What is Internal Trade

Internal trade or home trade is a trade where goods are purchased or sold within a country.

Internal trade is also known as domestic trade or home trade or inland trade.

It simply implies sale, transfer or exchange of goods or services with profit motive within the geographical area of a country.

The purchaser and seller of the commodity belonging to the same country and the payment are made in the currency of the country, to which buyers and sellers belong.

Transfer of goods from one place to another helps to bring uniformity and stability of prices.

The growth of home trade basically depends on the development of an internal transport system- Roads, railways, airways, inland waterways, etc.

The volume and the value of trade also depend on the size of the population, the volume of population, development of banking and other support facilities.

Above all, political stability and economic policies of the government are the other environmental factors which influence the growth of the trade.

Internal trade

Internal trade may be classified According to the size and volume of the home trade.

Different Types of Internal Trade:

A) Wholesale trade.

B) Retail trade.

A) Wholesale trade: The wholesale trade is a trade which involves buying goods in large quantities from producers and selling them in small quantities to retailers.

The wholesalers take the responsibility of procuring and storing large quantities of goods for supply to the retailers as and when required by them.

As such, wholesalers act as an improvement link between the manufacturer and the consumers through retailers.

The wholesale provide information to the producers regarding the choice, interest, and taste of consumers so that the producers can produce the products as per the requirements of consumers.

The wholesalers purchase goods at retailer price with a percentage of discount or commission.

Retailer price means the price at which it will be sold to the retailers.

The difference between retailer price and the maximum retail price is the income for retailers and the discount is allowed by the producers on retailer price is the income of the wholesaler.

The wholesalers are criticized for hoarding books, creating artificial scarcity, indulging in black-marketing and other malpractices.

B) Retail Trade: It means to sell goods in small quantities directly to ultimate consumers. Retailers purchase goods from the wholesaler in small lots or quantities and sell the same to consumers in pieces or numbers.

The retailers are the connecting link between wholesalers and consumers and render valuable services to both.

The retail trade is situated among the consumers. It arranges different goods from different places and makes it available to members of the society residing in its locality.

These traders inform the producers through wholesalers about the attitudes, likes and dislikes, preferences, traditions, and habits of consumers.

At the same time, the retail traders educate the consumers about the utility and working of new products.

Related:

  1. WHAT IS TRADE?
  2. WHAT ARE THE TYPES OF TRADE?
  3. WHAT IS EXTERNAL TRADE?

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