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Write short notes on wholesale trade.

Wholesale trade refers to purchase and sale of commodities and services in huge quantities for the purpose of resale or intermediate use. Wholesaling is connected to the activities of those people or establishments which sell to retailers and other merchants, and/or to industrial institutional and commercial consumers but who don’t sell in significant amount to final consumers. They not only enable the producers to reach large number of consumers spread over a wide location (through retailers) but carry out different functions in the process of distribution of commodities and services. They normally take title of the commodities and bear the business risks by buying and selling the goods by their own name. They buy in bulk and sell in small quantities to retailers or industrial consumers. They undertake different activities such as grading the products, packing into smaller packs, storage, and transportation, promotion of commodities, gathering market information, collection of small and scattered orders of retailers and supplying to them. They also ease the retailers for maintaining large stocks and also extend credit facilities to them. Most of the functions done by wholesalers are such which can never be neglected. If we do not have any wholesalers, these functions will have to be performed either by the manufacturers or the retailers themselves.


Mention the services of retailers to manufacturers and wholesalers.

Services to Manufacturers and Wholesalers


(i) Help in Distribution of Goods: The most important service to the wholesalers and producers by the retailers is to give help in the distribution of their goods by making these available to the final customers, who may be scattered over a large location.

(ii) Personal Selling: In the process of sales of most consumer products, some amount of personal selling effort is also required. By carrying out these personal efforts, the retailers relieve the manufacturers of this activity and enormously help them in the process of actualizing the sales of the products.

(iii) Enabling Large-scale Operations: Owing to retailer’s services, the producers and wholesale merchants are relieved from the botheration of making individual sales to customers in small scales. This helps them to operate at comparatively larger grounds, and thereby fully concentrate on their other activities.

(iv) Collecting Market Information: As retailers have a direct and continuous touch with the consumers, they serve as an important source of gathering market information about the tastes, preferences and attitudes of buyers. Such information is very needy in taking crucial marketing decisions in any organization.

(v) Help in Promotion: Every now and then, producers and distributors have to perform various promotional activities so that they can increase the sale of their products like for example, they have to advertise their products and offer short-term incentives in the form of coupons, free gifts, sales contests, and so on. Retailers take part in such activities in various ways and, thereby, help to promote the sale of the products.


Write short notes on the services provided by retailers to customers.

Services to Consumers


(i) Regular Availability of Products: The central service of a retailer to customers is to maintain regular availability of different products from various producers. This helps the buyers to choose products according to their desires from a range of products and buy them when needed.

(ii) New Products Information: By arranging for effective display of products and through their personal selling efforts, retailers give necessary information about the arrival, special features, etc., of newcomers to the consumers and serve as an important factor in the decision making process for the buying of those goods.

(iii) Convenience in Buying: Retailers normally buy goods in a large scale and sell them in a small scale, according to the needs of their consumers. Also, they are usually located very near to the residential areas and mostly remain open. This gives great convenience to the consumers in purchasing products of their needs.

(iv) Wide Selection: Retailers normally keep stock of various products of different producers. This helps the customers to make their choice out of a wide variety of goods.

(v) After-sales Services: Retailers give vital after-sales services in the form of home delivery, supply of spare parts and attending to customers and this becomes an important factor in the buyers’ decision for repeat purchase of the goods.

(vi) Provide Credit Facilities: The retailers few times give credit facilities to their regular buyers and this helps the latter to increase their level of consumption and thus their standard of living.


How are the retail trade categorized and what they classified as?

We have various types of retailers in our country. For better understanding, its appropriate, to classify them into certain usual categories. Different categories have been used by experts to classify retailers into various types like for example, on the basis of ‘size of business’, they may be classified into large, medium and small retailers. In case of basis of ‘type of ownership’, they are grouped into ‘sole trader’, ‘partnership firm’, ‘cooperative store’ and ‘company’. Another common base of categorization is whether or not they have a fixed location of business like:

(a) Itinerant retailers, and

(b) Fixed shop retailers


Write short notes on Mail Order Houses.

Mail Order Houses

These are the retail outlets that carry out sales of their goods through mail. There is normally no direct personal contact between the purchasers and the vendors in this form of trading. For getting orders, potential consumers are approached by advertising in newspapers or magazines, circulars, catalogues, samples and bills, and tariff sent to them by post. All the related information about the goods like price, features, delivery terms, terms of payment, etc., are described in the advertisement. On getting the orders, the products are cautiously scrutinized with respect to the specifications asked for by purchasers and are complied with through the post office. They can have various alternatives for getting payments. First, the consumers can be asked to make whole payment in advance. Secondly, the products can be sent by Value Payable Post (VPP). By this arrangement, the products are sent through post and are given to the consumers only on making the complete payment for the same. Third, the products can be delivered through a bank, which is instructed to deliver the items to the customers. Under this arrangement there are no risks of bad debt, as the items are handed over to the purchasers only after he makes complete payment. However, there is a requirement to ensure the purchasers that the items dispatched are in accordance with their specifications. This form of business is not adaptable for all types of items like for example, products that perish or are bulky and cannot be easily managed, are never recommended for mail-house trading. Only the products that can be

(i) graded and standardised,

(ii) easily transported at less expense,

(iii) always have demand in the market,

(iv) are available in large scale all round the year,

(v) involve minimum competition in the market and

(vi) can be described through pictures etc., are suitable for this type of trading.

One more significant note in this regard is that this business cannot be successfully done unless education is wide spread, because only the literate persons can be reached by advertisements and similar types of written communication.


What are the advantages and disadvantages of mail order houses?


(i) Limited Capital Requirement: This business doesn’t require large expenditure for building and rest of the infrastructural facilities and thus it can be started with relatively less amount of capital.

(ii) Elimination of Middle Men: The biggest merit of this business from the point of view of customers is that unnecessary middlemen between the buyers and sellers are eliminated and thus results in lot of savings for both to the buyers as well as to the sellers.

(iii) Absence of Bad Debt: Because the mail order houses don’t provide credit facilities to the customers, there are no chances of any bad debt on account of non payment of cash by the customers.

(iv) Wide Reach: By mail-order system the products can be sent to all the locations having postal services and thus opens wide scope for business as a large number of people throughout the country can be served through mail.

(v) Convenience: By the mail-order system products are delivered at the doorstep of the customers and results in great convenience to the customers in purchasing these products.


(i) Lack of Personal Contact: As there is no personal contact between the purchasers and the vendors in this system of mail order selling, there are more possibilities of misunderstanding and mistrust between the two. The purchasers are not in a position to examine the goods before purchasing and the sellers cannot pay personal attention to the likes and dislikes of the buyers and cannot clear all their doubts through catalogues and advertisements.

(ii) High Promotion Cost: This business has to rely mostly on advertisements and other ways of promotion in order to inform and persuade the potential purchasers to buy their products. Thus it results is large expenditure on promotion of the goods.

(iii) No After Sales Service: In this way of selling, the purchasers and vendors may be situated very far away from each other and there is no personal contact between the two. Thus, there is absence of after sales services and its important for the satisfaction of the consumers.

(iv) No Credit Facilities: These do not give credit facilities to the purchasers. Thus, consumers with limited means are not interested in this form of trading.

(v) Delayed Delivery: There is no immediate delivery of products to the consumers, as receipt and execution of order through mail takes some time.

(vi) Possibility of Abuse: This form of business gives greater possibility of abuse to dishonest traders to cheat the consumers by making false claims about the goods or not honoring the commitments made through hand bills or advertisements.

(vii) High Dependence on Postal Services: The success of this business relies largely on the availability of efficient postal services at a location. But in a big country like ours, where many locations are still without postal facilities, this form of business has limited prospects.


What are the advantages and disadvantages of super markets.



(i) One Roof, Low Cost: They offer a large variety of products at cheap rates, under one roof. These outlets are hence not only convenient but also economical for the purchasers for their shopping.


(ii) Central Location: They are normally situated in the centre of the city and so they are easily accessible to large number of people staying in the surrounding areas.


(iii) Wide Selection: They keep a large variety of products of different designs, color, etc., which enables the purchasers to make better selection.


(iv) No Bad Debts: As normally they sell on cash basis, there are no bad debts in super markets.


(v) Benefits of Being Large Scale: It is a large scale retailing store and It enjoys all the benefits of large scale purchasing and selling because of which its operating costs are less.



(i) No Credit: Their sales are on the basis of cash only and no credit facilities are made available to the purchasers. This reduces the purchasing power of purchasers from these super markets.

(ii) No Personal Attention: They work on the principle of self service and the customers by this do not get any personal attention. Because of this, such goods that require personal attention by sales persons cannot be handled properly in super markets.


(iii) Mishandling of Goods: Few consumers handle the commodities kept in the shelf with out care and this can raise costs in super markets.


(iv) High Overhead Expenses: They incur large overhead expenses and thus these are not able to make low price appeal among the consumers.


(v) Huge Capital Requirement: Establishing and functioning of a super market needs a large investment and the turnover of a store is suppose to be high so that the overheads are kept under reasonable level. These are possible in larger towns but not in small places.


Write short notes on vending Machines.

Vending Machines

These type of machines are the latest revolution in marketing techniques. Coin operated vending machines prove to be useful in selling several things like hot beverages, platform tickets, milk, soft drinks, chocolates, newspaper, etc., in a lot of countries. Other than some of these products mentioned above, the recent area in which this concept is getting popular in many parts of our country (particularly in the urban areas) is the case of Automated Teller machines (ATM) in the banking service. As the name suggests, these machines have totally changed the ideology of banking and made it possible to withdraw money at any hour without visiting any branch of a bank. They can be useful for selling pre-packed brands of less rated goods which have a large turnover and which are uniform in size and weight. However, the initial capital of installing a vending machine and the expenses for their regular maintenance and repair are quite high. Also customers will not be able to feel or see the product before purchasing and don’t have the opportunity of returning unwanted goods. Other than that, special packages are suppose to be developed for the machines. These machines are suppose to be made reliable in their functions . Even after having these limitations, with the development in the economy, vending machines have a promising future in retail sales of high turnover and less expensive consumer products.


What are the roles of indian chambers of commerce and industry in promotion of internal trade?

(i) Transportation or Inter State Movement of Goods: The Chambers of Commerce and Industry aid in a lot of activities relating to inter state movement of goods which includes registration of vehicles, surface transport policies, construction of highways and roads. For example, the construction of golden quadrilateral corridor announced by the Indian Prime Minister in one of the Annual General Meetings of the Federation of Indian Chambers of Commerce and Industry (FICCI) is going to boost internal trade.


(ii) Octroi and Other Local Levies: Octroi and local taxes are the significant sources from which the local government gets revenue. This is got on the products and from people entering the state or the municipal limits. The government and Chambers of Commerce must make sure that their imposition is not at the rate of smooth transportation and local trade.


(iii) Harmonisation of Sales tax Structure and Value Added Tax: This Chambers of Commerce and Industry plays a significant role in interacting with the government to harmonise the sales tax structure in various other states. This sales tax is crucial for any state’s revenue. A rational structure of the sales tax and its uniform rates in all the states, are important for maintaining the balance of trade. According to the new policy of the government, the Value Added Tax is being levied instead of the sales tax to eliminate the cascading effect of the sales tax.


(iv) Marketing of Agro Products and Related Issues: The associations of agriculturists and other federations have a significant role to play the marketing of agro products. Streamlining of local subsidies and marketing policies of organizations which sell agro products are a few of the areas where the Chambers of Commerce and Industry can really interfere and interact with concerned agencies like farming cooperatives.


(v) Weights and Measures and Prevention of Duplication Brands: Laws relating to Weights and Measures and protection of brands are required to protect the interest of the customers and also the traders. The Chambers of Commerce and Industry interact with the government to design such laws and take action against the people violating these rules and regulations.


(vi) Excise Duty: Central excise is the chief source of the Government revenue levied in all the states by the central government and the excise policy plays a significant role in pricing mechanism and hence the associations need to interact with the government to make sure streamlining of excise duties.


(vii) Promoting Sound Infrastructure: Sound infrastructure like road, port, electricity, railways etc., play a action boosting role in the promotion of trade. The Chambers of Commerce and Industry in collaboration with the government requires to undertake heavy investment projects.


(viii) Labour Legislation: An easy and flexible labour legislation is useful in running industries, maximizing production and generate employment. The Chambers of Commerce and Industry the government are continuously interacting on topics such as labour laws, retrenchment etc.


What is a Consumer Co-operative Store?

Consumer Cooperative Store

A consumer cooperative stores are organizations which are owned, handled and managed by consumers themselves. The objective of consumer cooperative stores is to lessen the number of middlemen who increase the cost of production, and hence present service to the members. These stores normally purchase in a large scale, directly from producers or wholesalers and sell them to the consumers at reasonable prices. Because the middleman are eliminated or reduced, the members get good quality goods at cheaper prices. The profits earned by these stores during a year are used for declaring bonus to members according to purchases they make and for strengthening the general reserves and general welfare funds or similar funds for social and educational benefits of the members. To start a such a store, a minimum of ten people should come together and form a voluntary association and get it registered under the Cooperative Societies Act. The management of the store is democratic and entrusted to an elected managing committee where one man one vote is the rule but the liability of the members of a cooperative store is normally bounded to the amount of the capital contributed by them. To have a fair management of funds the accounts of the stores are audited by the Registrar of Cooperative Societies or some person authorized by them.


Explain the services of wholesalers to manufacturers and retailers.

Services to Manufacturers

The main services presented by wholesalers to the producers of commodities and services are as shown below:


(i) Facilitating Large Scale Production:

Wholesalers gather small orders from many retailers and place the pool of such orders to manufacturers and purchase bulk quantities. This helps the producers to carry out production on a big scale and take advantage of the economies of scale.


(ii) Bearing Risk: The wholesalers deal in commodities with their own name, take delivery of the commodities and keep them purchased in large quantities in their warehouses and hence In this process they bear lots of risks such as the risk of fall in prices, theft, pilferage, spoilage, fire, etc.


(iii) Financial Assistance: The wholesale merchants present financial help to the manufacturers in the sense that they normally make cash payment for the commodities bought by them. A few times they also advance money for the bulk orders which have been placed by them.

(iv) Expert Advice: As the wholesale merchants have direct contacts with the retailers, they help by advising the producers about various aspects including customer’s tastes and preferences, market conditions, competitive activities and the features desired by the purchasers. And hence they are an important source of market information on these and related issues.


(v) Help in the Marketing Function: The wholesale merchants take care of the distribution of commodities to many retailers who, in turn, sell to large number of buyers spread over a large location. This helps the producers to take care of the production activity alone.


(vi) Facilitate Continuity: The wholesale merchants enable continuity of production activity for the whole year by buying the goods as and when they are manufactured.


(vii) Storage: Wholesale merchants take delivery of commodities when these are produced in factory and keep it in their warehouses. This relieves the producers from providing storage facilities for their finished goods.


Services to Retailers

The services received by the retailers are shown below:


(i) Availability of Goods: Retailers are suppose to maintain adequate stock of different commodities so that they are able to offer variety to the buyers. The wholesale merchants make the goods of various producers readily available to the retailers and thus this relieves the retailers from the work of collecting commodities from several manufacturers and keeping big inventory of the same.


(ii) Marketing Support: The wholesale merchants carry out different marketing functions and give support to the retailers. They make advertisements and other sales promotional activities to induce buyers to buy their products. Thus this helps the retailers as it keeps increasing the demand for various new products.


(iii) Grant of Credit: The wholesale merchants normally give credit facilities to the regular purchasers they have. This makes the retailers to handle their business with comparatively small amount of working capital.


(iv) Specialized Knowledge: The wholesale merchants specialize in a single line of products and know the status of the market and pass on this knowledge to the retailers. They notify the retailers about the new items, their uses, quality, prices, etc. and also advise on the decor of the retail outlet, allocation of shelf space and demonstration of certain products.


(v) Risk Sharing: The wholesale merchants buy in bulk and sell in relatively less lots to the retailers. Being able to handle with purchase of merchandise in smaller lots, retailers can avoid the risk of storage, pilferage, obsolescence, reduction in prices and demand fluctuations in respect of the additional goods that they would have to buy in case the services of wholesalers are not available.


Explain in detail about itinerant retailers and fixed shop retailers.

Itinerant Retailers

Itinerant retailers are traders who do not have a standard place of business from which they can operate. They keep moving with their shops from one location to another, in search of consumers.


(a) These small traders operate with limited resources;

(b) They deal in customer products of day to day use like toiletry products, fruits and vegetables, and similar ones;

(c) The importance of such traders is on presenting more customer service by making the goods available at the very doorstep of the consumers; and

(d) Because they do not have a fixed business institution to work from, these retailers have to keep their limited list of merchandise either at home or at any other place. Few of the usual types of itinerant retailers which operate in India are shown below:


(i) Peddlers and Hawkers: Peddlers and hawkers are most likely amongst the oldest type of retailers in the market place and they have not lost their utility even during modern times. They are small producers or petty traders who carry the products on a bicycle, a hand cart, a cycle-rickshaw or on their heads, and move around a location to sell their products at the doorstep of the consumers. They normally deal in non standardized and low-cost products such as toys, vegetables and fruits, fabrics, carpets, snacks and ice creams, etc. One main merit of this type of retailing is the facility of convenient service to the customers. But, people should be careful in dealing with them, as the goods they sell are not always reliable in terms of quality and price.

(ii) Market Traders: They are the small retailers who open their shops at various places on fixed days or dates, such as every Saturday or alternate Saturdays, and similarly. Market traders may deal in one particular line of products, like fabrics or ready-made garments, toys, or crockery, or alternatively, they can be general merchants. They are mainly catering to lower-income group of consumers and deal in low-cost consumer products which are of daily use.

(iii) Street Traders (Pavement Vendors): These traders are the small retailers who are usually found at locations where large floating population gathers, for example, near railway stations and bus stands, and sell customer products of common use, like stationery items, eatables, readymade garments, newspapers and magazines. They differ from market traders in the sense that they do not switch their location of business so frequently.

(iv) Cheap Jacks: These are petty retailers who own independent temporary shops in a business location. They keep changing their business from one place to another, depending upon the potential of that place. But still the change of location is not so frequent like hawkers or market traders. They also deal in consumer products and provide service to customers in terms of making the item available where ever required.


Fixed Shop Retailers

Fixed shop retailing is the very usual type of retailing in the market place. As the name suggests, they maintain permanent establishment to sell their products and hence they do not move from place to place to serve their customers. Some other features are:



(a) when compared with itinerant traders, these have larger resources and operate at a comparatively larger scale. But, there are various size groups of fixed shop retailers.

(b) These retailers may deal in various items, including customer durables as well as non durables; and

(c) This section of retailers has more credibility in the minds of consumers, and they are in a position to give better services to the consumers such as home delivery, guarantees, repairs, credit facilities, availability of spares, etc.


What are the classifications of Fixed shop retailers and list their advantages and disadvantages?


These retailers can be categorized into two different types by comparison of the size of their operations. These are:

(a) small shop-keepers, and

(b) large retailers.


Fixed Shop Small Retailers


(i) General Stores: General stores are most normally found in a local market and residential areas and as the name shows, these shops carry stock of various products required to satisfy the day-to-day requirements of the customers residing in nearby areas. These stores stay open for long hours at convenient timings and often give credit facilities to a few of their regular customers. The best advantage of these stores is convenience to the consumers in purchasing items of daily use such as grocery items, soft drinks, toiletry products, stationery and confectionery. Since mostly their consumers are residents of the same area, an important factor contributing to their success is the image of the owner and the rapport he has established with them.

(ii) Specialty Shops: This type of retail shop, in recent times, has become very popular, particularly in urban places. Instead of selling various products of various types, these retail shops specialize in the sale of a specific type of products like for example, shops selling children’s garments, men’s wear, ladies shoes, toys and gifts, school uniforms, college books or consumer electronic goods, etc. They are some of the normally found stores of this nature in the market place. These shops are normally located in a central place where a big number of consumers can be attracted, and they provide a wide choice to the consumers in the selection of products.

(iii) Street Stall Holders: Street stall holders are usually found at street crossings or other places where there is heavy flow of traffic. These traders attract floating people and deal mainly in goods of less expensive variety like hosiery products, toys, cigarettes, soft drinks, etc. They are supplied from local suppliers or wholesale merchants. The total area covered by these stall holders is very small and, hence, they handle goods on a very small quantity. The most useful advantage is that they provide convenient service to the customers in purchasing some of the items of their requirements.

(iv) Secondhand Goods Shop: They deal with secondhand or used goods, like books, clothes, automobiles, furniture and similar household items. Normally people with modest means buy things from these shops. The items are sold at less expensive prices. These shops sometimes have rare objects which are of historical value and antique goods which are sold at rather heavy prices to persons who have special interest in such antique items. These selling second hand items can be located at street crossings or in busy streets in the form of a stall having very small structure — a table or a temporary platform to display the books or can have reasonably good infrastructure, as in the case of those selling furniture or used cars or scooters or motorcycles.


(v) Single Line Stores: These are those shops which deal in a specific line of products like readymade garments, watches, textiles, shoes, automobiles, tyres, computers, books, and stationery. They keep a large variety of products of the same line and are located at a central place. Most of them are organized as independent retail outlets which can be sole traders or franchise.


Fixed Shop - Large Stores

1. Departmental Stores

A departmental store is a big establishment having a wide variety of goods, categorized into well-defined departments, aimed at satisfying practically all the customer’s requirements under one roof. It has many departments, each one carrying out activities to a specific type of item like for example, and departments for toiletries, medicines, furniture, groceries, electronics, clothing and dress material. Hence, they satisfy different market sections with a large variety of goods and services. It’s not weird for any departmental store in the United States of America to carry ‘needle to an aero plane or ‘all shopping under one roof.’ In India these departmental stores are not yet present in a big way in the retailing business. But still, some stores of this type in India include ‘Akberally’ in Mumbai and ‘Spencer’s’ in Chennai. Some important points about them are given below:

(a) A modern departmental store can give all facilities like a restaurant, travel and information bureau, telephone booth, restrooms, etc. Likewise they try to give maximum service to higher class of customers for whom the rates of goods are of secondary importance.

(b) They are normally situated at a central place in the heart of a city, which caters to a huge number of people.

(c) As these stores are very large, they are normally established as a joint stock company managed by a board of directors. They have a managing director assisted by a general manager and several other managers;

(d) These stores combine both the functions of retailing as well as warehousing by purchasing directly from producers and operate individual warehouses and thus by that way they help in eliminating undesirable middlemen between the producers and the customers; and

(e) These have centralized buying arrangements since all the purchases here are made centrally by the purchase department of the store, whereas sales are decentralized into various departments.




(i) Attract Large Number of Customers: As they are normally situated at central places they attract a huge number of people during the best part of the day.


(ii) Convenience in Buying: They offer a large variety of items under one roof and hence provide great convenience to customers in purchasing nearly everything of their requirements at a single place which avoids them to run from one place to the to complete their shopping.


(iii) Attractive Services: This store aims at giving maximum services to the consumers. A few of the services they provide include home delivery of goods, execution of telephone orders, grant of credit facilities and provision for restrooms, telephone booths, restaurants, saloons etc.


(iv) Economy of Large-scale Operations: Since these stores are organized at a big scale, the benefits of large-scale operations, particularly, in respect of purchase of products are available to them.


(v) Promotion of Sales: These stores are in a position to spend considerable amount of money on advertising and similar promotional activities, which boost their sales.




(i) Lack of Personal Attention:

Since they carry out large-scale operations, it’s very difficult to show adequate personal attention to the customers in these stores.


(ii) High Operating Cost: Since they give more emphasis on providing services, their operating costs are on the greater side and hence, in turn, make the prices of the goods high. Therefore they do not attract the lower income group of people.


(iii) High possibility of Loss: Because of higher operation costs and big scale operations, the probability of incurring losses in a departmental store is high.


(iv) Inconvenient Location: As these stores are normally located at a central location, it is not convenient for the purchase of goods that are needed at short notice. Apart from some of these limitations the departmental stores are popular in some of the western countries of the world because of their benefits to few classes of customers.

2. Chain Stores or Multiple Shops

They are networks of retail shops that are owned and operated by producers or other middlemen. Under this form of arrangement, a number of stores with similar appearance are established in places, spread over different parts of the country. These different types of stores generally deal in standardized and branded consumer items, which have rapid sales turnover. They are run by the same organization and have similar merchandising strategies, with identical goods and displays. Some of the features of these are given below:

(a) They are situated in fairly populous places, where sufficient number of customers can be approached;

(b) The production of merchandise for all these retail units is centralized at the head office, from where the products are dispatched to each of these shops according to their requirements and thus results in savings in the cost of operation of these stores;

(c) Each one is under the direct supervision of a Branch Manager, who is considered responsible for its daily management. He sends daily reports to the head office in respect of the sales, cash deposits, and the needs of the stock;

(d) All these branches are handled by the head office, which is connected to formulating the policies and having them implemented;

(e) The rates of the products in these shops are fixed and all sales are made on cash basis. The cash realized from the sales of goods is deposited daily into a local bank account on behalf of the head office, and a report is delivered to the head office in this regard.

(f) The head office generally appoints inspectors, who deal with day-to-day supervision of these shops, in respect of quality of customer service given, adherence to the policies of the head office, and so on. In our country, Bata Shoe stores are typical examples of these kind of shops. Similar form of retail outlets are gathering up in different type of goods also. For example, D.C.M., Raymonds and the fast food chains of Nirula’s and McDonald and many more.




(i) Economies of Scale: Because there is central production, these multiple-shops organization enjoy the economies of scale.


(ii) Elimination of Middlemen: By selling directly to the customers, these multiple-shop organizations are able to eliminate unnecessary middlemen in the sale of products and services.


(iii) No Bad Debts: Because all the sales in such shops are made on cash basis, there do not incur losses on account of bad debts.


(iv) Transfer of Goods: The products not in demand in a specific place may be transferred to another locality where it is in demand and reduce the chances of dead stock in these shops.


(v) Diffusion of Risk: The losses incurred by one shop are compensated by profits in another one, reducing the total risk of an organization.


(vi) Low Cost: Since they have a centralized purchase, elimination of middlemen, centralized promotion of sales and increased sales, the multiple shops have less expensive rate of business.


(vii) Flexibility: Under such systems, if the shop is not operating at a profit, the management can decide to close it or shift it to some other place without really affecting the profitability of the organization as a whole.




(i) Limited Selection of Goods: They deal only with limited range of goods, mostly those produced by the marketers. They never sell goods of other producers and so In that way the consumers get only a limited choice of products.


(ii) Lack of Initiative: The employees handling these shops have to obey the orders received from the head office and this makes them habitual of looking up to the head office for guidance on all matters, and takes away the initiative from them to use their creative skills to satisfy the consumers.


(iii) Lack of Personal Touch: Lack of participation in the employees may lead to indifference and less personal touch in them.


(iv) Difficult to Change Demand: If the demand for the goods managed by multiple shops change rapidly, the management will have to incur huge losses because of large stocks lying unsold at the central depot.


List out the differences between Departmental Stores and Multiple Stores.

Difference between Departmental stores and Multiple shops

Even though both these types of retail organizations are big establishments, there are a few differences between the two. They are:


(i) Location: A departmental store is situated at a central place, where a huge number of people can be attracted to it. However, the multiple stores are situated at a number of locations for approaching a large number of customers and hence central location is not necessary for a multiple shop.

(ii) Range of Products: Departmental store aims to satisfy all the requirements of people under one roof. So they are suppose to carry various products of different types. However, the multiple shops aim to satisfy the needs of the people relating to a limited range of their products only.

(iii) Services Offered: The departmental stores give importance on presenting maximum service to their customers. A few facilities, given by them include post office, restaurant and so on. But, the multiple shops provide very a short range facilities confined to guarantees and repairs if the sold out items turn out to be defective.

(iv) Pricing: The multiple shop chains sell products at fixed rates and maintain uniform pricing policies for all their stores. The departmental shops, however, do not show uniform price feature for all the departments; rather they have to frequently offer discounts on certain items and varieties to clear their stock.

(v) Class of Customers: The departmental stores cater to the requirements of comparatively high income group of people who care more for the services provided rather than the prices of the item. But multiple shops, on the other hand, cater to various types of consumers, including those belonging to the lower income groups, who are interested in purchasing quality products at reasonable prices.

(vi) Credit Facilities: All sales in the multiple shops are made strictly on cash basis but on the contrary, the departmental stores can provide credit facilities to a few of their regular people.

(vii) Flexibility: As the departmental stores deal with a large variety of goods, they have certain flexibility in respect of the line of products marketed. But, there is not much scope for flexibility in the chain stores as they deal only in fixed range of products.


What do you mean by Internal Trade?

Buying and selling of commodities and services within the country is referred to as internal trade. Whether the products are bought from a neighborhood store in a location or a central market or a departmental store or a mall or even from any door to- door salesperson or from an exhibition, all these are examples of internal trade as the commodities are bought from an individual or establishment within a country. No custom duty or import duty is levied on this type of trade as commodities are a part of domestic production and are intended for domestic consumption. Normally, payment is made in the legal tender of the country or any other appropriate currency. Internal trades are categorized into two broad groups’ viz., (i) wholesale trade and (ii) retail trade. Usually, for products, which are suppose to be distributed to a large number of buyers locating over a wide geographical area, it’s very difficult for the producers to reach these buyers directly. For example, if vegetable oil or bathing soap or salt is being produced in a factory in any part of the country are suppose to reach millions of buyers throughout the country, the aid of wholesalers and retailers becomes very necessary. Buying and selling of commodities and services in huge quantities, with the intention of resale or intermediate use is referred to as wholesale trade. On the other hand, buying and selling of commodities in comparatively less quantities, normally to the final consumers, is known as retail trade. Traders dealing in wholesale trade are known as wholesale traders while those who deal in retail trade are known as retailers. Both of them are required marketing intermediaries performing very necessary functions in the process of exchange of commodities and services between producers and users or final consumers. Internal trade intends at equitable distribution of commodities within a country very fast and at reasonable cost.

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