Class 11

Business Studies
Chapter - 10

Internal Trade

Shradha Bidasaria
Trad
e
 Trade

Trade means buying and selling of goods,

which involves the exchange of
commodities
for money or money’s worth

On the basis of scale of operation, internal

trade can be divided into
Wholesale trade and Retail trade
Wholesale
Trade
 Wholesale Trade

Buying and selling in large quantities

A wholesaler buys goods directly from the

producers and sells them to the retailers

One who deals in wholesale trade is known as

wholesaler or wholesale dealer
 Services of
Wholesalers to
Manufacturers or
Producers
Service of Wholesalers to Producers
1 Facilitating large scale production

Bulk orders from wholesalers enable to

produce in large quantity
Service of Wholesalers to Producers
2 Bearing risk
They purchase the entire goods immediately
on production

They take the risk of change in demand,

spoilage, damage, theft etc. during
transportation and storage
Service of Wholesalers to Producers
3 Financial assistance

Wholesalers purchase on cash basis and

sometimes they may give advance payment
for bulk purchases
Service of Wholesalers to Producers
4 Expert advice

Wholesalers are in constant touch with the

retailers, they can collect information about
the tastes and fashion of consumers and
passes it on to producers
Service of Wholesalers to Producers
5 Helps in marketing

Wholesalers take care of distribution of goods,

market research, transportation, warehousing etc.
Service of Wholesalers to Producers
6 Facilitates continuity of production

Wholesalers purchase goods on a real time basis

as and when they produce goods
It helps the manufacturers to carry out continuous
production.
Service of Wholesalers to Producers
7 Storage

The burden of storing goods passes to the

wholesalers
Services of Wholesalers to Producers
1) Facilitating large scale production
2) Bearing risk
3) Financial assistance
4) Expert advice
5) Helps in marketing
6) Facilitates continuity of production
7) Storage
 Services of
Wholesalers to
Retailers
 Service of Wholesalers to Retailers
1 Availability of goods

Retailers get goods as and when they

required as there is a large quantity stored by
wholesalers
 Service of Wholesalers to Retailers
2 Marketing support

Wholesaler takes all the burden

advertisement and of sales
activities, and the retailer promotion
enjoys the benefit
Service of Wholesalers to Retailers
3 Providing credit facilities

It enables the retailers to conduct their

business without much investment in
working capital
Service of Wholesalers to Retailers
4 Specialized knowledge
Wholesalers can give expert advice on their
products as they are dealing only a limited
line of goods

They also inform the retailers about new

products, their uses, quality, prices etc.
Service of Wholesalers to Retailers
5 Risk sharing

The risk of retailers gets reduced as most of

the burden of marketing such as price
fluctuation, loss of goods in transit, storage
etc. is born by the wholesalers.
Services of Wholesalers to Retailers
1) Availability of goods
2) Marketing support
3) Providing credit facilities
4) Specialized knowledge
5) Risk sharing
Retail

Trad
e
 Retail Trade

Buying and selling of goods in small

quantities

A retail trader buys goods from the

wholesalers and sells them to the customers
 Retail Trade

Retail trade includes all activities directly

related to sale of goods or services to
ultimate consumers for consumption
Services of Retailers to
Manufacturers or
Wholesalers
 Service of Retailers to Producers
1 Helps in distribution

Retailers help in distribution of goods to the

ultimate consumers who are scattered over
the world
 Service of Retailers to Producers
2 Personal selling

Most of the consumer goods requires personal

selling, wholesalers and producers are free from
this task as it is undertaken by the retailers
 Service of Retailers to Producers
3 Large scale operations

Manufacturers and wholesalers are free from

the trouble of making individual sales to
consumers in small quantities
This enables them to operate on large scale
 Service of Retailers to Producers
4 Collecting market information

Since the retailers are in constant touch with

the consumers, they can collect reliable
market information, which can be passed to
the wholesalers and manufacturers
 Service of Retailers to Producers
5 Help in sales promotion
Retailers also undertake advertisement and other
sales promotion activities to increase their
sales

It helps the wholesalers and manufacturers in

promoting the sales of their products
 Services of Retailers to Producers
1) Helps in distribution
2) Personal selling
3) Large scale operations
4) Collecting market information
5) Help in sales promotion
Services of Retailers to
Consumers
Service of Retailers to Consumers
1 Regular availability of products
Most often the retailers holds sufficient stock of
goods from various producers and wholesalers

It ensures ready and regular supply of goods

 Service of Retailers to Consumers
2 New products information

By arranging proper display and through personal

selling efforts, the retailers provide relevant
information about the new products and their
features to the consumers
Service of Retailers to Consumers
3 Convenience in buying

Retailer sells goods in small quantities and

they have set up their stores in residential
areas which are very near to the consumers
 Service of Retailers to Consumers
4 Wide selection

The retailer has a large variety of goods from

different manufactures
Service of Retailers to Consumers
5 Provide credit facilities

The retailers often provide credit facilities to

regular and trusted customers
 Services of Retailers to Consumers
1) Regular availability of products
2) New products information
3) Convenience in buying
4) Wide selection
5) Provide credit facilities
 Types of Retail Trade

Itinerant Traders Fixed Shop

Itinerant Traders
 Itinerant Traders

Traders are having no fixed place of business

Eg: Hawkers, street traders etc.

Characteristics of
Itinerant Traders
Characteristics of Itinerant Traders
a Small scale operation

Due to limited resource

 Characteristics of Itinerant Traders
b Deal in consumer products

Usually they deal in consumer goods of daily use

Eg: Fruits, vegetables, fish, stationery etc.
Characteristics of Itinerant Traders
c Door step service

They provide goods at the door step of the

consumers
 Characteristics of Itinerant Traders
d Limited stock

As they have no fixed place to operate, they do their

business with limited stock only
 Characteristics of Itinerant Traders
a) Small scale operation
b) Deal in consumer products
c) Door step service
d) Limited stock
Kinds of Itinerant
Traders
Kinds of Itinerant Traders

1.Hawkers and Peddlers

2.Market Traders
3.Street Traders / Pavement Traders
4.Cheap Jacks
 Hawkers and Peddlers

Hawkers are the traders

who carry their
products on carts or
bicycles

Peddlers carry their

products on their back or
head or in baskets or
shoulder bags
Features of Hawkers
and Peddlers
 Features of Hawkers and Peddlers

●
Generally dealing non-standardized and
low value goods.
●
Operates mainly on streets of residential
areas, exhibition grounds, public places
etc.
●
Supply the goods at
the door step of the
consumers.
 Market Traders

These traders sell their articles on fixed

days in different market places
 Features of
Market Traders
 Features of Market Traders
a) They deal in one particular line of goods.
Eg: toys, garments, crockery etc.

b)Sell products on fixed days in the market.

a)Dealing in Low priced

goods.

b) They move from one

market to another.
Street Traders / Pavement Traders

These traders generally arrange their

articles at busy street corners, near
railway stations etc.
 Features of
Street Traders
 Features of Street Traders

a) They sell consumer items of daily use.

b) Generally operates near public places.
c) Donot change their places of
business
frequently.
 Cheap Jacks

They usually, hire small shops for a

short period of time

Depending upon the scope of sale they keep

shifting from one locality to another
Features of
Cheap Jacks
 Features of Cheap Jacks

a) They deal in consumer items.

b)Also provide services like repairing
watches, shoes, buckets etc.
c) Move from one area to another
depending on sales potential.
d)They also sells goods in temporary
sheds during festivals.
 Itinerant Traders
At a glance

Hawkers and Peddlers

Market Traders
Street Traders / Pavement Traders
Cheap Jacks
Fixed Shop Retailers
 Fixed Shop Retailers

These retailers are those who carry on

business by maintaining a fixed place of
business to sell their goods

They do not move from one place to another

 Fixed Shop Retailers
Depending upon the size of operations,
they can be of two types

Small scale Retailers Large scale retailers.

Features of

Fixed Shop
Retailers
 Fixed Shop Retailers - Features
a Large resources
They have a lot of goods compared to
itinerant traders
 Fixed Shop Retailers - Features
b Deal in different products
They deal consumer goods,
both durables and non-durables
 Fixed Shop Retailers - Features
c Credibility
They have greater credibility in the minds of
consumers as they provide services like
home delivery, guarantees, repairs, credit
facility etc.
 Types of

Fixed Shop Retailers

Large
Small Scale
Scale
 Small

Retailers
Scale
General Second Hand
Stores Goods
Shop

Specialty Street Stall

Shops Holders
 Small Scale Retailers
They are running their business on a small
scale and deal in a limited line of goods
 Small Scale Retailers
a General Stores
They are selling all general items of goods
such as groceries, stationery, oils, etc.
Customers can buy most of their requirements at one place

They may also provide free home delivery, credit

facilities etc. to regular customers
 Small Scale Retailers
Features of General Stores
●
They stock variety of goods for day to
day requirement.
●
Open for long hours based on
the convenience of consumers.
 Small Scale Retailers
Features of General Stores
●
Provide credit facilities to
regular customers.
●
Located near residential area.
●
Provide service like home delivery etc.
 Small Scale Retailers
b Specialty Shops
They are specialized in a single product of a
certain line
Also known as Single Line Stores

E.g. kids wear shop, computer shop,

bookshop etc.
 Small Scale Retailers
Features of Specialty Shops
●
Specialize in one product only.
●
Located in central places.
●
Keep all brands of a particular product.
 Small Scale Retailers
c Street Stall Holders
They are generally located at street
crossings or in the main street

They usually display their goods on a table,

stand or by fixing a shelf on the wall
 Small Scale Retailers
Features of Street Stall Holders
●
Deal in cheaper goods. Eg: toys, soft drinks,
hosiery items etc.
●
They mainly attract floating customers.
●
The stall is housed in very small area.
●
Found in high customer traffic area.
 Small Scale Retailers
d Second hand goods shop
They are dealing in second hand goods
such as books, furniture, clothes, used cars
and other household items
 Small Scale Retailers
Features of Second Hand Goods Shop
●
Usually found in busy streets.
●
Helpful for low income group.
●
They often sell antique items and rare object
of historical value.
Departmental Vending
Stores
Large Machine

Scale
Retailers
Multiple Super
Shops
Bazar

Consumer
Mail Order
Co-op
Houses
Stores
 Large Scale Retailers

Large scale retailing may be defined as retail

trade involving operations on a large scale and
sale of goods in small quantities
Departmental
Stores
 Large Scale Retailers
a Departmental Stores
It is a large scale retail shop selling a wide
variety of goods in different departments under
one roof and one management

Textile Department Consumer Goods Department

Each department deals in separate line of goods

like stationery, books, furniture, clothing, footwear
etc.
 Large Scale Retailers
Features of Departmental Stores
●
Additional facilities like restaurant,
telephone booth, rest room, play area etc.
●
Usually located in central place of a big city.
●
Large scale retail organization, generally formed
as joint stock companies.

● Play Area for Children

 Large Scale Retailers
Features of Departmental Stores
●
Elimination of middlemen – They are
making their purchases directly from the
producers.
●
Centralized purchases and
decentralized selling.
 Large Scale Retailers
Advantages of Departmental Stores
●
Central location attracts more and
more customers.
●
Shopping convenience to the customers
as they get different products under one
roof.
● Consumer services are
provided like free home
delivery, telephone
facilities,
rest rooms etc.restaurants,
 Large Scale Retailers
Advantages of Departmental Stores
●
Economies of large scale operation in the
matter of transportation, advertising, purchase
etc.

● Automatic mutual
advertisement –
One department
advertises the
other.
 Large Scale Retailers
Limitations of Departmental Stores
●
Lack of personal attention – as they have
to handle a very large number of customers
daily.
●
High Operating Cost – due to heavy
rent, salaries of experts etc.
●
High possibility
loss – They incur highof Lack of personal
attention
loss due to change
taste
in and fashion of
consumers, as they
have a large quantity
of stock.
 Large Scale Retailers
Limitations of Departmental Stores
●
Inconvenient Location – The central location of
the store make it inconvenient for the consumers
who reside away from it, also it suffers from
traffic problems and parking difficulties.
●
Huge investment –

It requires heavy
investment for
establishment
and maintenance.
Multiple Shops
or
Chain Stores
 Large Scale Retailers
b Multiple Shops / Chain Stores
It is a system of branch shops operated under
a centralized management and dealing in
similar line of goods

Branches of the
shop are located
the nation under the
throughout
same name and
management and they
specialize in one or two
lines of goods
 Large Scale Retailers
Multiple Shops
Multiple shops are organized by the manufacturers
to eliminate middlemen

Eg. Bata Shoe company, Bombay Dyeing Show

Rooms, Big Bazar, Coffee Day, Raymonds, KFC etc.
 Large Scale Retailers
Multiple Shops
In a multiple shop there is uniformity in
advertisement, window display and interior display
of goods etc.
 Large Scale Retailers
Features of Multiple Shops
● Convenient location for consumers.
● Centralized buying and decentralized selling.
●
Centralized management and unified system of
control.

Convenient
location
 Large Scale Retailers
Features of Multiple Shops
● Follows cash and carry principle.
● Uniformity in shop’s design and lay-out.
●
Proper inspection from head office ensures the
smooth functioning.
 Large Scale Retailers
Advantages of Multiple Shops
● Economies of large scale buying – Centralized
purchase attracts higher discount,
low transportation cost, common
advertisement etc.
●
Elimination of middlemen – Direct
bulk purchase from producers.
●
No bad debts – Theyfollow cash
and carry system.
 Large Scale Retailers
Advantages of Multiple Shops
●
Diffusion of risk – Loss in one shop
may be compensated by the profits in other
●
shops.
Low cost – Low cost of operation
●
because of economies of scale.
Flexibility – Unprofitable branches can
be shifted to somewhere else.
 Large Scale Retailers
Limitations of Multiple Shops
●
Limited choice – they deal in one or two lines of
goods.
●
Lack of initiative and motivation – Due to
centralized control, there is only less chance for
initiatives from the part of the branch managers.
 Large Scale Retailers
Limitations of Multiple Shops
●
No personal contact due to scale
large operations.
●
Risk due to change in taste and fashion lead to
great loss.
Differences Between

Departmental Stores
&
Multiple Shops
Departmental Stores Vs. Multiple Shops

1 Location

Departmental Stores Multiple Shops

Central location Not necessary

Departmental Stores Vs. Multiple Shops

2 Variety of goods

Departmental Stores Multiple Shops

Limited variety of
Large variety of
goods from a
goods from different
producers specific producer
only
Departmental Stores Vs. Multiple Shops

3 Services offered

Departmental Stores Multiple Shops

Additional facilities
No such additional
like restaurants, play
facilities are
zone, alteration of provided
garments etc.
Departmental Stores Vs. Multiple Shops

4 Pricing policy

Departmental Stores Multiple Shops

No uniform pricing
policies, instead
Fixed price and
they are giving
uniform pricing
discounts to clear policies are followed
the stocks in special
occasions
Departmental Stores Vs. Multiple Shops

5 Class of customers

Departmental Stores Multiple Shops

Suitable for middle

High income group
and low income
who care more for
the services group who are more
rather than the concern about
price of products quality products at
reasonable price
Departmental Stores Vs. Multiple Shops

6 Credit facilities

Departmental Stores Multiple Shops

Sometimes to Strictly on cash

regular customers basis
Mail Order
Houses
 Large Scale Retailers
c Mail Order Houses
It is a form of retailing where the business
transactions are done through post or by mail

There is not direct personal contact between

the buyer and the seller
 Large Scale Retailers
Mail Order Houses
Under this system, receipt of orders, delivery
of goods and payment etc. are done through
the mail

E.g. VPP (Value Payable Post). This system is

also called shopping by post.
 Large Scale Retailers
Mail Order Houses – Mode of Operation
1.Giving advertisement in various media.
2.Preparing a mailing list of
customers. (Data prospective be
telephone directories, social
may media etc.)
collectedfrom
3.Approaching the
prospective customers by
sending circulars,
catalogues etc. by post.
 Large Scale Retailers
Mail Order Houses – Mode of Operation
4.Receiving of orders from
customers.
5.Execution of orders by sending
the goods through post office.

6.Receiving payment – It may be in different

forms such as advance payment at the time
of placing orders, VPP or payment through
bank.
 Large Scale Retailers
Suitability of Goods for Mail Order Houses

1.Graded and standardized goods.

2.Easily transported at low cost.

Eg: light in weight.

3.Goods having ready demand in the market.

 Large Scale Retailers
Suitability of Goods for Mail Order Houses
4.They should be available in large quantity
throughout the year.
5.Goods which are having least
competition
in the market.
6.Goods which are not available in the local
market.
 Large Scale Retailers
Advantages of Mail Order Houses
1.Limited capital – It does not require huge
buildings, furniture etc.
2. Elimination of middlemen – Hence
the cost of operation is minimized
3. No bad debt – No credit facilities
are allowed to customers.
 Large Scale Retailers
Suitability of Goods for Mail Order Houses
4.They should be available in large quantity
throughout the year.
5.Goods which are having least
competition
in the market.
6. Goods which are not
available in the local market.
 Large Scale Retailers
Advantages of Mail Order Houses
4.Wide reach – The area of operation is not
limited.
5.Convenience in buying – i.e. delivery
of goods are made at the door steps.
 Large Scale Retailers
Limitations of Mail Order Houses
1. No personal contact – Customers do not
have a chance to examine the products.
2. High promotion cost – Heavy
expenses on advertising.
3.No after-sales service.
e
4.No credit facilities. ervic
s S
ale
r S
fte
o A
N
 Large Scale Retailers
Limitations of Mail Order Houses

5.Delay in delivery.
6. Possibility of abuse – Dishonest
traders may cheat the customers.
5.High dependence
postal on services
Success of the –business
depends on the efficiency
of postal department.
Consumers'

Cooperative
Stores
 Large Scale Retailers
d Consumers’ Co-operative Stores
It is a retail store formed and run by
consumers on co-operative principles

- op
Co tore
S

These stores are owned and managed by

consumers so as to make goods available at a
reasonable price
 Large Scale Retailers
Consumers’ Co-operative Stores
Dealing in all types of consumer goods of daily
use such as grocery, stationery, dress
materials etc.
 Large Scale Retailers
Consumers’ Co-operative Stores
Capital is raised by the issue of
shares
to the members

management is vested in the hands of Board of

Directors
It should be registered under the Co-operative
Societies Act
 Large Scale Retailers
Advantages of
Consumers’ Co-operative Stores
1. Easy to form – Any ten people may come
together and form a society with limited
formalities.
2. Limited liability – Liability of members is
limited.
3. Democratic management – It is based on
democratic principles.
 Large Scale Retailers
Advantages of
Consumers’ Co-operative Stores
4. Low price – by eliminating
middlemen.
5. Cash sales – No chance for bad debt due
to cash and carry system.
6. Convenient location – Usually set up
in public places.
 Large Scale Retailers
Limitations of
Consumers’ Co-operative Stores
1. Lack of initiative – The persons who
manage and work on honorary basis may
not take much initiative for the success of
business.

2. Shortage of funds – Difficulty in

raising capital.
 Large Scale Retailers
Limitations of
Consumers’ Co-operative Stores
3. Lack of patronage – All members may not
be in touch with the organization regularly.
4. Lack of training and expertise
in management.
 Super Bazaar
(Super Market)
 Large Scale Retailers
e Super Bazaar (Super Market)
Large scale retail store selling a wide variety of
consumer goods.

The most distinctive feature is the absence of

salesmen and shop assistants to help the customers
in selecting the goods
Hence they are also called ‘Self Service Stores’
 Large Scale Retailers
Super Bazaar (Super Market)
Various products are arranged in well
marked divisions or departments
on open shelves

They are neatly

packed and the
weight, price, quality
etc. are marked on
the packets
 Large Scale Retailers
Features of Super Bazaar (Super Market)

1.Wide variety – Buyers can purchase a wide

variety of products under one roof.
2.Self service – Super markets functions on
the principle of self service which results in
lower operating cost.
 Large Scale Retailers
Features of Super Bazaar (Super Market)

3.Low price – Because of bulk purchase and

lower operating cost, they can sell their
products at low price than other retail shops.
4.Cash basis – This feature helps them to
eliminate bad debts.
5.Centrally located
Generally –
central placelocated
of a city.at
 Large Scale Retailers
Advantages of Super Bazaar

1.One roof and low cost – This convenient as

well as economical to the buyers.
2.Central location – So that it is
easily accessible to the people.
3.Wide selection – They offer wide variety of
goods from different producers.
 Large Scale Retailers
Advantages of Super Bazaar

4.No bad debt – They follow cash and

carry system.
5.Economies of large scale – It enjoys
the benefits of large scale operations.
 Large Scale Retailers
Limitations of Super Bazaar

1.No credit – It restricts the purchasing power

of consumers.
2.No personal attention – Due to the
absence of salesmen, the items which need
personal attention may not be sold out.
 Large Scale Retailers
Limitations of Super Bazaar
3.Mishandling of goods –
Consumers may
handlethe goods kept in
the shelves carelessly.
4.High overhead expense – High rent due to
prime location, heavy administrative cost etc.
5. Huge capital requirement
– Establishment and running
cost is relatively high.
Vending
Machine
 Large Scale Retailers
f Vending Machine
These are coin operated machines found very
suitable in selling products like hot
beverages, platform tickets, soft drinks,
newspaper etc.

ATM (Automated Teller

Machine) is also a vending
machine in banking
business
 Large Scale Retailers
Features of Vending Machine

1.They are suitable for selling pre-packed

items of low priced products, with uniform
size and weight.
2.Initial cost of the machine, maintenance
charges etc. are high.
 Large Scale Retailers
Features of Vending Machine

3.Consumers cannot see the product before

buying.
4.No return of goods is possible.
Goods and Service Tax
 Goods and Service Tax

1.Introduced by Government of India July

on 1 st 2017

2.One Nation One Tax

3.It is a destination based single tax on the supply of

goods and services from the manufacturer to the
consumer
 Goods and Service Tax

4.Replaced multiple taxes levied by central and state

governments

5.Reduced tax burden by eliminating tax on tax

 Goods and Service Tax
6.GST consists of CGST and SGST, which are
applicable in case of intra-state supply of goods
and services and IGST in case of inter-state supply
of goods and services

7. Tax liability arises

when taxable
the
person
the crosses
limit of 20
lakhs turn over
per year.
 Features of

Goods and Service

Tax
 Features of Goods and Service Tax
a) GST is applicable to the whole
country
including Jammu and Kashmir.

b) It is a destination based consumption tax.

c)Import of goods are treated as inter-state

supplies and hence IGST is applicable for for
such goods.
 Features of Goods and Service Tax
d)CGST, SGST and IGST are levied at rates
mutually agreed by the Centre and the State
based on the recommendations of GST Council.

e)There are four tax slabs: 5%, 12%, 18% and

28%
 Features of Goods and Service Tax
f) Export and supplies to SEZ are zero-rated.

g)Tax payer can remit the tax amount through

different payment gateways such as Net Banking,
Debit/Credit Card, NEFT (National Electronic Fund
Transfer) and RTGS (Real Time Gross Settlement.
 Role of
Commerce and
Industry Association
in Promotion of
Internal Trade
 Promotion of Internal Trade
The Chambers of Commerce and Industry was
formed as an association of business and industrial
houses to promote and protect their common
interest and goals

They play an important role in strengthening

internal trade and overall economic activity
 Promotion of Internal Trade
Examples:
1. CII (Confederation of Indian Industry)
2.FICCI (Federation of Indian Chambers
of Commerce and Industry)
3.ASSOCHAM (Associated Chamber of Commerce
and Industry)
 Promotion of Internal Trade
Role of Commerce and Industry
Association
1. Helps in many activities relating
interstate
movement of goods.
2. To ensure that octroi and other local levies
are charged reasonably.
3. Helps in harmonization of GST and VAT
(Value Added Tax).
4. Helps in marketing of agro products and
related issues.
 Promotion of Internal Trade
Role of Commerce and Industry
Association
5.Interacting with the government to take
action who violates rulesrelating
against those
to and measures and
weights prevention
duplication of brands. of
6. Promoting sound infrastructure.
7. Interact with the government on issues of labour
laws.