Chapter 9 Internal Trade Rajesh Gidwani

Class 11
Business Studies
Rajesh Gidwani
9824590506
Chapter - 10
Internal Trade
Tra d e
Tra d e
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
W h o l e s a l e 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
S e r v i c e s of
W h o l e s a l e r s to
M a n u f a c t u r e r s or
Producers
S e r v i c e of W h o l e s a l e r s t o P r o d u c e r s
1 Facilitating large scale production
Bulk orders from wholesalers enable to produce in

large quantity
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
3 Financial assistance
Wholesalers purchase on cash basis and sometimes they

may give advance payment for bulk purchases
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
5 Helps in marketing
Wholesalers take care of distribution of goods, market

research, transportation, warehousing etc.
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
7 Storage
The burden of storing goods passes to the

wholesalers
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
S e r v i c e s of
W h o l e s a l e r s to
Retailers
S e r v i c e of W h o l e s a l e r s to Retailers
1 Availability of goods
Retailers get goods as and when they required as there is a

large quantity stored by wholesalers
2 Marketing support
Wholesaler takes all the burden of advertisement and

sales promotion activities, and the retailer enjoys the
benefit
3 Providing credit facilities
It enables the retailers to conduct their business without

much investment in working capital
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.
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.
1) Availability of goods
2) Marketing support
3) Providing credit facilities
4) Specialized knowledge
5) Risk sharing
Retail
Trade
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
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

b Deal in consumer products
Usually they deal in consumer goods of daily use

Eg: Fruits, vegetables, fish, stationery etc.
c Door step service
They provide goods at the door step of the

consumers
d Limited stock
As they have no fixed place to operate, they do their

business with limited stock only
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.
M a r k e t 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.
c)Dealing in Low priced goods.
d) They move from one market to another.

S t r e e t Traders / Pa v e m e n t 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) Do not change their places of business
frequently.
C h e a p 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 S h o p 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 S h o p Retailers
Depending upon the size of operations,
they can be of two types
Small scale Retailers Large scale retailers

Fe a t u r e s of
Fixed S h o p
Retailers
Fixed S h o p Retailers - F eatur es
a Large resources
They have a lot of goods compared to itinerant
traders
b Deal in different products
They deal consumer goods,

both durables and non-durables
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 S h o p
Retailers
Large
Small
Scale
Scale
Small
Scale
General Retailers Second Hand
Stores Goods Shop
Speciality Street Stall

Shops Holders
S m a l l S c a l e Retailers
They are running their business on a small

scale and deal in a limited line of goods
S m a l l S c a l e R et ailers
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
Features of General Stores
● They stock variety of goods for day to day
requirement.
● Open for long hours based on the convenience of
consumers.
Features of General Stores
● Provide credit facilities to regular customers.
● Located near residential area.
● Provide service like home delivery etc.
b Speciality 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.

Features of Speciality Shops
● Specialize in one product only.
● Located in central places.
● Keep all brands of a particular product.
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
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.
d Second hand goods shop
They are dealing in second hand goods such as
books, furniture, clothes, used cars and other
household items
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
L a r g e S c a l e R et ailers
Large scale retailing may be defined as retail

trade involving operations on a large scale and
sale of goods in small quantities
Departmental
Stores
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.
L a r g e S c a l e 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
Features of Departmental Stores
●
Elimination of middlemen – They are making their
purchases directly from the producers.
●
Centralized purchases and decentralized selling.
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,
restaurants, rest rooms etc.
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.
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 of loss – Lack of personal
They incur high loss due attention
to change in taste and
fashion of consumers, as
they have a large
quantity of stock.
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
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 throughout the
nation under the same
name and management
and they specialize in one
or two lines of goods
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.
Multiple Shops
In a multiple shop there is uniformity in
advertisement, window display and interior display
of goods etc.
Features of Multiple Shops
●
Convenient location for consumers.
●
Centralized buying and decentralized selling.
●
Centralized management and unified system of
control.
Convenient
location
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.
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 – They follow cash and carry system.
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.
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.
Limitations of Multiple Shops
●
No personal contact due to large scale operations.
●
Risk due to change in taste and fashion lead to great
loss.
Differences B e t w e e n
Departmental Stores
&
Multiple S h o p s
D e p a r t m e n t a l S t o r e s V s . Multipl e S h o p s
1 Location
Departmental Stores Multiple Shops
Central location Not necessary

D e p a r t m e n t a l S t o r e s V s . M u l t i pl e S h o p s
2 Variety of goods
Limited variety of
Large variety of
goods from a
goods from different
specific producer
producers
only
3 Services offered
Additional facilities
No such additional
like restaurants, play
facilities are
zone, alteration of
provided
garments etc.
4 Pricing policy

No uniform pricing
policies, instead they Fixed price and uniform
are giving discounts to pricing policies are
clear the stocks in followed
special occasions
5 Class of customers

Suitable for middle and
High income group who
low income group who
care more for the
are more concern about
services rather than the
quality products at
price of products
reasonable price
6 Credit facilities
Sometimes to Strictly on cash

regular customers basis
Mail Order
Houses
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
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.
Mail Order Houses – Mode of Operation
1.Giving advertisement in various media.
2.Preparing a mailing list of prospective customers.

(Data may be collected from telephone directories,
social media etc.)
3.Approaching the
prospective customers by
sending circulars, catalogues
etc. by post.
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.
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.

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.
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.
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.
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.
4.No credit facilities.
Limitations of Mail Order Houses
5.Delay in delivery.
6. Possibility of abuse – Dishonest traders may
cheat the customers.
5.High dependence on postal
services – Success of the
business depends on the
efficiency of postal department.
G o o d s and Service
Tax
G o o d s a n d S e r v i c e Tax
1. Introduced by Government of India on 1st July 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
4.Replaced multiple taxes levied by central and state

governments
5.Reduced tax burden by eliminating tax on 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 the taxable
person crosses the
limit of 20 lakhs turn
over per year.
F e a t u r e s of
F ea t u r es of G o o d s a n d Ser v i c e 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.
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%
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.

Chapter 9 Internal Trade Rajesh Gidwani

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Class 11

On the basis of scale of operation, internal trade can be

One who deals in wholesale trade is known as

Bulk orders from wholesalers enable to produce in

They take the risk of change in demand, spoilage,

Wholesalers purchase on cash basis and sometimes they

Wholesalers are in constant touch with the retailers, they

Wholesalers take care of distribution of goods, market

Wholesalers purchase goods on a real time basis as and

The burden of storing goods passes to the

Retailers get goods as and when they required as there is a

Wholesaler takes all the burden of advertisement and

It enables the retailers to conduct their business without

They also inform the retailers about new products, their

The risk of retailers gets reduced as most of the burden of

A retail trader buys goods from the wholesalers and

Itinerant Traders Fixed Shop

Traders are having no fixed place of business

Eg: Hawkers, street traders etc.

Due to limited resource

Usually they deal in consumer goods of daily use

They provide goods at the door step of the

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

Peddlers carry their products

● Generally dealing non-standardized and

c)Dealing in Low priced goods.

d) They move from one market to another.

a) They sell consumer items of daily use.

b)Also provide services like repairing watches, shoes,

c)Move from one area to another depending on sales

d)They also sells goods in temporary sheds during

Hawkers and Peddlers

These retailers are those who carry on business by

They do not move from one place to another

Small scale Retailers Large scale retailers

They deal consumer goods,

Speciality Street Stall

They are running their business on a small

They may also provide free home delivery, credit facilities

E.g. kids wear shop, computer shop, bookshop etc.

They usually display their goods on a table, stand

Large scale retailing may be defined as retail

Textile Department Consumer Goods Department

Each department deals in separate line of goods like

Eg. Bata Shoe company, Bombay Dyeing Show Rooms, Big

Departmental Stores Multiple Shops

Central location Not necessary

Departmental Stores Multiple Shops

Departmental Stores Multiple Shops

Departmental Stores Multiple Shops

Departmental Stores Multiple Shops

Departmental Stores Multiple Shops

Sometimes to Strictly on cash

There is not direct personal contact between the

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

2.Preparing a mailing list of prospective customers.

3.Goods having ready demand in the market.

5.Goods which are having least competition in the

6.Goods which are not available in the local

1. Introduced by Government of India on 1st July 2017

2. One Nation One Tax

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

4.Replaced multiple taxes levied by central and state