Wholesale Trade: Commerce

• Commerce involves the exchange of goods or services for money or in kind
• Encompasses all activities involved in the production and distribution of goods and services

Branches of Commerce

• Trade: Buying and selling of goods and services with the aim of earning profit
• Aids to Trade: Activities that support and facilitate trade, such as transportation, banking, insurance, warehousing, and advertising

Trade

• Buying and selling of goods and services with the aim of earning profit
• Bridges the gap between producers and consumers

Types of Trade

• Home Trade
  • Buying and selling of goods within the geographical boundaries of a country
  • Also known as domestic or internal trade

Types of Home Trade

• Wholesale Trade
  • Buying goods in bulk from manufacturers or producers and selling them in smaller quantities to retailers
  • Wholesalers act as intermediaries between producers and retailers

Features of Wholesale Trade

- Buying and selling goods in large quantities
- Providing storage facilities for goods
- Grading and packaging of goods
- Offering credit facilities to retailers
- Providing market information to retailers and manufacturers

Services of Wholesalers to Retailers

- Supplying goods regularly
- Granting credit facilities
- Providing market information
- Offering promotional support

Services of Wholesalers to Manufacturers

- Enabling large-scale production
- Providing storage facilities
- Distributing goods to retailers
- Providing market information

Retail Trade

- Selling goods in small quantities directly to the ultimate consumers
- Retailers are the last link in the chain of distribution

Features of Retail Trade

 - Buying goods in small quantities
 - Selling goods directly to consumers
 - Maintaining a wide variety of goods
 - Providing customer service
 - Extending credit to customers

Types of Retailers

- Itinerant Retailers: Retailers who do not have a fixed place of business and move from place to place to sell their goods

Examples of Itinerant Retailers

- Peddlers: Carry goods on their heads or backs and move from street to street
- Hawkers: Use a cart or bicycle to carry goods and sell them in residential areas
- Street Vendors: Display goods on pavements or streets
- Cheapjacks: Hire a shop for a temporary period to sell goods at discounted prices

Fixed Shop Retailers

- Retailers who have a permanent place of business

Types of Fixed Shop Retailers

- General Stores: Sell a wide variety of goods to meet the daily needs of customers
- Speciality Shops: Focus on selling a specific type of product
- Departmental Stores: Large retail establishments that offer a wide range of products under one roof, divided into different departments
- Chain Stores: Multiple retail outlets with the same brand name, selling similar products and operating under a centralized management
- Supermarkets: Large self-service stores that sell a wide variety of food and household products

Services of Retailers to Consumers

- Providing a wide variety of goods
- Selling goods in small quantities
- Offering credit facilities
- Providing customer service
- Providing after-sales service
- Providing information about new products

Services of Retailers to Wholesalers and Manufacturers

- Enabling wide distribution of goods
- Providing market information
- Helping in sales promotion

Foreign Trade

- Buying and selling of goods and services between two or more countries
- Also known as international or external trade
- Facilitates specialization and efficient use of resources

Types of Foreign Trade

- Import Trade: Purchasing goods from a foreign country
- Export Trade: Selling goods to a foreign country
- Entrepot Trade: Importing goods from one country and then exporting them to another country

Advantages of Foreign Trade

- Specialization: Countries can specialize in the production of goods and services in which they have a comparative advantage
- Increased Production: Enables countries to produce goods on a large scale
- Availability of a Wide Variety of Goods: Consumers have access to goods and services from all over the world
- Economic Development: Promotes economic growth and development by increasing exports and earning foreign exchange
- Employment opportunities: Expansion of industries and businesses to support foreign trade results in the creation of jobs
- Improvement in the standard of living: Access to better quality products and services improves the standard of living

Disadvantages of Foreign Trade

- Dependence: Over-dependence on foreign countries for essential goods may be risky
- Competition: Local industries may face stiff competition from foreign industries
- Exploitation: May lead to exploitation of underdeveloped countries
-  Risk: Subject to risks such as changes in government policies, exchange rates, and political instability

Documents Used in Foreign Trade

- Pro Forma Invoice: A document containing the details of goods to be exported, sent by the exporter to the importer for confirmation
- Indent: An order placed by the importer with the exporter for the supply of goods
- Letter of Credit: A guarantee issued by the importer's bank to the exporter, assuring payment upon fulfillment of certain conditions
- Shipping Bill: A document submitted by the exporter to the customs authorities for permission to export goods
- Bill of Lading: A document issued by the shipping company, acknowledging receipt of goods for shipment
- Consular Invoice: A document certified by the consul of the importing country, containing details of the goods
- Certificate of Origin: A document certifying the country of origin of the goods
- Marine Insurance Policy: A contract between the exporter and the insurance company, providing coverage against loss or damage to goods during transit

Aids to Trade

- Activities that support and facilitate trade
- Also known as auxiliary services to trade
- Remove various hindrances in the process of trade

Types of Aids to Trade

- Transportation: Facilitates the movement of goods from one place to another, removing the hindrance of place
- Banking: Provides financial assistance to traders, removing the hindrance of finance
- Insurance: Protects traders from losses due to various risks, removing the hindrance of risk
- Warehousing: Provides storage facilities for goods, removing the hindrance of storage
- Advertising: Creates awareness about goods and services, removing the hindrance of information
- Communication: Facilitates exchange of information between traders, removing the hindrance of communication

Transportation

- Facilitates the movement of goods from one place to another
- Essential for both home and foreign trade
- Creates place utility

Modes of Transportation

- Land Transport: Includes road transport and rail transport
- Water Transport: Includes inland water transport and ocean transport
- Air Transport: Fastest but most expensive mode of transport

Banking

- Provides financial assistance to traders
- Facilitates payments and receipts
- Offers various banking services such as loans, overdrafts, and credit facilities

Functions of Banks

- Accepting deposits
- Granting loans
- Providing credit facilities
- Facilitating payments
- Offering various other services such as foreign exchange and investment advice

Insurance

- Protects traders from losses due to various risks such as fire, theft, and accidents
- Provides compensation for losses
- Offers various types of insurance policies such as fire insurance, marine insurance, and life insurance

Warehousing

- Provides storage facilities for goods
- Protects goods from damage and deterioration
- Maintains a regular supply of goods in the market
- Creates time utility

Types of Warehouses

- Private Warehouses: Owned and managed by individual traders or manufacturers
- Public Warehouses: Owned and managed by government agencies or private companies and are available to the public for storing goods
- Bonded Warehouses: Licensed by the government to store imported goods until customs duties are paid

Advertising

- Creates awareness about goods and services
- Persuades customers to buy goods and services
- Provides information about the features and uses of products
- Increases sales and profits

Modes of Advertising

- Print Media: Includes newspapers, magazines, and journals
- Electronic Media: Includes television, radio, and internet
- Outdoor Advertising: Includes billboards, posters, and banners
- Direct Advertising: Includes direct mail, leaflets, and brochures

Communication

- Facilitates exchange of information between traders
- Essential for placing orders, making inquiries, and resolving disputes
- Includes postal services, telephone, internet, and email