing a location where customers can conveniently obtain goods and services.

  • Enabling large-scale Production: By placing enormous orders for items from each shop, producers are able to produce in massive quantities on a regular basis until there is a market need.

  • Easy access to information about price, demand, preferences, and other factors allows them to readily comprehend market preferences and specific demand. As a result, they are able to predict the future.

  • Manufacturers of goods are indirectly promoted by retailers who advertise their products in the locations where they are produced or consumed.


Services To Consumers by Retailers

  • A variety of goods avail them: There is a wider selection of goods in front of consumers in all categories and in a proper classified manner.

  • Regular Business: The consumer avails goods on all days and at the prescribed time, so the regular customer can connect easily on daily basis.

  • After-Sales Service: There are facilities called home delivery, and supply of spare parts and some of them are like warranty at home.

  • Provide credit facilities: It is common in all fields of trade for providing credit facilities to the customer like purchasing on EMI or on Hire purchase.


Types of Retail Shops


On the basis of the Size of Business

There are mainly three types of business retail on the basis of Size Large, Medium, and small Retail shops.


On the Basis of Types of Ownership

  • Sole trader

  • Partnership Firm

  • Cooperative Society

On the basis of Merchandise Handled

  • Speciality store

  • Supermarket

  • Departmental Store

On the basis of Fixed Place Business

  • Itinerant Retailer

  • Fixed Shop Retailer


Itinerant Retailer

  • That trader does not have a fixed Place of business to operate.

  • They keep moving with their ware’s street to street or place to place.

  • Paddlers and hawkers, Market traders, Street traders, and Cheap jack is the example.

Paddlers and hawkers

  • Oldest form of retailers in the Market Place

  • They are small producers or petty traders who carry the product on the bicycle

  • And move from place to place and street to street

  • There sell generally low-value products like a toy, vegetables, fruits, etc.

Market Trader

  • They are a small trader

  • They generally open one or two days a week on a fixed date.

  • They deal in one particular line of product use in daily life.

Street trader

  • They are a generally small retailer

  • Found on the place to place where there is a huge population gather

  • Like in railway Station, bus stand, etc.

  • Sells generally Ready-made product

Cheap jack

  • Petty retailers who have an independent shop of temporary nature

  • They deal in consumer items as well as services.


Fixed Shop Retailer

  • Very common type of retailing in the market.

  • Who has a permanent place for business.

  • Basically, two types Small shop keeper and large retailer


Small Shop keeper

General Store:

  • Most commonly Found in a local market and residential areas.

  • Carry a stock of a variety of products.

  • Satisfy the day-to-day needs.

  • Such a store remains open for long time periods and provides credit facilities.

  • Customer In buying products of daily use such as grocery items, soft drinks toiletry products.


Specialty shops

  • This type of retail store become very popular, particularly in the Urban area.

  • Varieties of products offered and sales of products that are in a specific line.

  • Generally located in a central place where a large number of customers can be attracted.


Street stall Holder

  • These small vendors are commonly found at street crossings or other places where the flow of traffic is high.

  • Deals in the good of cheap varieties like hosiery, soft Drink, cigarette, etc.

  • Their supplies are from local suppliers as well as wholesalers.


Second-hand goods shops

  • Shops deals in second-hand goods like books, clothes, and other household goods.

  • These are sold at rather heavy prices to people who have special interests.

  • Located at a street crossing or in a busy street crossing having very little structure means a temporary platform.


Large Store


Departmental Store

  • The store is a large establishment offering a wide variety of Products.

  • And has a number of Departments.

  • Eg. Have separate departments for toiletries, medicines, furniture, electronics, clothing, etc.

  • Everything from a pin to an elephant is the spirit behind it.

  • Located generally at a central place in the heart of the city where the large no. of customers gathers.

Advantage

  • attract a large number of customers.

  • Convenience in buying the product.

  • attractive services offered.

  • Promotion of sales by advertisement.

Disadvantage

  • Lack of personal attention due to heavy rush.

  • High operating cost.

  • Inconvenient location.


Chain store

  • They are a network of retail shops that are owned and operated by manufacturers or intermediates.

  • Normally deals In Standardised and branded customer products.

  • Located in fairly populous localities that can be approached.

  • Each retail Shop is under the supervision of a branch manager who is responsible for it.

  • Branch is controlled by the head office.

  • Prices are there normally fixed.


Advantage

  • Elimination of middle man in work.

  • No bad debt because they deal on a cash basis.

  • Easily transfer goods at any place.

  • Low-cost operation at a fixed price.

Disadvantage

  • Limited selection of which are available here.

  • Lack of initiative because of personal managing and controlling in accordance to head office.

  • Difficult in the change of demand.


Mail Order House

  • They are the retail outlet that sells their merchandise through the mail.

  • No direct personnel Contact Between the buyer and the sellers.

  • A potential customer is approached through advertisements in newspaper catalogs sample and bills.

  • Firstly, a customer asked to make full payment in advance.

  • Second, the goods may be sent by value payable post.

  • Goods may be sent through a bank and handed over only after making full payment of the price.


Advantage

  • Limited capital requirement.

  • Elimination of middlemen.

  • absence of bad debt.

  • The wide reach of product at any place.

Disadvantage

  • lack of personal contact.

  • High promotion Cost.

  • No after-sales services.

  • No credit facilities.

  • Delayed delivery.

  • possibilities of abuse.


Consumer Cooperative store

  • It is owned, managed, and controlled by Consumers themselves.

  • The objective of such a store is to reduce the no. of middle man who increases the cost of production.

  • Provides services to the member.

  • Generally, buy in large quantities, directly from the manufacturer or wholesaler, and sell them to consumers at reasonable prices.

  • Profits earned by consumer cooperative stores during the year are utilized for the declaration of bonuses to members and for strengthening the general reserve and general welfare.

  • Its form by at least 10 people requires to come from under the cooperative Society Act.

  • Management of the store is democratic and entrusted to an elected managing committee.

  • The liabilities of the member are up to capital contributed in a cooperative society.


Advantage

  • Ease of formation.

  • Limited liabilities.

  • democratic management.

  • lower price.

  • cash sales only.


Disadvantage

  • Lack of initiative.

  • shortage of fund.

  • lack of patronage.

  • lack of business training.


Super Market

  • Large retailing business units selling a wide variety of consumer goods on the basis of low-price appeals.

  • Generally, food products, other low-priced products, and widely used consumer products are to be offered in this.

  • Goods kept in racks with clear labeled price and qualities tags in such store

  • Goods are sold on a cash basis only.

  • Located generally at a central location to secure high turnover.


Advantage

  • One roof is low cost.

  • Central Location.

  • Wide selection of products.

  • No bad debts.

  • Benefits of being large scale.

Disadvantage

  • No credit.

  • No personal attention.

  • mishandling of goods.

  • High operating expenses.

  • huge capital required.


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