● Communication: to transmit and receive information quickly

● Insurance: absorbs some of the risks in production and trade

● Warehousing: provides storage facilities
● Advertisement: inform customers about product
Similarities between Home Trade and Foreign trade:
● Buying and selling of goods to make profit
● Serve mankind by satisfying their needs and wants
● Requires aid to trade
● Requires surplus to be created
● Works on the principle of specialisation

Comparison between HT and FT

● Home trade is done within the country while FT is done across the globe
● HT involves same currencies but FT involves different currencies
● HT - same units of measurements but FT has different
● HT - same government policies but FT has different
● HT - no taxes involved but FT - import and export taxes
● HT - simple documents but FT - complex documents
● HT = same culture and language FT - different
● HT - mode of payment is cash, cheque etc, FT - online payment, bill of exchange etc

Retail Trade
Home trade: consists of buying and selling of goods with the aim of making profit among the people
of the same country. Home trade can be divided into wholesale and retail trade.

Wholesale trade: deals with the bulk buying of goods from various manufacturers and the breaking
down of this bulk into smaller quantities which is then sold to the retailer. Wholesale traders is an
intermediary distributor.

Retail trade: deals with buying of goods in small quantities from the wholesale trader and selling of
goods in single units to the customer. A retailer is a intermediary distributor

Different Channels of Distribution

● Producer to the consumer: expensive, technical, perishable, exclusively made for one
customer
● Producer to retailer to consumer: large scale retailer, producers own outlet, suitable for
perishable items like bakery
● Producer to wholesaler to retailer to consumer: standardised, consumer items, low value
and high shelf life, suitable when demand of product is seasonal or production is seasonal
● Producer to agent to wholesaler to retailer to consumer: only in case of international trade,
overseas traders appoint agent in home market, for example; imported cars and cosmetics

Factors affecting choice of channel of distribution

 - Producer capabilities; can he open his own outlet?
- Producer philosophy; exclusive and extensive distribution
- Types of customer; own use, business use
- Size of order; small or large
-
- Nature of product
- Value of product; expensive - small channel while cheap - long channel
- Size of market
- Nature of market; international or home trade

Functions of retailer
- Always looking for good source of supply
- Further bulk breaking and selling in single units
- Offers variety of goods from different producers
- Sell to end customer
- Might be involved in branding and packing
- Might provide home delivery
- Small scale retailers may provide informal credit to trustworthy customers
- Provide after sale services to customer
- Provides information to customers about new products and schemes
- Informs the wholesaler or producer about reaction/feedback of market towards a certain
product
- Deals with complaints from customers
- Warehousing
- Display products to customers

Large Scale Retailers

- Purchase from the producer in bulk
- Normally work on basis of public or private limited companies
- Involve a lot of capital
- Invest heavily in the fixed assets
- Employ specialist staff
- Arrange transportation from the producer
- Pay cash to producer at time of purchase
- Sell on cash to end customers (no credit offered)
- Provide impersonalised services to customers
- Do not provide home delivery

Types of Large Scale Retailers

1. Multiple Shops
- Many same looking outlets distributed all over the country under the same head
- Same product line is sold through all shops
- Losses in one store may be offset by profits in other stores
- Stock in bought centrally
- Stock can be moved between branches
- Most operate as public limited companies
- Goods are usually on open display
- Prices are clearly marked

2. Department stores
- Many departments or specialist shops in one building located in centre of city
- Each department specialises in particular types of goods
- Main aim is to provide complete range of goods under one roof
- Operates as limited companies
- Prices are clearly marked

3. Variety Chain stores

- Contains features of both multiple and department stores
- Offers variety of goods with similar looking outlets spread all over the country
- Sells by self service, goods openly displayed, prices clearly marked

4. Supermarket
- Big department stores
- Specialised in kitchen related and daily household goods
- Offers self service
- High rate of turnover

5. Hypermarket
- Very large supermarkets
- Sited outside large towns
- Offers low prices as they buy in bulk
- Suitable for those who want to buy in bulk and have their own transport