Domestic Trade | ISC Class 11 Business Studies Notes

This note covers domestic (internal) trade: the meaning and features of wholesale trade and the services a wholesaler gives to the producer, the retailer and the customer; the meaning and features of retail trade; the distinction between wholesale and retail trade; the types of retail trade, namely itinerant retailers and small-scale fixed shops (general stores, speciality shops, street stall holders, second-hand goods shops and single line stores) as well as departmental stores, chain stores and dark stores; and the meaning and features of digital retailing and omnichannel retailing.

What is domestic (internal) trade?

Trade refers to buying and selling of goods and services with the objective of earning profit. On the basis of the geographical location of buyers and sellers, trade is classified into internal trade and external trade.

Trade which takes place within a country is called internal trade, while trade between two or more countries is called external trade.

Definition: Internal trade. Internal trade is the buying and selling of goods and services within the boundaries of a nation. Purchases from a neighbourhood shop, a departmental store, a mall, a door-to-door salesperson or an exhibition are all examples, because the goods are bought from an individual or establishment within the country.

No customs duty or import duty is levied on internal trade, as the goods are part of domestic production and are meant for domestic consumption; payment is generally made in the legal tender of the country.

Internal trade is classified into two broad categories: wholesale trade and retail trade. Internal trade aims at the equitable distribution of goods within a nation speedily and at reasonable cost.

What is wholesale trade and what are its features?

Definition: Wholesale trade. Wholesale trade refers to the purchase and sale of goods and services in large quantities for the purpose of resale or intermediate use.

Wholesaling is concerned with the activities of those persons or establishments which sell to retailers and other merchants, and to industrial, institutional and commercial users, but which do not sell in significant amounts to ultimate consumers.

Wholesalers serve as an important link between manufacturers and retailers. They enable producers to reach a large number of buyers spread over a wide geographical area, through retailers, and they perform a variety of functions in the distribution of goods and services.

What are the features of wholesale trade?

• Bulk buying and selling: wholesalers purchase goods in bulk and sell them in small lots to retailers or industrial users.
• Limited variety of goods: a wholesaler generally specialises in one line of products rather than stocking many unrelated lines.
• Large capital and storage needs: dealing in large lots calls for large working capital and warehouse or godown space.
• Link between producers and retailers: wholesalers stand between the manufacturer and the retailer in the chain of distribution.
• Own name and business risk: wholesalers generally take the title of the goods and bear the business risks by purchasing and selling the goods in their own name.
• No direct dealing with consumers: they do not sell in significant amounts to ultimate consumers.

Wholesalers undertake activities such as grading of products, packing into smaller lots, storage, transportation, promotion of goods, collection of market information, collection of small and scattered orders of retailers and distribution of supplies to them. They also relieve retailers of maintaining large stocks and extend credit facilities to them.

Most of the functions performed by wholesalers cannot be eliminated. If there were no wholesalers, these functions would have to be performed either by the manufacturers or by the retailers.

What services does a wholesaler provide to the producer, the retailer and the customer?

By making products available at a place and a time when they are needed, wholesalers provide both time utility and place utility.

Services to producers

1. Facilitating large-scale production: wholesalers pool small retailer orders and purchase in bulk, letting producers gain economies of scale.
2. Bearing risk: wholesalers take delivery of goods and keep them in their warehouses, bearing risks such as fall in prices, theft, pilferage, spoilage and fire.
3. Financial assistance: wholesalers generally make cash payment for goods purchased, so producers need not block their capital in stocks; wholesalers sometimes advance money for bulk orders.
4. Expert advice: being in direct contact with retailers, wholesalers advise producers on customer tastes, market conditions and competitive activities.
5. Help in marketing function: wholesalers distribute goods to many retailers, relieving producers of marketing activities.
6. Facilitate production continuity: wholesalers purchase and store goods as produced, allowing continuous production throughout the year.
7. Storage: wholesalers keep goods in their own godowns, reducing the producer's burden of providing storage.

Services to retailers

1. Availability of goods: wholesalers make products of various manufacturers readily available, relieving retailers of collecting goods from many producers.
2. Marketing support: wholesalers undertake advertising and sales promotion that help retailers increase demand for new products.
3. Grant of credit: wholesalers extend credit to regular customers, letting retailers operate with a relatively small working capital.
4. Specialised knowledge: wholesalers inform retailers about new products, uses, quality and prices, and may advise on shop decor and shelf allocation.
5. Risk sharing: because retailers can purchase smaller quantities from wholesalers, they avoid the risk of storage, pilferage, obsolescence and price falls on larger stocks.

Services to customers

1. Regular supply of goods: by holding large stocks in their godowns, wholesalers keep retailers supplied, so the ultimate customer finds goods available when needed.
2. Lower prices: wholesalers buy in bulk and pass on the benefit of economies of scale, so goods reach the customer at reasonable prices.
3. Wider choice: because wholesalers stock the products of many producers, the customer can choose from a wide variety of goods at nearby retail shops.
4. Time and place utility: wholesalers make products available at the place and at the time the customer needs them for consumption or use.

What is retail trade and what are its features?

Definition: Retail trade. Purchase and sale of goods in relatively small quantities, generally to the ultimate consumers, is referred to as retail trade. A retailer is a business enterprise engaged in the sale of goods and services directly to the ultimate consumers.

Retailing covers any way of selling (personally, by telephone, through vending machines) and any place of sale (store, customer's house, roadside), so long as the sale is made directly to the ultimate consumer for personal, non-business use.

What are the features of retail trade?

• Direct sale to ultimate consumers: the retailer sells goods and services directly to ultimate consumers for their personal and non-business use.
• Small quantities: the retailer normally buys goods in large quantities from wholesalers and sells them in small quantities, according to the requirements of customers.
• Final link in distribution: retail trade represents the last stage in the distribution chain, where goods pass from manufacturers or wholesalers to final consumers.
• Variety of products: a retailer purchases a variety of products from wholesale distributors and others, keeping stock of the products of different manufacturers.
• Storage and risk: the retailer arranges for proper storage of goods and bears business risks.
• Credit and promotion: the retailer grades products, collects market information, extends credit to buyers and promotes sales through displays and participation in various schemes.

How does wholesale trade differ from retail trade?

Wholesale trade and retail trade are the two broad divisions of internal trade, and they differ in the quantity dealt in, the buyer served and the place each occupies in the chain of distribution.

What are itinerant retailers?

Definition: Itinerant retailers. Itinerant retailers are traders who do not have a fixed place of business to operate from and who keep moving with their wares from street to street or place to place in search of customers.

What are the characteristics of itinerant retailers?

• They are small traders operating with limited resources.
• They normally deal in consumer products of daily use, such as toiletry products, fruits and vegetables.
• Their emphasis is on providing greater customer service by making products available at the very doorstep of customers.
• As they have no fixed business establishment, they keep their limited inventory of merchandise either at home or at some other place.

What are the types of itinerant retailers?

1. Peddlers and hawkers: small producers or petty traders who carry products on a bicycle, a hand cart, a cycle-rickshaw or on their heads and move from place to place, selling at the doorstep of customers. They generally deal in non-standardised, low-value products such as toys, vegetables, fruits, fabrics, carpets, snacks and ice creams, and are also found in streets of residential areas, at exhibitions and outside schools during a lunch break. Their main advantage is convenient service, but their products are not always reliable in terms of quality and price.
2. Market traders: small retailers who open their shops at different places on fixed days or dates, such as every Saturday or alternate Saturdays. They may deal in one line of merchandise, such as fabrics, ready-made garments, toys or crockery, or be general merchants. They mainly cater to lower-income group customers and deal in low-priced consumer items of daily use.
3. Street traders (pavement vendors): small retailers commonly found where a huge floating population gathers, for example near railway stations and bus stands, selling consumer items of common use such as stationery, eatables, ready-made garments, newspapers and magazines. They differ from market traders in that they do not change their place of business so frequently.
4. Cheap jacks: petty retailers who have independent shops of a temporary nature in a business locality. They keep changing their business from one locality to another depending on the potential of the area, though the change of place is not as frequent as in the case of hawkers or market traders. They deal in consumer items as well as services such as repair of watches, shoes and buckets.

What are fixed-shop retailers?

Definition: Fixed-shop retailers. Fixed-shop retailers maintain a permanent establishment to sell their merchandise and, therefore, do not move from place to place to serve their customers.

Compared with itinerant traders, fixed-shop retailers generally have greater resources and operate on a relatively larger scale, though sizes range from very small to very large.

They may deal in consumer durables as well as non-durables, and this category has greater credibility in the minds of customers, enabling it to offer services such as home delivery, guarantees, repairs, credit facilities and availability of spares.

Fixed-shop retailers are classified, on the basis of the size of operations, into small shopkeepers and large retailers. The small-scale fixed shops are described below; the large-retailer forms, departmental stores and chain stores, and the modern dark store are described in the sections that follow.

What are the types of small-scale fixed shops?

1. General stores: most commonly found in a local market and residential areas, these shops carry a variety of products needed for the day-to-day needs of nearby residents, such as grocery items, soft drinks, toiletries, stationery and confectionery. They remain open for long hours at convenient timings and often give credit to regular customers; their biggest advantage is convenience, and their success depends on the owner's image and rapport with the locality.
2. Speciality shops: instead of selling a variety of products, these stores specialise in one line, such as children's garments, men's wear, ladies shoes, toys and gifts, school uniforms, college books or consumer electronic goods. They are generally located at a central place and offer a wide choice within that line.
3. Street stall holders: small vendors found at street crossings or where traffic is heavy, dealing mainly in cheap goods such as hosiery products, toys, cigarettes and soft drinks, with supplies from local suppliers and wholesalers; the stall covers a very limited area.
4. Second-hand goods shops: these deal in used goods such as books, clothes, automobiles, furniture and household goods, generally bought by people of modest means at lower prices; they may also stock rare and antique items sold at heavy prices.
5. Single line stores: these deal in a single product line, such as readymade garments, watches or shoes, keep a variety of items within that line, and are situated at a central location.

What is a departmental store and what are its features?

Definition: Departmental store. A departmental store is a large establishment offering a wide variety of products, classified into well-defined departments, aimed at satisfying practically every customer's need under one roof.

It has a number of departments, each one confining its activities to one kind of product. For example, there may be separate departments for toiletries, medicines, furniture, groceries, electronics, clothing and dress material within a store. Thus, they satisfy diverse market segments with a wide variety of goods and services.

Real departmental stores have not come up in a big way in India, though stores on this line include 'Akberally' in Mumbai and 'Spencers' in Chennai.

What are the features of a departmental store?

• Maximum service: a modern departmental store may provide facilities such as a restaurant, travel and information bureau, telephone booth and rest-rooms, and so tries to provide maximum service to higher class customers for whom price is of secondary importance.
• Central location: these stores are generally located at a central place in the heart of a city, which caters to a large number of customers.
• Company form: as the size of these stores is very large, they are generally formed as a joint stock company managed by a board of directors, with a managing director assisted by a general manager and several department managers.
• Retailing with warehousing: a departmental store combines both the functions of retailing and warehousing. It purchases directly from manufacturers and operates separate warehouses, helping to eliminate undesirable middlemen between producers and customers.
• Centralised purchasing: all purchases are made centrally by the purchase department of the store, whereas sales are decentralised in different departments.

What are chain stores or multiple shops?

Definition: Chain stores. Chain stores, or multiple shops, are networks of retail shops owned and operated by manufacturers or intermediaries, with a number of similar-looking shops established across different parts of the country, dealing in standardised and branded consumer products with a rapid sales turnover.

These shops are run by the same organisation and follow identical merchandising strategies, with identical products and displays.

They are located in fairly populous localities so that the shop is nearest to a customer's residence or workplace rather than attracting customers to one central place.

Manufacturing or procurement is centralised at the head office, from where goods are despatched to each shop.

Each retail shop is under a Branch Manager, responsible for day-to-day management and for sending daily reports on sales, cash deposits and stock requirements to the head office, which formulates and enforces policy.

Prices are fixed and all sales are made on a cash basis; cash is deposited daily into a local bank account on the head office's behalf.

In India, Bata shoe stores, DCM, Nirula's and Raymonds are typical examples of such shops, while retailer-owned chains such as Big Apple and Reliance Retail sell products of many manufacturers rather than only their own.

What is a dark store?

Definition: Dark store. A dark store is a retail outlet or small warehouse that is closed to walk-in shoppers and is used only to pick, pack and despatch goods ordered online, usually for fast local delivery.

A dark store looks like an ordinary small retail shop or warehouse from outside, but it has no display counters, billing staff or customers walking the aisles; instead, staff pick items from shelves against online orders and hand them to delivery riders.

Dark stores are usually set up close to residential localities so that orders placed through a website or app can reach the customer within a short time.

Their main feature is that they combine the stock range of a small fixed shop with the speed needed for quick online delivery, rather than serving customers in person as a general store or a departmental store does.

Draw a small rectangular warehouse with labelled storage racks for groceries, a packing counter, and a back door marked "for delivery riders only"; show no customer entrance or billing counter, to contrast it with an ordinary fixed shop that has a shop-front and a customer counter.

What is digital retailing?

Definition: Digital retailing. Digital retailing is the sale of goods and services to ultimate consumers through digital channels, such as websites, mobile apps and online marketplaces, rather than through a physical shop counter.

In digital retailing, the retailer displays its products online, the customer browses and selects items on a screen, pays through an online mode and has the order delivered to the chosen address, or sometimes collects it from a pick-up point.

Features of digital retailing include a wide and easily searchable catalogue of goods, round-the-clock availability unlike a shop with fixed opening hours, the ability to compare prices and read reviews before buying, and the use of customer data to show personalised offers.

Digital retailing removes the need for the customer to travel to a shop, but it depends heavily on reliable internet access, digital payment systems and an efficient delivery network to bring the goods to the customer's doorstep.

What is omnichannel retailing?

Definition: Omnichannel retailing. Omnichannel retailing is a retailing approach in which a retailer sells through several channels, such as a physical shop, a website, a mobile app and social media, that are linked together so the customer gets one seamless shopping experience across all of them.

Under omnichannel retailing, a customer may browse a product on a mobile app, check its availability in a nearby shop, buy it online and either have it delivered home or collect it in person, and later return it at any of the retailer's outlets.

The key feature that distinguishes omnichannel retailing from simply running a shop and a website side by side is integration: stock, pricing, promotions and customer information are shared across every channel, so the customer does not notice a difference between buying online and buying in the shop.

This gives the customer flexibility and convenience in deciding how, when and where to shop, while giving the retailer a single, unified view of each customer across all touchpoints.

Draw the retailer in the centre connected by two-way arrows to four boxes: physical shop, website, mobile app and social media, with a shared stock and customer database box in the middle linking all four, to show how the channels are integrated rather than separate.

Going beyond the syllabus

These ideas extend the unit and are not needed for the questions on it.

What services do retailers give to manufacturers and wholesalers?

1. Help in distribution of goods: retailers make products available to scattered final consumers, providing place utility.
2. Personal selling: retailers relieve producers of the personal selling effort needed to actualise sale of most consumer goods.
3. Enabling large-scale operations: retailers free manufacturers and wholesalers from making individual small sales, letting them operate at a relatively large scale.
4. Collecting market information: being in direct touch with buyers, retailers are a useful source of information on customer tastes and preferences.
5. Help in promotion: retailers participate in promotional activities such as coupons, free gifts and sales contests.

What services do retailers give to consumers?

1. Regular availability of products: retailers maintain regular stock so buyers can purchase as and when needed.
2. New products information: retailers inform customers about new products through display and personal selling.
3. Convenience in buying: retailers, situated near residential areas and open for long hours, sell in small quantities as customers require.
4. Wide selection: retailers stock a variety of products of different manufacturers, giving consumers a choice.
5. After-sales services: retailers may provide home delivery, spare parts and attending to customers, encouraging repeat purchase.
6. Credit facilities: some retailers extend credit to regular buyers, raising their level of consumption.

What are the advantages and limitations of departmental stores?

• Attract a large number of customers: the central location attracts a large number of customers during the best part of the day.
• Convenience in buying: a large variety of goods under one roof saves customers from running between shops.
• Attractive services: services include home delivery, telephone orders, credit facilities, restrooms, telephone booths, restaurants and saloons.
• Economy of large-scale operations: large-scale purchase benefits are available to such stores.
• Promotion of sales: a large amount can be spent on advertising and promotional activities.
• Lack of personal attention: large-scale operations make it difficult to give adequate personal attention to customers.
• High operating cost: emphasis on services raises operating costs and, in turn, prices, making the stores less attractive to lower-income groups.
• High possibility of loss: high operating costs and large scale raise the chance of loss, for example when a clearance sale is needed to clear out-of-fashion stock.
• Inconvenient location: a central location is not convenient for buying goods needed at short notice.

What are the advantages and limitations of chain stores?

• Economies of scale: central procurement lets the multiple-shop organisation enjoy economies of scale.
• Elimination of middlemen: selling directly to consumers removes unnecessary middlemen.
• No bad debts: since all sales are on a cash basis, there are no losses from bad debts.
• Transfer of goods: goods not in demand in one locality can be moved to another, reducing dead stock.
• Diffusion of risk: losses at one shop can be covered by profits at others.
• Low cost: centralised purchasing and promotion keep costs low.
• Flexibility: an unprofitable shop can be closed or shifted without affecting overall profitability.
• Limited selection of goods: manufacturer-owned chains mostly sell their own products, giving consumers only a limited choice.
• Lack of initiative: staff must follow head office instructions, which can take away initiative to use creative skills.
• Lack of personal touch: lack of initiative can lead to indifference towards customers.
• Difficult to change demand: a rapid change in demand can leave large unsold stocks at the central depot, causing losses.

How do departmental stores differ from chain stores?

Glossary

• Internal trade — buying and selling of goods and services within the boundaries of a nation.
• Wholesale trade — purchase and sale of goods and services in large quantities for resale or intermediate use.
• Retail trade — purchase and sale of goods in relatively small quantities, generally to ultimate consumers.
• Wholesaler — a trader who sells to retailers and other merchants, and to institutional or commercial users, in large quantities.
• Retailer — a business enterprise engaged in the sale of goods and services directly to the ultimate consumers.
• Time utility — value created by making a product available at the time it is needed.
• Place utility — value created by making a product available at the place it is needed.
• Itinerant retailers — traders with no fixed place of business who move from place to place to sell goods.
• Peddlers and hawkers — small traders who carry goods on a cart, cycle or head and sell at the customer's doorstep.
• Cheap jacks — petty retailers with temporary independent shops who change locality occasionally.
• Fixed-shop retailers — retailers who maintain a permanent establishment and do not move from place to place.
• Departmental store — a large establishment offering a wide variety of products in well-defined departments under one roof.
• Chain stores — a network of similar, centrally controlled retail shops dealing in standardised, branded goods.
• Dark store — a retail outlet or warehouse closed to walk-in shoppers, used only to fulfil online orders.
• Omnichannel retailing — selling through several linked channels so the customer has one seamless experience across all of them.

Common errors and misconceptions

• Misconception: Internal trade and external trade mean the same thing. Correct: internal trade takes place within a country's boundaries, while external trade takes place between two or more countries.
• Misconception: A wholesaler sells mainly to ultimate consumers. Correct: a wholesaler sells mainly to retailers and to industrial, institutional or commercial users, not in significant amounts to ultimate consumers.
• Misconception: Wholesale trade and retail trade differ only in the name of the trader. Correct: wholesale trade deals in large quantities for resale or intermediate use, while retail trade sells in small quantities to the ultimate consumer, and the two differ in buyer, capital, stock and risk.
• Misconception: Market traders and street traders are the same. Correct: market traders open shop at different places on fixed days, while street traders stay at busy, fixed locations without changing place so frequently.
• Misconception: A chain store and a departmental store are the same kind of large retailer. Correct: a departmental store is a single large establishment with many departments at one central location, while a chain store is a network of smaller, similar shops spread across many localities.
• Misconception: All large retailers offer credit to customers. Correct: chain stores sell strictly on a cash basis, while departmental stores may extend credit to regular customers.
• Misconception: A dark store is simply a small shop that is closed. Correct: a dark store is deliberately set up without any customer-facing counter, used only to pack and despatch goods ordered online.
• Misconception: Digital retailing and omnichannel retailing mean the same thing. Correct: digital retailing means selling through a digital channel such as a website or app, while omnichannel retailing means linking several channels, physical and digital, into one seamless experience.

Exam-style questions with model answers

Q1. State whether the following statement is true or false: a wholesaler sells goods mainly to ultimate consumers. [1 mark]

1. False. A wholesaler sells mainly to retailers and to industrial, institutional or commercial users, and does not sell in significant amounts to ultimate consumers.

Q2. Complete the analogy: Peddlers and hawkers: itinerant retailers :: General stores: ____________. [1 mark]

1. Small-scale fixed shops, since general stores maintain a permanent establishment and carry a variety of products for the day-to-day needs of nearby residents.

Q3. Distinguish between wholesale trade and retail trade on the following bases: (a) quantity dealt in (b) buyer (c) link in the chain of distribution (d) risk borne. [4 marks]

1. Quantity dealt in: wholesale trade deals in large quantities, sold in small lots to retailers or industrial users, while retail trade deals in relatively small quantities as required by the final consumer.
2. Buyer: a wholesaler sells to retailers and other merchants and to industrial, institutional or commercial users, while a retailer sells to the ultimate consumer for personal and non-business use.
3. Link in the chain: the wholesaler stands between the manufacturer and the retailer, while the retailer represents the final stage between the wholesaler or manufacturer and the consumer.
4. Risk borne: the wholesaler bears the business risk of price falls, theft, pilferage, spoilage and fire on large stocks, while the retailer bears a smaller risk because stock is held in small quantities and sold quickly.

Q4. Explain any two services that a wholesaler renders to a producer and any two services rendered to a retailer. [4 marks]

1. Facilitating large-scale production: the wholesaler collects small orders from retailers, pools them and purchases in bulk, enabling the producer to produce on a large scale and gain economies of scale.
2. Bearing risk: the wholesaler takes delivery of goods and keeps them in warehouses, bearing risks such as fall in prices, theft, pilferage, spoilage and fire, and so relieves the producer of these risks.
3. Availability of goods: the wholesaler makes the products of various manufacturers readily available to retailers, relieving them of collecting goods from several producers and holding a big inventory.
4. Grant of credit: the wholesaler generally extends credit facilities to regular retailer customers, enabling retailers to manage their business with a relatively small amount of working capital.

Q5. Explain the meaning and features of a departmental store. [4 marks]

1. A departmental store is a large establishment offering a wide variety of products, classified into well-defined departments, aimed at satisfying practically every customer's need under one roof.
2. It is generally located at a central place in the heart of a city, which caters to a large number of customers.
3. As the size is very large, it is generally formed as a joint stock company managed by a board of directors, with a managing director assisted by a general manager and several department managers.
4. It combines retailing with warehousing, purchasing directly from manufacturers and operating separate warehouses, and its purchasing is centralised while sales are decentralised across departments.

Q6. Explain the meaning and features of a chain store (multiple shop). [8 marks]

1. Meaning: a chain store, or multiple shop, is one of a network of retail shops owned and operated by manufacturers or intermediaries, with similar-looking shops established in localities spread over different parts of the country.
2. Standardised products: these shops deal in standardised and branded consumer products with a rapid sales turnover.
3. Identical merchandising: the shops are run by the same organisation and follow identical merchandising strategies, with identical products and displays.
4. Location: they are located in fairly populous localities so as to serve customers at a point nearest to their residence or workplace, rather than attracting them to a central place.
5. Centralised procurement: manufacturing or procurement is centralised at the head office, from where goods are despatched to each shop.
6. Branch Manager: each shop is under a Branch Manager, who is responsible for its day-to-day management and sends daily reports to the head office on sales, cash deposits and stock requirements.
7. Head office control: all the branches are controlled by the head office, which formulates the policies and gets them implemented.
8. Fixed prices and cash sales: prices are fixed and all sales are made on a cash basis, with the cash deposited daily into a local bank account on behalf of the head office.

Q7. Explain the meaning and features of digital retailing and of omnichannel retailing, and state one way in which they differ. [8 marks]

1. Digital retailing is the sale of goods and services to ultimate consumers through digital channels such as websites, mobile apps and online marketplaces rather than through a physical shop counter.
2. In digital retailing the retailer displays its products online, the customer browses and selects items on a screen, pays through an online mode and has the order delivered, or collects it from a pick-up point.
3. Its features include a wide and easily searchable catalogue, round-the-clock availability, the ability to compare prices and read reviews, and the use of customer data for personalised offers.
4. Digital retailing removes the need to travel to a shop, but depends on reliable internet access, digital payment systems and an efficient delivery network.
5. Omnichannel retailing is an approach in which a retailer sells through several channels, such as a physical shop, a website, a mobile app and social media, that are linked together.
6. Under it, a customer may browse on an app, check availability in a nearby shop, buy online and collect in person, and later return the item at any outlet.
7. Its key feature is integration: stock, pricing, promotions and customer information are shared across every channel, so the customer does not notice a difference between buying online and buying in the shop.
8. Difference: digital retailing means selling through a digital channel, while omnichannel retailing links physical and digital channels into one seamless experience for the customer.

Key takeaways

• Internal trade is trade within a country's boundaries, split into wholesale trade and retail trade, with no customs duty charged on it.
• Wholesale trade is the purchase and sale of goods in large quantities for resale or intermediate use, mainly to retailers and institutional users.
• Wholesalers give producers help such as bearing risk, financial assistance, expert advice and storage, creating time and place utility.
• Wholesalers give retailers availability of goods, marketing support, credit, specialised knowledge and risk sharing.
• Wholesalers also serve customers by keeping goods regularly available, at reasonable prices and in wide variety.
• Retail trade is the sale of goods in small quantities directly to the ultimate consumer, forming the final link in distribution.
• Itinerant retailers, such as peddlers, hawkers, market traders, street traders and cheap jacks, have no fixed place of business.
• Small-scale fixed shops include general stores, speciality shops, street stall holders, second-hand goods shops and single line stores.
• Departmental stores and chain stores are large fixed-shop retailers, while a dark store is a modern outlet that serves only online orders.
• Digital retailing sells through websites and apps, while omnichannel retailing links the physical shop and digital channels into one seamless experience.

Test yourself

What is meant by internal trade?

It is buying and selling of goods and services within the boundaries of a nation, with no customs or import duty levied because the goods are for domestic consumption.

Who is a wholesaler?

A wholesaler is a trader who buys and sells goods and services in large quantities, mainly to retailers and to industrial, institutional or commercial users, rather than to ultimate consumers.

Name any two itinerant retailers.

Peddlers and hawkers, and market traders, are two types of itinerant retailers who have no fixed place of business.

What is the main feature that marks out a fixed-shop retailer from an itinerant retailer?

A fixed-shop retailer maintains a permanent establishment and does not move from place to place, unlike an itinerant retailer.

Give one feature of a chain store.

A chain store is one of a network of similar shops, all owned by the same organisation, selling standardised, branded goods on a cash-only basis under centralised head-office control.

How is a dark store different from an ordinary shop?

A dark store has no customer counter and is not open to walk-in shoppers; it is used only to pick and pack goods ordered online for delivery.

What makes omnichannel retailing different from simply having a shop and a website?

In omnichannel retailing, the shop and the digital channels share the same stock and customer information, giving the customer one seamless experience across all of them.