Business consists of production and distribution activities.

These activities are important in our

life, because these activities enable us to satisfy our wants when we desire so.
Industry produces the required goods or commodities and commerce arranges their distribution
to needy customers. Industrial activities would be meaningless if the goods produced do not
reach to the ultimate consumers. So, distribution of goods is as important as production of
goods. Such distribution involves buying and selling of goods for mone or money's worth.
However, it is not an easy job for producers to contact all consumers for selling the goods.
Because,
(i) consumers are many in number;
(ii) they are spread over a large area; and
(iii) vast distance exists between the producers and the consumers. So, the producers need
help of middlemen who can contact the ultimate consumers. Such middlemen are known as
traders and the buying and selling conducted by them is known as trade. Trade is an important
aspect of commerce.
Trade is divided into two types:-
1. Internal Trade and 2. External Trade
Let us study internal trade and its various aspects in detail.
Internal Trade
Meaning
When buying and selling is conducted within the boundries of a country it is know as Internal
Trade.
The parties involved in this trade i.e.
buyer and seller belong to the same country. Similarly, the goods do notcross national boundries
even after completing the sales deal.
For example,
Mr. Anand of Mumbai purchases readymade garments from Mr. Patel of Baroda. Both of them
belong to India and the trade transaction between the two takes place in India. In short, internal
trade covers all those activities
which are required to transfer the possession and ownership of goods from seller's hands to
buyer's hands in the same country:

The chain through which a product passes on its way from factory in which it was
produced to the consumer in market place is called its chain or channel of distribution.

Wholesale Trade
The term 'wholesale' means sale in large quantities or bulk sale. A wholesaler is a trader
who buys goods from manufacturer in large quantities and sells them to retailers in
smaller quantities. He acts as a middleman or a link between the manufacturer and the
retailer.

From the above, certain important features of the wholesaler can be noted as follows: (1)
Wholesale trade is a part of internal or home trade and the wholesaler

is concerned with making purchases from the producers,

manufacturers or direct importers.

✓(2) The wholesaler makes his purchases in large quantities or in bulk. (3) The
wholesaler sells to the retailers in small quantities according to their requirements.

(4) The wholesaler acts as a connecting link between the manufacturers and the retailers;
he is neither a producer nor a retailer. While doing this role he has to perform many
marketing services like storing, grading, transporting etc.

(5) Many a times the wholesalers specialise in a particular line of product such as cloth,
grocery, medicine, stationery, garments, edible oil, grains etc. They also deal in allied
lines of products.

Functions of Wholesaler
(1) Assembling and Storing
(2) Transporting
(3) Risk bearing
(4) Processing
(5) Price Fixing
(6) Advertising & Salesmanship
(7) Information
(8) Credit granting

Services of Wholesaler
The wholesaler acts as a vital link between the manufacturers and the retailers. He
proves to be valuable to both as he renders important services to them. They can be
explained as follows :-

(A) Services to Manufacturers

(i) Collecting orders and distributing goods: The wholesaler collects small orders from
numerous retailers directly or through his travelling şalesmen. he provides outlets for
the goods of the manufacturer through the retailers. The cost of the manufacturer of
sending a large quantity of goods to few wholesalers is considerably less than it would
be if small quantities of goods had to be sent to numerous retailers. The manufacturer
can concentrate all his attention on production, production processes and techniques
and quality of goods to be produced.

(ii) Effecting economies of production: The wholesaler places his order for the goods
with the manufacturer in bulk on the basis of the small orders collected by him from the
retailers. This makes production of goods on large scale possible. The manufacturer can
reap the economies of large scale production. This also enables him to produce the
goods in anticipation of demand as the wholesaler places his orders in advance and to
keep himself busy even in the slack season because of assured sale of goods.

(iii) Providing warehousing facilities: The manufacturer is made free from storage and
warehousing problems of his goods as the wholesaler buys his goods in bulk and stores
them over a period of time. The goods are moved rapidly from the factory where they are
produced to the wholesaler's warehouses where they are further processed and stored.
This makes easy for the manufacturer to use the space in the factory for storing
subsequent lots of manufactured goods.

(iv) Supplying finance: While placing big orders with the manufacturer, the wholesaler
pays an advance. He also expects very small credit facility from the manufacturer for a
short period as he is generally financially sound. This keeps the funds of the
manufacturer unlocked and increases his financial soundness.

(v) Bearing Risks: The wholesaler bears many risks involved in storing the goods. He
faces the risks likely to be caused by price fluctuations in market, loss of and damage to
the goods due to fire, earthquake, flood etc. Of course, the wholesaler protects himself
from these risks by getting the goods insured. But even then, the risks are not totally
eliminated, they are only reduced to some extent.

(vi) Furnishing market information: The wholesaler knows the pulse of the market. He is
in touch with the retailers in different markets and has exact idea about recent market
trends. Through personal discussions and periodical correspondence the wholesaler
passes on this information to the manufacturer. He takes note of it and accordingly
changes his production policies and regulates production activities

Services to Retailers
i)Keeping stocks of goods ready: To cater to the needs of numerous customers, a retailer
has to carry stocks of many varieties of different goods. But due to limited storage space
he cannot maintain stocks in large quantities. His limited financial resources also do not
allow him to have large warehouse. The wholesaler comes to his rescue and stores large
quantities of different varieties of goods in his warehouses. He makes the supplies of
goods readily available to the retailers from his centrally situated warehouse. The
retailers can therefore carry on their business with relatively small amount of capital and
limited space.

(ii) Supplying market information: The wholesaler gets latest information about different
products as he is in touch with various manufacturers. He, therefore, knows present
general trends, new changes that are likely to take place in immediate future and arrival
of new products or varieties in the markets. To the retailers, this information is very
useful and valuable as they do not know much about the general market conditions. On
the basis of this information the retailers make their purchases.
(iii) Giving credit facilities: The wholesaler gives the retailer financial assistance in
different ways. He grants him credit facility for a large amount and a long period. He
settles his accounts with the retailers periodically i.e. cnce in a month or a quarter. The
credit facilities granted by the wholesaler to a retailer depend upon (a) credit facilities
given by the retailer to his customers; (b) speed of his turnover; and (c) his reputation in
market. He also gives the retailers various discount facilities.

(iv) Guiding and advising: The wholesaler knows the manufacturers, their best products
and prices they charge. He has the expert knowledge about market trends, methods of
publicity, ways of display etc. as he generally specialises in a particular line of products..
He passes on the benefits of his knowledge to the retailer and guides him on many
matters related to sales promotion techinques. The retailer also gets advantages of
publicity and advertisement campaigns conducted by the wholesaler from time to time.

In short, it may be said the wholesaler renders many valubable services to the
manufacturers as well as the retailers. It would not be possible to imagine the chain of
distribution without him. The wholesaler also serves the consumers. But his services
towards them are indirect as he does not directly come into contact with them.

Retail Trade
Meaning

Retail trade is a sale of goods in small quantities to the ultimate consumers. It is that
aspect of home trade which is related to sale of different types of goods in small
quantities to the final consumers. A trader, carrying on this type of trade, is known as
'retailer'. A retailer is one whose business consists of the sale of a wide variety of goods
to the final consumers. He is a person who carries on internal trade on a small scale and
acts as a connecting link between wholesalers and consumers. The word 'retail' is
actually derived from the French word 'Retailer' which means 'to cut'. A retailer cuts big
lots into small lots e.g. a big bag of sugar of 10 kg. is divided into small packages
containing 1/2 kg., 1 kg. etc. Wholesalers purchase goods from producers or
manufacturers, while retailers purchase different products from wholesalers according to
needs of consumers and sell them to the consumers. The retailer is the last link in the
chain of distribution of goods. He is the mediator.

following features or characteristics of the retail trade can be noted :-

i)In retail trade there is a direct contact with consumers.

(ii) Buyers are always the individuals or household consumers.
(iii) Retailing is the last link in the chain of distribution. In modern trade and commerce,
exchange of goods takes place with help of intermediaries. The retailer is the last
intermediary who has a direct contact with the consumers.
(iv) It is a trade in small quantities. Usually, the retailer deals in small quantities as per
the demands of consumers.
(v) It is trade in different types of goods. Generally, a retailer has to satisfy various
requirements of different consumers who have different tastes, fashions, likes and
dislikes.
(vi) It is a trade in local market. By opening shops in residential areas or by approaching
consumers personally, the retailers give maximum local convenience to them.
(vii) Retailing is a personal service to consumers. The retailer supplies not only the
goods but also essential and reliable information about the goods to consumers. He even
advises them on certain matters related to their purchases.

Services of Retailer

Though the retail trade is a trade in small quantities, as an intermediary, it is very

important to consumers, wholesalers and producers or manufacturers. A retailer renders
several useful services to all those who are involved in the distribution chain. They can
be described as follows :-

A. Services to Consumers

(i) Supply of goods in small quantities:- Daily requirements of the consumers are limited.
Many consumers have limited amount of money to spend. They buy the goods in small
quantities. Only the retailers can supply the goods in such quantities as and when
required by the consumers. The consumers cannot think of satisfaction of their wants
without the help of the retailers.

(ii) Variety of goods :- Consumers have different preferences for different brands. Their
purchasing powers also differ. To cater to the various requirements of different
consumers of numerous goods, the retailer keeps wide variety of goods. Some
consumers are fond of the particular brand, other prefer some other brands. Therefore
the retailer stocks all well-known brands of different goods so that the consumers can
pick-up and choose their favourite brands.

(iii) Local convenience :- The retailers' shops are situated near residential areas. The
retailers also open their shops near new housing colonies. Sometimes travelling retailers
provide door-to-door services. Thus, the retailer gives the maximum local convenience to
consumers.

(iv) Advice to the consumers: The retailers act as the best advisers to their customers.
They provide expert advice and guidance to the consumers in selecting the right brand of
goods. They also provide them useful information about expected shortages,
fluctuations in prices, arrival of new products etc.

(v) Credit facility:- Offering credit to the consumers is a regular feature of modern retail
trade. The consumers are encouraged to buy more by making credit facilities available to
them. Working-class people can buy their requirements only on the basis of credit.
Without cre, many consumers will be unable to purchase the goods. In our country,
credit facility is absolutely essential as the purchasing power of the people is very low.
The retailers are in close contact with the consumers so that they know financial
soundness of the consumers. Accordingly, they grant credit to the consumers.

(vi) After Sales Service :- Offering after sales service is an important sales promotion
device. A sale transaction is not closed at the point of sale but the consumers expect
additional services from the sellers in case of certain goods like radios, refrigerators, T.V.
sets, sewing machines etc. The retailers provide such valuable services during guarantee
period in the form of free home delivery, supply of spare parts, repairs and maintenance
etc. without charging anything extra.

B. Services to Wholesalers

(i) Organised link :- The retailer connects the wholesalers and the consumers. He
purchases goods from the wholesalers and resell to the consumers as per their
requirements. In the absence of the retailers, the wholesalers will find it difficult to
distribute the goods in the market.

(ii) Source of information: Being in constant touch with the customers, the retailers know
the pulse of the market. Their upto- date information is very useful to the wholesalers. As
the retailers are familiar with the consumers' tastes, fashions, preferences, likes and
dislikes they pass such information to the wholesalers. The wholesalers place orders for
the goods with the manufacturers by making necessary changes. The wholesalers can
advise the manufacturers to change or to modify the products, in the light of the
information received by them from the retailers.

(iii) Easy distribution : The retailers

make distribution work easy as they perform assembling, grading and packing functions.
For quick distribution of perishable goods, the retailer's presence is very important. The
wholesalers get relief from selling in small quantities and approaching final consumers.

Types of Retailers

There are different types of retailers working in the market. We find small retailers like
hawkers, pedlars etc. as well as large retail stores like shopping malls. It has been
noticed that retail organisations went on changing their size, scale and nature of working
as per the changing requirements of the ultimate consumers.

The types of retailers can be indicated by a chart as follows:-

Itinerant Retailers
Meaning
The term 'itinerant' means moving or changing. Itinerant retailers are those retailers who
move from one place to another for selling the goods. They do not have a fixed place of
business. They are also known as 'mobile retailers'. They are the oldest type of retailers.
They deal in household goods like vegetables, fruits, bakery product, crockery, utensils
etc. which can be easily carried from place to place. Sometimes they change the goods
to be sold according to the seasonal requirements.

Features of Itinerant Retailers

The features or characteristics of itinerant retailers can be described as below :-

(1) No fixea place:- As the title suggests these retailers move from one area to another to
sell the goods. They do not have any fixed place of business.

(ii) Little stock:- They carry very little stock of goods. They move from

place to place and therefore they can not carry large stock of goods. (iii) Low
Establishment Expenses :- As they do not have fixed business premises they do not
have to spend on rent, furniture, electricity etc. They do not spend even on advertising.
Generally, they advertise their goods by shouting. Their establishment expenses are
therefore very negligible..

(iv) Small Capital investment :- Due to very little establishment expenses

and less stock, itinerant retailers need less amount of capital to run

their business (v) Seasonal goods :- A peculiar feature of itinerant retailers is that they
never stick to any particular type of goods. They change the line of business as season
changes.
(vi) Low prices:- Compared to fixed retailers, the mobile retailers sell the goods at low
prices. They can afford to do so as they invest little capital and spend less amount on
establishment of the business.

(vii) Competition :- They offer tough competition for fixed shop keepers. The mobile
retailers are preferred by the ultimate consumers because they reach their doorsteps and
make the goods available. The consumers prefer them to fixed retailers as there is much
scope for bargaining.

) Quick turnover :- These retailers enjoy quick turnover due to low prices and local
convenience offered to consumers.

(ix) Cash transactions :- These retailers do not afford to give credit facility to their
consumers. They sell their goods only on cash basis. (x) Suitable for perishable goods :-
The itinerant retailers are suitable for selling perishable goods which need to be sold
quickly e.g.

vegetables, fruits, eggs, fish, eatables etc.

Importance of Itinerant Retailers

Though itinerant retailers are the oldest type of retailers even today they are found
everywhere. Inspite of the competition from large fixed retailers, the itinerant retailers
enjoy good turnover. This is because on certain matters they have an edge over large
scale fixed retailers.

The following points explain their importance and describe merits or advantages of these
retailers :- (i) Home delivery of goods :- The itinerant retailers are very important

from the point of view of the ultimate consumers because they get

the goods at their door-step. In today's busy life every one prefers

home delivery of the goods which becomes very much possible

because of the itinerant retailers. (ii) Seasonal goods :- These retailers change the goods
to be sold as per the season. The seasonal needs of the consumers are easily satisfied
by them.

(ii) Perishable goods :- These retailers are very useful in distributing perishable goods.
The perishable goods need to be distributed as quickly as possible. The itinerant
retailers go from one area to another and distribute the goods in time.
(iv) Low prices: These retailers can afford to sell the goods at low prices compared to the
fixed retailers as they need not have to spend on premises, rent, advertising, electricity
etc. Their little or no establishment expenses enable them to sell their goods at
comparatively lower prices.

(v) Scope for bargaining :- Absence of fixed establishment expenses allows these
retailers to bargain about prices with their customers. Many consumers take interest in
such bargaining negotiations and get benefits.

(vi) Local convenience :- These retailers offer maximum local convenience by bringing
the goods to the door-step of the consumers. They are accessible to people very easily.

Types of Itinerant Retailers

(i) Hawkers
Hawkers and pedlars are popular in big cities as well as in villages. Hawkers generally
use convenient vehicles like wheeled carriers, handcarts or animals to carry the goods.
ii)Pedlars
Pedlars carry their goods on their backs or heads in baskets or in suitable containers.
They sell the goods which are low-priced and light in weight like vegetables, fruits, pens,
cheap readymade garments etc. They advertise and sell their goods by shouting loudly,
mentioning the prices and features of the goods.

(iii) Cheap Jacks

Cheap jacks are different from hawkers and pedlars in the sense that hawkers and
pedlars do not have any place of business but cheap jacks hire some place or shops.
They hire shops in one area as long as they find customers. They shift from locality to
locality. They display their goods. The goods sold by these retailers are generally of
inferior quality. They deal in different types of goods like (a) Stationery - Note-books, ball
pens, pencils, pins, erasers etc. (b) Cutlery - Spoons, Knives, bottle-openers etc. (c)
Crockery-Mugs, jugs, dishes, cups, tumblers etc. (d) Cosmetics - face powders, scents,
nail polish, beauty creams, lipsticks, hair-oils, soaps etc.

(iv) Market dealers

Market dealers sell the goods by opening their shops at different market places. They
move from one locality to another. On certain, fixed days i.e. market days, these dealers
keep their stalls in that locality. On these days people from nearby areas come to that
locality for shopping. These dealers attract customers by hiring stalls at trade-fairs a: 1
by offering different types of goods at low prices. Popular products in a particular locality
are sold by these traders.

(iv) Street traders

Street traders are found in busy streets of cities and towns. They move from one street to
another in the same locality. Some of these traders select particular streets near cinema
theatres, bus-stops, restaurants etc. to display their goods. The stalls are run on very
small scale. They place their goods even in baskets or on bed-sheet.
In Bombay we find these street vendors on footpaths of busy areas like Dadar, Fort etc.
and in Pune on Laxmi Road, Deccan Gymkhana etc
They generally fix one locality. They sell light and low priced goods on cash basis. These
traders sell products like goggles, pocket books, stationery, fountain pens,
handkerchiefs, cassettes, cosmetic items etc. Now-a-days these traders are also found
somewhat organised. They do not offer bargaining facility. They cause inconvenience to
pedestrians. Many times their temporary stalls are unauthorised.

Non-Itinerant Retailers/Fixed Shop Retailers

Retailers who have fixed place of business do this job as they stock variety of goods to
satisfy theirnumerous customers. They can do so because they can invest moderat
amount of capital in stocks of goods at fixed business places with more
accomodation.

Meaning

Retailers who have fixed place of business and ho do not move from place to place to
sell their goods are known as 'non-itinerant or fixed retailers'. They establish their
business places in market areas as well as near residential areas which are convenient to
customers.