Learning Objectives
- Understand the meaning and types of internal trade
- Learn about wholesale trade and its functions
- Understand retail trade and its various forms
- Know about large-scale retail formats: departmental stores, chain stores, supermarkets, mail order
- Learn about the role of Chambers of Commerce and Trade Associations
Key Concepts
Meaning of Internal Trade
Internal trade (domestic trade) refers to the buying and selling of goods and services within the geographical boundaries of a country. It is subject to a uniform set of commercial laws and transactions are conducted in the domestic currency. Internal trade is classified into Wholesale Trade and Retail Trade.
Wholesale Trade
A wholesaler buys goods in large quantities from manufacturers and sells them in smaller lots to retailers. The wholesaler acts as a link between the manufacturer and the retailer.
Services to Manufacturers: buying in bulk, warehousing and storage, risk bearing, financing (advance payments), market information, facilitating large-scale production.
Services to Retailers: availability of variety, credit facility, marketing support, expert advice, reduced burden of storage, regular supply.
Retail Trade
A retailer is the last link in the chain of distribution, selling goods directly to the final consumer in small quantities. Retailers provide convenience of location, variety, after-sales service, and credit facilities to consumers.
Types of Retail Trade
Small-scale (Itinerant) Retailers:
- Hawkers and Peddlers: Move from place to place selling goods door-to-door.
- Street Traders: Sell goods on footpaths, pavements, and street corners.
- Market Traders: Sell goods in weekly markets (haats) or periodic markets.
- Cheap Jacks: Small retailers with a temporary shop that changes location frequently.
Small-scale (Fixed Shop) Retailers: General stores, speciality shops (single product line), second-hand goods dealers, street stall holders.
Large-scale Retail Formats
- Departmental Stores: Large retail establishments with multiple departments under one roof, each selling a different product line (clothing, electronics, home furnishings, groceries). Features: central location, wide variety, centralised purchasing, decentralised selling. Example: Shoppers Stop, Lifestyle. Advantages: one-stop shopping, convenience, variety. Disadvantages: high operating costs, impersonal service, risk of loss from unsold inventory.
- Chain Stores (Multiple Shops): A network of retail stores under common ownership selling similar products with standardised layout. Features: similar appearance, centralised purchasing, decentralised selling, located in different localities. Example: Bata, Raymond, McDonald's. Advantages: bulk buying discounts, uniform quality, wide reach. Disadvantages: limited variety in each store, lack of personal touch.
- Mail Order Houses: Retail businesses that receive orders through post/email and deliver goods by mail/courier. No direct contact between buyer and seller. Suitable for standardised, branded, lightweight goods. Advantages: no shop needed, wide reach, convenience. Disadvantages: no personal inspection, delayed delivery, limited to certain products.
- Supermarkets: Large self-service retail stores selling food and household products. Customers select goods from shelves and pay at checkout counters. Features: self-service, low prices (due to bulk buying), high turnover, located in busy areas. Example: Big Bazaar, D-Mart, Reliance Fresh.
- Vending Machines: Coin or card-operated machines dispensing products automatically. Used for beverages, snacks, tickets, etc. Advantages: 24/7 availability, no salesperson needed. Disadvantages: limited product range, machine malfunction.
Chambers of Commerce and Trade Associations
Chambers of Commerce are voluntary associations of business people formed to promote, protect, and facilitate trade and industry. They represent business interests before the government, organise trade fairs, provide market information, and settle commercial disputes. Examples: FICCI, ASSOCHAM, CII. Trade Associations represent specific industries or trades and work for the interests of their members.
Summary
Internal trade encompasses all buying and selling within a country, conducted through wholesalers (bulk buying and redistribution) and retailers (sale to final consumers). Retail trade ranges from small itinerant sellers to large-scale formats like departmental stores, chain stores, supermarkets, and mail-order businesses. Each format has distinct features suited to different products and market segments. Chambers of Commerce and Trade Associations play a crucial role in representing business interests and facilitating trade.
Important Terms
- Wholesale Trade
- Buying goods in bulk from manufacturers and selling in smaller quantities to retailers.
- Retail Trade
- Selling goods directly to the final consumer in small quantities for personal use.
- Departmental Store
- A large retail establishment with multiple departments under one roof, each selling different product lines.
- Chain Stores
- A network of identical retail stores under common ownership selling similar products across different locations.
- Supermarket
- A large self-service retail store selling food and household items at competitive prices.
- Chamber of Commerce
- A voluntary association of business persons formed to promote and protect trade and commercial interests.
Quick Revision
- Internal Trade = Wholesale Trade + Retail Trade, conducted within a country's borders.
- Wholesaler links manufacturer and retailer; Retailer links wholesaler and consumer.
- Itinerant retailers: hawkers, peddlers, street traders, market traders, cheap jacks.
- Departmental Store: multiple departments, one roof, centralised purchasing, wide variety.
- Chain Stores: uniform shops, different locations, same products, centralised buying.
- Supermarket: self-service, low prices, high turnover, food and household goods.
- Chambers of Commerce: FICCI, ASSOCHAM, CII -- represent business interests before government.
Practice Tips
- Create a detailed comparison table of Departmental Stores, Chain Stores, Supermarkets, and Mail Order on 6-8 parameters.
- Learn the services of wholesalers to manufacturers and retailers separately -- common exam question.
- Understand the difference between itinerant and fixed-shop retailers with examples.
- Practice case-based questions identifying which retail format is most suitable for given scenarios.