Chapter 10

Internal Trade
[ wholesale trade]
 INTRODUCTION

WHOLESALE TRADE

agenda
IMPORTANT QUESTIONS
INTRODUCTION
Trade refers to buying and selling of
goods and services with the objective of
earning profit.
Internal trade, also known as domestic
trade, refers to the buying and selling of
goods and services within the
boundaries of a country.
On the basis of geographical locations
of buyers and sellers trade can be
broadly classified into two categories (i)
Internal trade
(ii) External trade.
 INTERNAL
TRADE

WHOLESALE
RETAIL TRADE
TRADE
WHOLESALE TRADE
Wholesale trade is an essential component of the
internal trade system, involving the buying and
selling of goods in large quantities. Wholesalers act
as intermediaries between producers and retailers
or other businesses, helping to streamline the
distribution process.

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 KEY FEATURES OF WHOLESALE
TRADERS
•Bulk Transactions: Wholesalers buy goods in large quantities from manufacturers or
producers and sell them in bulk to retailers, industrial users, or other wholesalers.
•Lower Prices: Due to the volume of transactions, wholesalers can negotiate better
prices from manufacturers and offer goods to retailers at a lower cost compared to
retail prices.
•Warehousing: Wholesalers often have large storage facilities to keep the goods until
they are sold. This helps in maintaining a steady supply and managing seasonal
demand.
•Market Coverage: Wholesalers usually operate over a wide geographical area,
reaching multiple retailers and ensuring extensive market coverage for manufacturers.
•Credit Facility: Wholesalers may offer credit facilities to retailers, allowing them to
purchase goods without immediate payment, which helps retailers manage their cash
flow.
SERVICES OF WHOLESALERS
By placing the goods in a location and at a time when they are required for
consumption or use, wholesalers provide both time and place utility.
Wholesalers provide :
1.Manufacturers-related services
2.Retailers-related services

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 SERVICES TO MANUFACTURERS
. Facilitating large-scale production
•Wholesalers send a pool of orders gathered from various retailers to
manufacturers.
•Wholesalers then make the purchases in bulk, enabling manufacturers to
undertake large-scale production.
2 Bearing risk
•The wholesale merchants deal in goods under their own name.
•Take delivery of the goods and keep the goods purchased in large lots in their
warehouses.
•A wide range of dangers, such as price drops, theft, spoilage, fire and others
are present.
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3. Financial assistance
•They pay manufacturers in cash, so they don’t
need to invest all of their capital in stocks.
•Sometimes they also advance money to the
producers for bulk orders placed by them.
4. Expert Advice
•They are in a position to advise producers about
various customer preferences and market
conditions.
5. Help in the marketing function
•They are in control of selling to retailers spread
over a large geographical area, relieving the
manufacturers of those duties and allowing them to
concentrate on effective production.
o 6. Facilitate production continuity
• Wholesalers purchase goods upon their production and store them till they
are demanded by retailers and consumers, ensuring continuous production
by manufacturers.
o 7. Storage
• Storage of manufactured goods in the wholesale godowns reduces the
burden of storage on the producers, thus providing time utility.

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SERVICES TO RETAILERS
1) Availability of goods
• Wholesalers keep adequate stock of the goods
and allow retailers the facility of purchasing newer
goods of a wider variety to keep high customer
engagement
• They decrease the retailer’s work by reducing
product inventory.
2) Marketing support
• Wholesalers perform marketing duties and
provide support to the retailers and induce
customers to purchase goods.
• Retailers are benefitted as it helps them to
increase demand for new products. 11
3) Grant of credit
•The wholesalers provide credit to their frequent customers and build up a
relatively smaller amount of working capital, allowing better management of their
business.
4) Specialized knowledge
•Wholesalers better understand consumers’ demands and can utilise this
information to advise retailers about the quality, uses of the products, pricing
strategies and decor of the store for more customer attraction.
5) Risk sharing
•Retailers can avoid the risk of storage, theft, obsolescence, price reductions and
market demand fluctuations by using the services of a wholesaler.

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IMPORTANT QUESTIONS ON THIS TOPIC

1) Discuss the role of wholesalers in the distribution channel. How do they add value to the
supply chain?

2) Explain the various types of wholesalers with examples.

3) Describe the services offered by wholesalers to retailers and consumers.

4) How do wholesalers help in stabilizing prices in the market?

5) Discuss the challenges faced by wholesalers in the modern market scenario.

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Thank you…

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