Internal Trade

Since no  place is self-sufficient in all the required resources, the importance of trade has only increased in modern times. Based on the geographical location of the trader, trade can be classified into two categories: (i) Internal trade; and (ii) External trade.

Internal Trade

Internal trade refers to the buying and selling of goods within a nation’s border. There is no tax levied on such trade, as the production and consumption of such goods lie within the country. Internal trade can be classified into two broad categories: 

1. Wholesale trade 
2. Retail trade

Wholesale trade

• Wholesale trade is buying and selling of goods and services in huge quantities. It refers to selling to retailers and institutional, industrial, and other merchants but not selling to ultimate consumers in large quantities.
• They serve as a bridge between retailers and manufacturers. They take business risks by trading the goods in their name. They buy in large quantities and sell in small quantities to retailers and other merchants.
• They tackle activities such as packing, storage, and the grading of products, transportation, collection of market information, etc.

Services of Wholesalers

Wholesalers have a crucial role in making the products available at the right place and at the right time when they are needed for consumption. 

The services of wholesalers are:

1. Services to manufacturers
2. Services to retailers

Services to Manufacturers

1. Facilitating large scale production:

Wholesalers fetch orders in small quantities from a variety of retailers and transmit such orders to the manufacturers, who then make purchases in large quantities.

2. Bearing risk:

• Wholesalers deal in goods in their name, dispatch the goods, and keep the goods purchased in bulk quantities in their warehouses.
• They bear many risks such as spoilage, fire, theft, pilferage, risk of fall in prices, etc.

3. Financial assistance:

• Wholesalers make financial payments to the manufacturers; hence they need not block their capital in the stock.
• They also proceed with money for orders in large quantities placed by them.

4. Expert advice

• Wholesalers are in a better position to advise manufacturers on multiple aspects such as the competitive activities and features referred by the buyer, customer preferences and tastes, etc.

5. Helping in the marketing function

• Wholesalers help the manufacturers in various marketing activities so that they can concentrate on production activities. 
• Customers receive their goods from merchants, who in return buy the goods from the wholesaler.

Service to Retailers

1. Availability of goods

• Wholesalers provide various products and services to the retailers so that they can provide a variety of goods to their customers.
• Wholesalers collect a variety of goods and also take care of the work of the retailers.

2. Marketing support

• Wholesalers take care of various marketing activities and also provide help to retailers.
• Retailers get a benefit out of this as it makes them increase the demand for many of such new products.

3. Grant of credit

• Wholesalers provide regular customers with credit.
• Therefore,  the retailer can run with a minimum quantity of money.

4. Specialised knowledge

• Wholesalers have the specialisation of a single product line and possess a great knowledge of the market, which, in turn, transmits to the retailers.

Retail Trade

• A retailer is a business enterprise that provides goods and services to the customer directly.
• He generally purchases bulk quantities of goods from wholesalers and sells them in small amounts to the ultimate buyer.
• The retailer collects market information, bears business risks, sells the goods in small amounts, gives credit to the customers, extends product sales via displays, participates in a variety of schemes, etc.
• Retail is the last stage in the dispersal process, where goods are dispatched from wholesalers to end-users.

Services of Retailers

Retailers act as an important link in the dispersal of goods and services between the sellers and ultimate buyers. They provide these services:

• Services to manufacturers and wholesalers
• Services to consumers

Services to Manufacturer and Wholesalers

1. Help in the distribution of goods 

• They provide place utility by helping in the dispersal of the product by making goods available to the end customer.

2. Personal selling

• This activity is rendered useless to the producer by retailers, and retailers aid them substantially in realising product sales.

3. Enabling large scale operations

• Consequently, they can focus on other activities to the fullest extent possible.

Services to Consumers

1. Regular availability of products

• Products created by different manufacturers are continually and regularly available, allowing buyers to purchase items when they need them.

2. New product information

• With their shelf space and displays, retailers provide customers with information about products, features, etc., which could affect their purchasing habits.

3. Convenience in buying

• As retail stores are available in every residential area, customers can buy small amounts of goods at any time, anywhere.

Types of Retailing Trade

There are two categories of retailers:

1. Itinerant retailers
2. Fixed shop retailers

1. Itinerant retailers

These are retailers who constantly move their goods from place to place, looking for buyers.

Characteristics:

• There is a limited supply of resources for traders.
• Offers products that are used every day come under them.
• Since they deliver things right to their customers’ doorsteps, their customer service is top-notch.
• The business is not based at a fixed location.

Some types of itinerant retailers operating in India include peddlers and hawkers, market traders, and street traders

2. Fixed shop retailers 

These are those who sell their goods from a fixed location. This prevents them from moving from one location to another to serve their customers.

Characteristics:

• An expanded resource base and capability to operate on a large scale.

• Ability to work both with durable and non-durable products.

• As a result, they are considered more trustworthy by the customers.

Types:

1. Fixed shop small retailers: General stores, speciality shops, street stall vendors, second-hand goods shops, etc.
2. Fixed shop large retailers: Departmental stores, chain stores or multiple shops, consumer cooperative stores, supermarkets, vending machines, mail-order houses, etc.

Role of Commerce and Industry Associations in the PromotIon of Internal Trade

A business and industrial organisation’s purpose is to promote and protect its mutual interests and goals. There are many such associations formed, i.e., the Associated Chamber of Commerce and Industry (ASSOCHAM), the Confederation of Indian Industry (CII), and the Federation of Indian Chambers of commerce and industry (FICCI). They have played an important role in boosting domestic trade to become an important part of overall economic activity.

Their contribution to internal trade is mainly in aspects such as: 

• Interstate movement of goods.
• Harmonisation of sales tax structure and Value Added Tax.
• Marketing of agro products and related issues.
• Weights and measures, and prevention of duplication brands.
• Promoting sound infrastructure.

Conclusion

Internal trade has a low ratio of additional capital output. Despite the greater capital requirements of modern trade, it can provide decent quality productive employment with modest capital expenditure.