Internal Trade Internal Trade Features Domestic Production Buying
Internal Trade
Internal Trade Features: • Domestic Production • Buying and selling with in the geographical boundaries of a country • Payment in the legal currency of a COUNTRY • Use of local means of transport • Does not involve any custom/ import duty • Local taxes applicable (VAT/ CST) (Now GST) • Distribution of goods within the country speedily at a reasonable cost
Internal Trade Wholesaler: • Buying and selling in large quantities • Link between manufacturers and retailers • Bears the risk • Undertake other activities as well • Extend credit facilities
Internal Trade Services of wholesalers to Manufacturers: • Facilitating large scale production • Bearing risk • Financial assistance • Expert advice • Help marketing function • Facilitate continuity in production • Storage
Internal Trade Services to Retailers: • Availability of goods • Marketing support • Grant of credit • Specialized knowledge • Risk sharing
Internal Trade Retail Trade: • Sale of goods and services to the ultimate customers • Represents the final stage in the distribution of good and services • Different ways of selling – personally, telephonically, vending machines • Bears the risk • Collects information • Extends credit facilities • Promotes the products
Internal Trade Services to Manufacturers & Wholesalers: • Helps in distribution of goods • Personal selling • Enabling large scale operation • Collecting market information • Helps in promotion
Internal Trade Services to Customers: • Regular availability of products • New products information • Convenience buying • Wide selection • After sale services • Provide credit facilities
Types of Retail Trade 1. Itinerant Retailers: • Small traders with limited resources • Deals in fast moving consumer goods • Provides goods at the door step • Maintains limited inventory • No establishment expenses – low price • Goods are sold for cash • Examples – vegetables, fruits, goods of daily use, home utility items
Types of Retail Trade Types of Itinerant Retailers with reference to India: • Hawkers & Peddlers • Market Traders • Street Traders • Cheap Jacks
Types of Retail Trade 2. Fixed Shop Small Retailers: • Varies from very small to very large shops • Deals both in consumer goods and durable goods • They have more reliability amongst customers • They provide greater customer satisfaction by providing services like free delivery, after sale service, credit facilities, exchange possibilities etc
Types of Retail Trade Types of Fixed Shop Retailers: (Small Retailers) • General stores • Street stall holders • Speciality shop holders • Second hand goods dealer • Seconds shop • Single line shop
Types of Retail Trade Types of Fixed Shop Retailers (Large Scale): • Departmental Store • Multiple Shops • Mail Order Business • Consumer’s Cooperative Stores • Super Markets • Automatic Vending Machine
Departmental Stores Features: Varied Services Central Location Huge Investment Corporate Status Bulk Purchasing Centralized purchasing Organized as Departments
Departmental Stores Advantages: • Attract large no. of customers • Convenience in buying • Attractive services • Economy of large scale operations • Promotion of sales • Quality of products • Professional mangement
Departmental Stores Disadvantages: • Lack of personal attention • High operating cost • High possibility of losses • Inconvenient location • Sectional appeal • Huge investment • Adversely affects small retailers
Chain Stores / Multiple Shops Features: • Location • Huge investment • Single line stores • Uniformity • Management • Cash sales • Controlled by head office • Purchases/ sales
Chain Stores / Multiple Shops Advantages: • Economies of scale • Standardized quality • Fixed prices • Elimination of middlemen • No bad debts • Transfer of goods • Diffusion of risk • Low cost • Flexibility • Centralized planning and control
Chain Stores / Multiple Shops Disadvantages: • Limited selection of goods • Lack of initiative/ flexibility • Lack of personal touch • Difficult to change demand • Huge investment and high operating cost
Mail Order Houses Advantages: • Limited Capital Requirement • Elimination of Middlemen • No bad Debts • Wide Reach • Convenience
Mail Order Houses Disadvantages: • Lack of Personal Contact • High Promotion Cost • No after Sale Services • No Credit Facilities • Delayed Delivery • Possibility of Fraud • High Dependence on Postal services • Limited Customer Base
Consumer Cooperative Store Features: • Voluntary Organisation • Reduce the no. of middlemen • Functions democratically • Minimum 10 individuals • Registration • Distribution of profits
Consumer Cooperative Store Advantages: • Ease in Formation • Limited Liability • Democratic Management • Lower Price • Cash Sales • Convenient Location
Consumer Cooperative Store Disadvantages: • Lack of initiative • Shortage of funds • Lack of patronage • Lack of professionalism
Super Markets Features: • Sell a complete line of food and non food convenience items • Self Service • Cash sales • No additional Services • Low Prices
Super Markets Advantages: • One Roof • Low Cost • Central Location • Wide Selection • No Bad Debts • Benefits of large Scale • Fixed Prices
Super Markets Disadvantages: • No Credit Facilities • No Personal Attention • Mishandling of goods • High Overhead Expenses • Huge Capital Expenditure
Automatic Vending Machines Advantages: • Can be placed anywhere • Zero Selling Cost • Useful for selling pre packed items with high turnover • Provides standardized good quality products at fixed price
Automatic Vending Machines Disadvantages: • High installation & maintenance cost • No option of return of goods • Lack of confidence • Inconvenience if the machine breaks down
Role of Commerce & Industry Associations in Promotion of Internal Trade • Inter State movement of goods • Octroi and other local levies • Harmonisation of sales tax structure and value added tax • Marketing of agro products and related issues • Weights & measures and prevention of duplication of brands • Excise Duty • Promoting sound infrastructure • Labour Legislation
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