What is Trade?
Trade means the transfer of goods or services from one person or organization to another, often this transaction happens in exchange for money. Economists refer this system or network to that which allows trade as a market.
Trades are of many forms one is - Domestic trade or the Internal Trade which is different from international trade, this is the exchange of domestic goods within the boundaries of the country. Another is wholesaling trade, which is a subdivision of Internal Trade, this is the distributing or sale of goods or merchandise to the retailers. In our upcoming section we will learn in detail about this Internal and Wholesale Trade.
Note: An early form of trade was the barter system where the direct exchange of goods and services for other goods and services existed.
Buying and selling of goods and services or trading with these goods and services which happens within the boundaries of a nation are called internal trade.
Internal Trade takes place between the buyers and the sellers in the same locality, may it be a village, town or even a city.
This may also occur between two or more different states known as interstate trade, but this happens definitely within the same country.
The other name for Internal trade is called the domestic trade or the home trade.
Internal Trade starts from an individual or establishment within a country and also the trade ends within the country itself by consumption by the local consumers of the nation. This trade facilitates domestic consumption only. The payment for this trade is to be made with the legal tender of the country.
Internal trade can be classified as:
1. Wholesale Trade
Wholesale trade refers to the buying and selling of goods and services in large quantities for the purpose of resale to the end users.
Wholesaling is connected with the activities of those persons or establishments who sell the bulk of goods to the retailers and other merchants who in turn sell it to the consumers.
The wholesale trade does not sell goods to the end users in smaller quantities.
Wholesalers act as an important link between the manufacturers and the retailers.
They give access to the producers not only to reach a large number of buyers who are spread over a wide geographical area (through retailers), but also to perform a variety of other functions in the process of distribution of these goods and services.
They generally take the title of the goods and bear the business risks involved in purchasing and selling the goods in their own name. They purchase in bulk from the producers and sell in small lots to the retailers or to other industrial users. They undertake various other activities to facilitate the sale which the producers are made free from doing the same.
Features of Internal Trade
The features of Internal Trade are explained in points, in the section down below –
The buying and selling of goods happen within the boundaries of the nation, and is subject to rules and regulation of the country.
There is no restriction on the exchange of goods and services between the buyer and seller such that they need to follow the norms of the nation while transacting.
Goods and services are exchanged for a single and common currency. Like in India, Indian Rupees are used as a medium of exchange for buying and selling of goods and services.
In home trade, there is a simplified trade procedure of buyer who places an order and the seller executes the order and receives his payment.
Difference between Wholesale Trade and Retail Trade