COMMERCE NOTES [ CLEAR]

WHOLESALE TRADE.
Buying and selling of goods and services in large quantities for the purpose of resale or intermediate
use is referred to as wholesale trade. They act as a link between manufacturers and retailers.

ADVANTAGES.

1. The wholesaler provides valuable information to the producers regarding the needs and
requirements of the customers or consumers.
2. The wholesaler provides finance to the producers at the time of need.
3. They may also provide transportation facility by carrying goods from producers to godowns
and then to retailers.
4. They perform advertising and sales promotion activities and also employ expert sales
representatives for the purpose.

SERVICES OF A WHOLESALER TO RETAILER

1. Wholesalers make goods available to the retailers, who make them available to ultimate
consumers.
2. Wholesalers help retailers by providing credit facility.
3. They act as retailers’ buying agents and save them from the trouble of searching out and
assembling goods from several manufacturers.
4. They protect the retailers from risk of loss arising from holding large stocks of the product.

SERVICES OF A WHOLEALER TO A CONSUMER

1. He provides goods at a cheaper rate because he facilitates large scale production.

2. There is no shortage of goods as the wholesaler undertakes large scale purchasing.
3. The wholesalers are a wealth of information and thy share this information with the
consumers.
4. He enables the consumer to purchase required quantity of goods at the desired time,
because he supplies goods regularly to the retailers.

RETAIL TRADE

Buying of goods in large quantities from the wholesalers and selling them in small quantities to the
ultimate consumers is known as retail trade. They act as a link between producers and final
consumers.

SERVICES OF RETAILERS TO MANUFACURERS AND WHOLESALERS

1. Retailers help manufacturers and wholesalers in the distribution of their goods and services
to the ultimate consumers.
2. Retailers’ health manufacturers and wholesalers and promoting their goods and services.
3. Retailers undertake personal selling efforts and thus help manufacturers and wholesalers in
the process of actualising the sale of the products.
4. Retailers supply valuable and reliable information to wholesalers and manufacturers about
the consumer’s demands and the changes occurring in their likes and Dislikes.
SERVICES OF RETAILERS TO CONSUMERS

1. Retailers provide goods to consumers, according to their requirements.

2. Retailers make goods of the sizes, styles, types, qualities and prices they prefer available to
them.
3. Many retailers offer free home delivery of goods purchased.
4. Many types of retailers sell goods on credit to the customers they know personally.

DEPARTMENTAL STORES

Departmental store is a large detail outlet Offering a wide Variety of products classified into well-
defined departments under one roof. It has a number of departments. Each specialises in a single
line of products such as toiletries, medicines, furniture, groceries, etc, within a store. Example- dmart
stores, big bazaar stores.

FEATURES

1. They are located at a central place so that maximum customers could reach there.
2. They provide all facilities such as restaurant, travel and information bureau telephone booth,
restrooms, etc.
3. These stores are very large in size, so they are generally formed as a joint stock company
managed by a board of directors.
4. They buy and keep stock in large quantities so they are able to provide discounts on MRP to
customers.

MERITS

1. They attract large number of customers as they are located at central places.
2. They provide great convenience to customers, as they can purchase a number of goods at
one place.
3. They provide attractive services to customers like home delivery of goods credit facilities,
restrooms, etc.
4. They are able to undertake various promotional activities which help people to know more
about the products.

DEMERITS

1. They operate on a large scale, which leads to lack of personal attention to the consumers.
2. They provide various services to the customers like restrooms, home delivery of goods, etc,
which increases their operating costs. Thus, the overall price of the goods increases.
3. They are situated at the central place, and thus they are not convenient for sudden required
goods.
4. Unless there is regular stocktaking, some show selling items will occupy shelves and add the
cost of storage.

CHAIN STORES OR MULTIPLE SHOPS

Chain stores are multiple shops referred to networks of retail shops that are owned and operated by
the same organisation established in localities spread in different parts of the country. Eg- bata,
chrome, Ikea etc.
FEATURES

1. They are located in popular localities where maximum customers can approach.
2. The manufacturing or procurement of goods is centralised at the head office, from where the
goods are dispatched to each store.
3. Each chain story supervised by the branch manager who is responsible for its day to day
working. He sends all the information, like sales, cash deposits, requirement of the stock, etc,
daily to the head office.
4. These chain stores deal in standardised and packaged branded products.

MERITS

1. They sell goods on cash basis and thus there are no losses on account of bad debts.
2. They eliminate middlemen in the sale of goods as they directly sell the goods to the
customers.
3. Central procurement or manufacturing enables the organization to enjoy the economies of
scale.

DEMERITS

1. Chain stores sell goods produced in the organization only, so they offer only a limited choice
of goods.
2. Managers cannot take their own initiative to satisfy the customers as they have to obey the
instructions of the head office.
3.