Classification of Trade PDF

# CHAPTER 01 ## CLASSIFICATION OF TRADE ### Definition of Trade? Exchanging the ownership of goods and services between the buyer and seller for a consideration is trade. ### Classification of Trade ``` TRADE | | --- | | Domestic/ International/External...

# CHAPTER 01 ## CLASSIFICATION OF TRADE ### Definition of Trade? Exchanging the ownership of goods and services between the buyer and seller for a consideration is trade. ### Classification of Trade ``` TRADE | | --- | | Domestic/ International/External Local trade Foreign Trade | | --- --- | | Home Trade Trade which takes place between two or more countries is foreign trade. | --- | Retail trade | --- Wholesale trade | --- Import trade | --- Export trade ``` ### **Agent** A person who is involved in any activity on the authority of a **(principal)** is known as an agent. * The agent undertakes responsibilities on behalf of his head. * He gains a commission for his service. **Types of Agents** 1. **Commission agent** - One who purchases or sells his personal desire on behalf of his master, for his head's benefits, and earns a reasonable amount as a commission. 2. **Broker** - Facilitates a transaction by arranging a meeting between the buyer and the seller, without maintaining any stocks. The broker claims commission from both buyer and seller. 3. **Factor** - Works in his own name when buying and selling on behalf of his principal. Also has authority to transfer ownership of goods asper the accepted credit terms 4. **Del credere** - A guarantor of credit extended to the buyer. The Del Credere acts as a sales person or broker for the principal but also guarantees that the buyer will pay for the products or services 5. **Auctioneer** - The auctioneer summons a large number of buyers to a specific location and calls for price biddings from the buyers, thereby selling goods to the highest bidder on behalf of his principle. # CHAPTER 02 ## RETAIL TRADE Selling goods and services for final consumption is retail trade. ### Characteristics of Retail Trade 1. Selling goods and services for the end consumption. 2. Delivering required goods in required quantities to required locations 3. Delivering a variety of goods for sale 4. Maintaining a close relationship with the consumer 5. Selling on a credit basis. ### Services rendered by the retailers **To the producer** 1. Introducing new products 2. Promotion of new products. 3. Providing information on market. **To the wholesaler** 1. Distribution of goods stored by the wholesaler to the consumer. 2. Provide information on the market, consumer taste. 3. Contributing to the promotion of wholesale activities. **To the consumer** 1. Provision of the required goods in adequate quantities when necessary. 2. Make credit sales. 3. Introducing new products and providing instructions when necessary. 4. Providing various types of goods based on customer requirements. 5. Providing various facilities to the consumer (E.g.: transport facilities, electronic payment methods) ### Trends in retail trade 1. **Expansion of supermarkets** - Spreading of supermarkets that were limited to urban areas in the past are now in rural areas at present. 2. **Use of modern technology** - Various new technologies are used at present to carry out the retail trade in an efficient manner * Recording of prices using barcode / digital flashes of prices. * Using digital scales in weighing / measuring prices. * Using Dr/Cr cards for making payments * Application of CCTV camera system in supervision 3. **Extending opening hours** - Ability to carry out transactions till late at night and at any time on holidays. 4. **Combining retail outlets with the supply of services** - Laugfs fuel stations and supermarkets. Commercial mini bank and cargills supermarkets. 5. **Non - Store retailing (Retail trade without physical store)** - This is where the consumer is able to purchase goods without visiting a retail outlet by placing orders through the telephone, fax, and internet and with the aid of catalogues. * **Online retailing** - The electronic retail trade that takes place through the internet * **Direct marketing** - Products being supplied to the consumer without the aid of intermediaries. Example: - Direct mail, Catalogue, through the telephone and the TV 6. **Automatic vending machines** (For sweets, chocolate, soft drinks) 7. **Using of modern management techniques** ### Super Markets Self-service retail market selling especially foods and household merchandise. **Benefits provided by supermarkets to customers** 1. Can fulfill many consumer wants under one roof. 2. Availability of self service. 3. Availability to use electronic money. 4. Availability of parking 5. Benefits from promotional activities. ### Reasons for the prevalence of traditional boutique despite the supermarket system With the expansion of the supermarkets the traditional boutique is gradually declining. However, there is a significant present of traditional boutique despite the expansion of the Supermarket system. 1. Ability to purchase goods on credit 2. Easy accessibility (proximity to consumers) 3. Ability to buy in small quantity. 4. Ability to bargain. 5. Can build personal relationships. # CHAPTER 03 ## WHOLESALE TRADE ### Wholesale Trade Wholesale trade can be defined as the sale of goods to the purchasers who purchase with the intention of resale. ### Characteristics of Wholesale Trade 1. Carrying out market research 2. Purchasing of goods with the purpose of resale. 3. Storage of goods in large quantities 4. Conduct of sales promotion activities 5. Providing trade discounts 6. Selling goods in lots/batches 7. Providing transport services when distributing goods in bulk. ### Functions of Wholesale Trade 1. Storing 2. Mixing 3. Packaging 4. Transporting ### Services by Wholesaler **Services to the Manufacturer** 1. Purchasing the products of the producer in bulk/lots/batches 2. Providing information about the markets. 3. Providing various services to the producer. * ex:- financial facilities, Obtaining RM. **Services to the Retailer** 1. Supplying goods in bulk / lots / batches. 2. Transporting goods to the retail trade centre itself. 3. Providing loan facilities. 4. Engaging in storing out, mixing up, packaging of goods ### Disadvantages of Wholesale Trade 1. Rise of storage expenses 2. Certain goods can get perished. 3. The complexity of the producers work increase in distribution cycle. 4. Inability to gain wholeseller's specialized knowledge. 5. Instrumental in creating market shortage.