Commerce Keypoints: Trade; Trade refers to the exchange of goods and services between different parties. It is an essential aspect of economic activity and plays a crucial role in the growth and development of nations. Trade can be categorized into two main types: Home Trade and Foreign Trade.
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A. Home Trade
Home trade, also known as domestic trade, is the exchange of goods and services within the boundaries of a country. It involves the buying and selling of goods and services by individuals or organizations. Home trade can be further classified into two types: Retail Trade and Wholesale Trade.
(i) Retail Trade:
Retail trade involves the sale of goods and services directly to the final consumers. Retailers are the middlemen who facilitate the transaction between producers and consumers. They can be classified into various types based on size, ownership, and product range. Some common types of retailers include:
- Department stores
- Supermarkets
- Convenience stores
- Discount stores
- Online retailers
Functions of Retailers:
Retailers play a crucial role in the marketing of goods and services. Some of the essential functions of retailers include:
- Buying and assembling goods from different sources
- Storing and displaying goods in an attractive manner
- Providing information about the products to the customers
- Offering credit facilities to the customers
- Providing after-sales services
Factors to be Considered in Setting up Retail Trade:
Setting up a retail business requires careful planning and consideration of various factors. Some of the critical factors that need to be considered include:
- Location: The location of the retail store plays a crucial role in determining its success. A prime location with high footfall can attract more customers.
- Product Range: The range of products offered by the retailer should be relevant to the target market.
- Pricing Strategy: The pricing strategy should be competitive and should take into account the cost of goods, overheads, and profit margin.
- Marketing and Promotion: Effective marketing and promotion can help attract more customers and increase sales.
- Staffing: The retailer should have a skilled and trained staff to provide excellent customer service.
Trends in Retailing:
Retailing is a dynamic industry, and new trends keep emerging regularly. Some of the current trends in retailing include:
- Branding: Retailers are increasingly focusing on building their brand and creating a unique identity for themselves.
- Self-service: Self-service is becoming more prevalent in retailing, with customers preferring to choose and buy products themselves.
- Vending Machines: Vending machines are becoming popular in retailing, particularly for the sale of snacks and beverages.
- Use of Coupons and Vouchers: Retailers are offering various coupons and vouchers to attract and retain customers.
- Fuel Vouchers: Fuel vouchers are becoming popular as a promotional tool, particularly for supermarkets and convenience stores.
Advantages and Disadvantages of Retailers:
Retailers play a crucial role in the marketing of goods and services. Some of the advantages of retailers include:
- Facilitating the transaction between producers and consumers
- Providing a one-stop-shop for customers
- Offering credit facilities to customers
- Providing after-sales services
However, there are also some disadvantages of retailers, including:
- Additional cost: Retailers add to the cost of goods by charging a margin for their services.
- Limited product range: Retailers may not offer the entire range of products produced by the manufacturers.
- Increased competition: Retailers face stiff competition from other retailers, both online and offline.
(ii) Wholesale Trade:
Wholesale trade involves the buying and selling of goods and services in large quantities to retailers or other businesses. Wholesalers act as intermediaries between the manufacturers and retailers. They can be classified into various types based on their functions and ownership. Some common types of wholesalers include:
- Merchant Wholesalers: Merchant wholesalers buy goods from manufacturers and
sell them to retailers or other businesses. They take ownership of the goods and bear the risk of loss or damage.
- Agent Wholesalers: Agent wholesalers act as intermediaries between the manufacturers and retailers. They do not take ownership of the goods and earn a commission on the sale.
- General Wholesalers: General wholesalers deal in a wide range of products and serve a broad customer base.
Functions of Wholesalers:
Wholesalers play a vital role in the distribution of goods and services. Some of the essential functions of wholesalers include:
- Buying and storing goods in large quantities
- Sorting and grading goods
- Breaking bulk and repackaging goods
- Providing credit facilities to retailers
- Providing marketing information and support to retailers
Advantages and Disadvantages of Wholesalers:
Wholesalers provide several benefits to manufacturers and retailers. Some of the advantages of wholesalers include:
- Efficient distribution of goods
- Reduced marketing costs for manufacturers
- Access to a broader customer base for retailers
- Credit facilities for retailers
However, there are also some disadvantages for wholesalers, including:
- Additional cost: Wholesalers add to the cost of goods by charging a margin for their services.
- Delay in delivery: Wholesalers may take some time to deliver the goods to the retailers, leading to delays in the availability of goods for consumers.
- Dependence on wholesalers: Retailers may become dependent on wholesalers for the supply of goods and may not have control over the quality and availability of the products.
B. Foreign Trade
Foreign trade, also known as international trade, involves the exchange of goods and services between different countries. It is an essential aspect of the global economy and plays a crucial role in the growth and development of nations.
(i) Basic Issues in Foreign Trade:
Foreign trade involves several issues, including:
- Balance of Trade: Balance of trade refers to the difference between the value of exports and imports of goods and services of a country. A positive balance of trade indicates that a country is exporting more than it is importing, while a negative balance of trade indicates the opposite.
- Balance of Payments: Balance of payments refers to the difference between the total value of payments made by a country to other countries and the total value of payments received from other countries. A positive balance of payments indicates that a country is receiving more money from other countries than it is paying out, while a negative balance of payments indicates the opposite.
- Counter Trade: Countertrade refers to the practice of exchanging goods and services between two countries without the use of currency.
(ii) Procedures and Documents Used in Foreign Trade:
Foreign trade involves several procedures and documents, including:
- Export Documents: Export documents include the invoice, packing list, shipping bill, and bill of lading.
- Import Documents: Import documents include the purchase order, bill of lading, and customs clearance documents.
- Entreport Trade Documents: Entreport trade documents include the transit document, re-export certificate, and certificate of origin.
(iii) Barriers to International Trade:
International trade faces several barriers, including:
- Tariffs and Customs Duties: Tariffs and customs duties are taxes imposed on imports and exports, making them more expensive and reducing trade.
- Non-Tariff Barriers: Non-tariff barriers include regulations, standards, and technical barriers that can make it difficult for foreign companies to enter a market.
- Political Barriers: Political barriers include restrictions on trade imposed by governments, such as embargoes and sanctions.
(iv) Role of Customs and Excise Authority, Ports Authority, etc in Foreign Trade:
Customs and Excise Authority and Ports Authority play a crucial role in foreign trade. Customs and Excise Authority is responsible for regulating the import and export of goods and collecting customs duties. Ports Authority is responsible for ensuring the efficient movement of goods in and out of the country through the ports. They provide necessary infrastructure, including cargo terminals, container yards, and warehouses, to facilitate the smooth movement of goods. They also ensure compliance with customs and excise regulations and provide security to prevent illegal activities such as smuggling.
Conclusion:
Trade, whether home or foreign, plays a vital role in the distribution of goods and services and contributes to the growth and development of nations. Retailers and wholesalers serve as intermediaries between manufacturers and consumers and provide several benefits to the distribution system. In foreign trade, several issues, procedures, and documents need to be considered, and there are several barriers that need to be overcome for a successful trade. Customs and Excise Authority and Ports Authority play a crucial role in regulating and facilitating foreign trade.
