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Internal trade

Internal Trade

Today we are going to discuss the new chapter of business studies CBSE class 11 that is the Internal trade

Also, we are going to give you study notes, video lectures, and also PDF of handly lecture notes. Firstly, I want to share with you what are all the topics which we are going to cover in this article. Also, you can watch all the chapters videos on my YouTube channel by clicking here.

Internal trade

Topics Which we will cover today will be in the following ways:-

  1. Meaning, features & Concept of Internal Trade
  2. Services of wholesaler and retailer
  3. Retail internal trade types
  4. Itinerants Internal Trade
  5. Fixed Shop Retailer
  6. Small Scale retail trade
  7. Large Scale retail trade
  8. Chambers of commerce and Industry
  9. Terms of Internal Trade

Meaning & Concept of Internal Trade

Buying and selling goods and services are called trade.

Internal Trade means trade within the country. Internal trade is also called as home trade and inland trade.

Some feature ures of internal trade are –

  • Buying and selling goods and services within a country is called internal trade.
  • The payments are made and received in-home currency.
  • Very few of negligible formalities
  • No tax to be paid

Internal trade is further classified into two types-

  1. Wholesale Trade
  2. Retail Trade

External Trade means trade between two or more countries. External trade is also called as trade between two countries or International trade

External trade is further classified into three types-

  1. Export
  2. Import
  3. Entrepot

Services of wholesaler & Retailer

Services of Wholesaler to manufacturer

1) Economic of scale because of the selling of product in bulk.

2) Sales promotion as manufacturer directly gets its sales from the manufacturer.

3) Wholesalers can also give market information about the product and the rating of the products.

4) No need of storage in bulk as the product are getting sold directly to wholesalers.

5) Good financing is received to the manufacturer as the wholesalers buy the products and pay the price instant.

6) Concentration on production as the manufacturer has no tension of selling the product, so he can focus on boosting its production.

7) Price stability as the product is gone to the wholesaler the manufacturer get the stable price.

Services of wholesaler to retailers

1) Retailers purchases products from many different wholesalers, so they got variety of products for the customers.

2) Retailers got regular supply of products from the wholesalers.

3) Sometimes wholesaler doesn’t ask for full payment for the product, they simply say that whenever you got your product sold and collect enough money then they can pay the price of goods to them.

4) Risk bearing as the transportation of products to the retailers totally depends on the wholesalers.

5) Wholesalers can give information about the new product to the retailers so that they can buy the product in stock for the customers.

6) Transportation facility is given by the wholesalers to the retailers.

7) Publicity of the products is done by the wholesalers, so retailers are stress free for the publicity of the products.

Services of retailers to consumers

1) Ready supply of the products from the retail shop.

2) Wide variety of products are available to the retailers.

3) Guiding consumers about the available products.

4) After sale services are provided by the retailers to the consumers.

5) Demonstration of the product is done by the retailers in the shop. Ex- retailer will give the demo of the car if a customer wants to see it.

6) Home delivery of the products to the customers home is sometimes provided by the retailer.

7) Sometimes the retailers give the product to the customer in advance, this facility is called credit facility.

8) Come to location whenever necessary or the whenever the product is not proper working.

Services of retailers to wholesalers/manufacturers

1) Ready market for the wholesalers or manufacturer because they don’t take the tension of selling the product as they are directly linked to the customers via retailers.

2) Providing information as the retailers are directly connected to customers.

3) Risk bearing as the proper storage of the product is necessary before going to the customers.

4) Goods can be distributed to the distant places via retailers.

Retail trade types of Internal Trade

Retail trade are of two types:-

  1. Itinerants
  2. Fixed Shop Retailer

Itinerants of Retail Internal Trade

Itinerants have no shops, also called mobile vendors. They moves in search of customer. Itinerants are of two types:-

  1. Hawkers & Peddlers
  2. Periodic Market Traders
  3. Street Traders
  4. Cheap Jacks

Features of Itinerants –

1) They deals in daily use products.

2) Small investment needed to start their business.

3) They have variety of goods.

4) They always store cheap price products in their stock.

5) They always sell local or Non-branded products to the customers.

Hawkers & Peddlers

1) They move from street to street in search of customers.

2) They have variety of goods.

3) They always store cheap price products in their stock.

4) They always sell local or Non-branded products to the customers.

5) They supply goods to doorstep of customers.

Periodic market traders

1) Retailers sell goods on fixed days but in different market places.

2) They have variety of goods.

3) They always store cheap price products in their stock.

4) They always sell local or Non-branded products to the customers.

5) They also trade on special occasions of Holi, Christmas, diwali, etc.

Street traders

1) They sell goods on busy roads, public places, footpaths, etc.

2) They have variety of goods.

3) They always store cheap price products in their stock.

4) They always sell local or Non-branded products to the customers.

Cheap Jacks

1) They higher shops for temporary period to sell goods.

2) They have variety of goods.

3) They always store cheap price products in their stock.

4) They always sell local or Non-branded products to the customers.

5) They shift locality to locality depending upon prospectus of business.

B) Fixed shop retailers – They have fixed shops. They do not move in search of customer.

Fixed Shop Retailers of Retail Internal Trade

Fixed shop retailers have fixed shops. They do not move in search of a customer. Fixed shop retailers further divided into two types –

  1. Small Scale Shops
  2. Large Scale Shops

Small scale shops

I) General stores

  • Stores deals in item of daily use. Ex – Stationery, snacks, soft drinks, etc.
  • They have variety of goods.
  • Customer facility available (home delivery, credit, etc)

II) Single line stores

  • We get variety of goods/one line of products here.
  • Basically situated in market places.
  • Customer services depending upon store to store and also in type of product.

III) Speciality stores

  • Specialised in one line of product.
  • Customer find it convenient as they take advantage of specialisation in particular line of product.

IV) Street shops/Street stals

  • They have limited space.
  • Display goods on tables, stands, etc.

V) Second hand goods shop

  • They sell used goods.
  • Goods are usually low priced as they are used goods.
  • Shop mainly for poor people who cannot afford to buy new products and goods.

VI) Secondary shops

  • The products have manufacturing defects.
  • Goods sold in these shops are Nov used or second hand. They are new defective goods.
  • Goods sold at a heavily discounted prices.
  • The price depends on the defects of the goods.

Large scale shops

Departmental Stores

Departmental Stores having a number of departments under one roof, each department specializing in one line of product.

Features of departmental stores

1) They have large size.

2) Wide range or variety of products in terms of money.

3) It is organised Departmentally.

4) It have a central purchasing unit.

5) It has a central location so that most of the customers can visit it.

6) It provides many facilities and services.

7) In this middlemen or wholesalers are eliminated.

8) It does its own advertising on various platforms like TV and online.

Advantages of departmental stores –

1) Convenient shoping as most of our required products are available under off roof.

2) It have Central location.

3) It is economic of sale.

4) In this middlemen or wholesalers are eliminated.

5) It have well managed staff with professional management.

6) It provides good services to the customers.

7) It also does its advertisement online as well as on tv also.

Disadvantages of departmental stores

1) It have high operating cost.

2) It involves lack of personal touch.

3) The products are high in price than other market shops.

4) These types of shops are not located in residential colonies.

5) It requires huge capital to start such type of market or shops.

6) It also have a difficulty in operation because of the number of departments.

Multiple shops/Chain stores

Multiple Shops refers to a number of identical retail shops located in different parts of city. Multiple shops are owned and controlled by single organisation.

Features of multiple shops are:-

1) They are large in size.

2) They are specialised in one line products only.

3) They have centralised purchase system, means no involvement of middle men’s.

4) They have good quality products.

5) There is elimination of middle men.

6) Price is uniform in every retail shop.

7) They involves cash sales only.

Advantages of multiple shops are:-

1) There is economy of sale.

2) They only keeps standardised or branded items.

3) It increases public confidence.

4) They are easily approachable to public.

5) There is division of risk.

6) There is no bad debt because all deals are in cash.

7) The shops are easily identifiable.

8) They involves centralised advertising system.

Disadvantages of multiple shops

1) There is always lack of personal touch because owner does not able to contact customer directly.

2) There is inflexibility in the business.

3) No facilities of home delivery.

Mail order retailing

Mail order retailing operates through Internet. They are retailers where sellers contact buyers through advertisements and mail publicity.

A) Suitability –

  • The product we order should not perishable in nature.
  • The product should be a branded product.
  • It should be explained through pictures and description.
  • It should be easy to handle.

B) Features –

  • Only branded items can be bought.
  • Payment is received through VPP(Value Payable Post) or registered post.

C) Advantages –

  • To start the business limited capital is required.
  • It is very convenient method.
  • It involves wider market.
  • Involves no bad debt as payment is online or cash on delivery.
  • Middlemen are not required i. e., there is elimination of middle men’s.

D) Disadvantages –

  • It involves no personal contact of owner and customer.
  • There is no personal inspection, the product we order only seeing through pictures.
  • We can order only limited variety of products.
  • Sometimes postal delay occurs.
  • It involves heavy advertisements cost.
  • Outdated catalogues because company sometimes forget to update the cost of the product.
  • There is chances of cheating because no personal touch is involved and also sometimes we do advance payments and we cannot get the required product.

Auto vending machines

These are the machines in which when we insert suitable amount of money/tokens/coins we get our required product without any help of shopkeeper. The items are like softdrinks, cigarettes, tickets, snacks, etc.

Merits of Auto Vending machines-

  • They can be used for buying round the clock by the customers.
  • Fresh supply of goods with uniform weight and quality.
  • Availability of salesman not required.

Demerits of Auto Vending machines –

  • Initial investment of installing the machine is quite high.
  • Requires regular repair and maintenance.
  • Coins of exact shape and size are required to operate the machine.

Chambers of commerce industry

It is also representative body of business. It is a non profit organisation. It protect and operate interest of business. In India it is also known as Federation of Indian Chambers of Commerce and Industry (FICCI).


1) It represents business community.

2) It acts as a spokesman.

3) It also settles disputes between different industries or businesses.

4) It helps in settling code of conduct for business.

5) It provides facilities for education and research.

6) It helps in arranging seminar and conference meetings for business.


1) It helps in transportation.

2) Octroi or other services means it helps the government in regulating the tax.

3) Make laws to check weight and measures.

4) Provides infrastructure so that trading problems should be minimised.

5) It also helps in marketing the agri products.

6) It also checks that the labours are getting enough facilities called labour legislature.

Terms of trade of Internal Trade

1) COD(Cash on Delivery) – Payment is made only when the goods are delivered to the buyer.

2) FOB(Free on Board) – Contract where seller is expected to deliver goods to transporter and buyer has to bear all risk, damages, etc.

3) C & F(Cost & Frieght) – Contract where seller pay Frieght(transportation) charges, but risk/damage is borne by buyer.

4) CI & F(Cost, Insurance & Frieght) – Contract where seller bears all cost, Frieght & Insurance against risk/damage to goods during transit.

5) E & OE(Error & Omission Expect) – Reduce legal liability for incorrect or incomplete information supplied by supplier.

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Business Vidya

Hello, my name is KUNAL LONHARE. I am an entrepreneur based in india. This is a blog and I am the founder of it, where I post how can a person acquire Good marks In academics without wasting any money for tuition fees.

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