INTERNAL TRADE Module - 5

Trade

18

INTERNAL TRADE Note

You may be consuming a variety of products in your daily life - a notebook, a pen,
soap, garments, vegetables and fruits to mobile phones, radio, television, fans and
furniture. Where do you go to buy all these products? Your answer will be , 'from the
nearby market'. Sometimes during special occasions like a festival or a marriage we
prefer going to a market that may be located at a distance from our residence to get
more variety or better priced products. Now the question that arises is, how do all
these products reach the market? There are a number of firms/people who are engaged
in this activity of bringing the product from the place of production to the market and
then making it available to the final consumers. They act as a link or intermediary
between the producers and the consumers. In this lesson, we will learn about the
firms/people who link the producers and consumers within a particular country and
also about the various options available to the consumers to buy the products for their
consumption.

LEARNING OUTCOMES
After studying this lesson, you will be able to:

 describes the important role played by internal trade in business;

 distinguishes between the different types of middlemen and the role played by
them.

 differentiates between the various types of retail stores and their importance;
and

 explains the different trends of distribution and their significance in internal trade.

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Trade
18.1 MEANING OF INTERNAL TRADE
You know that the goods produced in a country may be sold within the country or
outside the country. When buying and selling of goods and services takes place within
the geographical boundaries of a country, it is referred to as internal trade. It may take
place between buyers and sellers in the same locality, village, town or city; or may be
in different states, but definitely within the same country. Internal trade is also called
Note
domestic trade or home trade.

To clarify the concept of internal trade let us now learn about its salient features.

Features of Internal Trade

(a) The buying and selling of goods takes place within the boundaries of the home
(domestic) country.

(b) Payment for goods and services is made in the currency of the home country.

(c) It involves transactions between the producers, consumers and the middlemen.

(d) It consists of a distribution network of middlemen and agencies engaged in

exchange of goods and services.

18.2 CLASSIFICATION OF INTERNAL TRADE

Generally we buy goods of our daily use from the local shopkeepers. These
shopkeepers buy goods in bulk and sell them to us as per our demand. But do you
know from where these shopkeepers buy those goods? They generally buy goods in
large quantity either from the producers directly or from any other shops that sell
goods in bulk. Thus, we find that some shopkeepers buy goods in bulk and sell to
others in bulk while others buy in bulk and sell in small quantities as per the demand of
the customers. Thus, on the basis of volume of goods traded we can classify internal
trade as:

1. Wholesale trade 2. Retail trade

18.2.1 WHOLESALE TRADE

Wholesale trade refers to buying of goods in large quantity from producers or

manufacturers for sale to other traders or buyers in small quantities. Those
who are engaged in wholesale trade are called wholesalers. They act as a link between
the manufacturers or producers and the small traders. Generally they specialise
and deal in only one or a few products.

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Functions of the Wholesalers Trade

1. Procurement of Goods: The wholesalers purchase goods from different

manufacturers and hold sufficient stock.

2. Grading and Packing: The wholesalers divide the goods according to their
size,weight, shape and quality. In this way they prepare the goods in small lots
for sale to retailers.
Note
3. Transporting: The wholesalers transport the goods from the production centres
to their godowns and from there to the retailers. Some wholesalers have their
own vehicles for transportation of goods.

4. Warehousing: The wholesalers keep the stock for retailers in the warehouse
so as to make goods available to the retailers whenever they need them.

5. Financing: The wholesalers buy goods from the manufacturers and sometimes
make advance payment. They sell goods to retailers on credit. In this way, they
finance the manufactures as well as the retailers.

6. Risk Bearing: The wholesaler bear the risk of changes in demand during
[Link] also bear the risk of damage of goods, risk of bad debt etc.

7. Providing Market Information: The wholesalers collect information about

changes in the taste, fashion, buying habits etc. of consumers from the retailers,
then they pass this information to the manufacturers, so that the manufactures
may produce goods according to the needs and demand of the consumers.

8. Selling: Retailers are widely scattered all over the country. Many wholesalers
employ sales persons to take orders from the retailers. Thus, the wholesalers
help in selling goods.

Services Provided by the Wholesalers

Wholesalers provide services to the manufacturers and the retailers.

1. Services to Manufacturers : Wholesalers render the following services to

the manufacturers :

a) Bulk Buying: Wholesalers collect orders from a large number of

retailersand buy goods in large quantities from manufacturers.

b) Warehousing Facility: Wholesalers relieve the manufacturers from storing

function by holding large stock of goods in their own warehouse. Therefore,
manufacturer is relieved of the function of warehousing.

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Trade 2. Service to Retailers :

a. Regular Supply:The wholesalers keep a large stock of goods for

[Link] ensure that the goods are available to retailers at all times.
In this way they maintain regular supply of goods to the retailers.

b) Financial Help: The wholesalers generally sell goods to retailers on

[Link] retailers will make payment to wholesalers on the basis of the
Note
sales made. So with less capital they can easily run the business properly.

c) Advertisement: The wholesalers advertise their goods regularly so the

process of selling goods becomes easy for the retailers.

d) Market Information: The wholesalers provide up-to-date information

about new products to the retailers. The wholesalers advice retailers on
matters like price, quality and time of purchase and sale.

e) Risk Protection: The wholesalers keep huge stock of goods and sell to
retailers on credit. As a result, retailers have to bear less risk.

18.2.2 RETAIL TRADE

Retail trade refers to buying goods from the manufacturers or wholesalers and selling
the same to the final consumers. The retail trader generally deals in a variety of goods.
Those who are engaged in retail trade are called retailers. Retailers sell goods in small
quantities as per the demand of the consumers.

Characteristics of Retail Trade

Following are the characteristics of retail trade:
(a) Retail trade generally involves dealing in a variety of items.
(b) A retailer makes purchases from producers or wholesalers in bulk for sale to the
consumers in small quantities.
(c) Retail trade is normally carried on or near the main markets.
(d) Generally retail trade involves buying on credit from the wholesalers and selling
for cash to the consumers.
(e) A retailer has indirect relation with the manufacturer (through the wholesalers)
but a direct link with the consumers.
Services Provided by Retailers

Retailers provide the following services to the consumers and wholesalers:

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1. Services to Consumers Trade

a) Regular Supply of Goods: Retailers maintain a ready stock of goods

for sale to consumers.

b) Convenient Location: Retail outlets are situated near residential area

and remain open for long hours. The consumers can buy the goods from
the retailers at their convenience.
Note
c) Wide Choice: Retailers stock a wide variety of products. Consumers
like to purchase all products from the same shop. So, retailers stock
products of different companies providing a wide choice to the consumers.

d) Home Delivery: Some retailers supply goods to the homes of consumers

without any extra charge.

e) Consumer Education: When a new product comes in the market, retailer

clearly explains the features, merits and uses of the product to the final
consumers.

2. Services to the Wholesalers

a) Market Information: Retailers supply valuable information to the

wholesalers about changes in tastes, fashion etc. of consumers.

b) Help in Distribution: Retailers relieve the manufacturers and wholesalers

of the burden of collecting and executing a large number of small orders
from a number of consumers.

c) Large Scale Production: Retailers help manufacturers operate at alarge

scale.

d) Sell New Products: New products will be displayed in retail outlets in an

attractive manner so as to persuade consumers to buy these products.

INTEXT QUESTIONS 18.1

1. State any two features of 'internal trade'.

2. Identify the following and write 'WT' for wholesale trade and 'RT' for retail
trade.

(a) Dealing in limited variety of products.

(b) Goods purchased from wholesalers for resale.

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Trade (c) Providing facilities like grading and packaging.

(d) Buying of goods in bulk from the manufacturers.

(e) Trading activities carried on near the residential areas.

18.3 MIDDLEMEN IN INTERNAL TRADE

Note Both wholesalers and retailers act as a link between producers and consumers in the
chain of distribution of products. They are called middlemen as they come in the
middle, i.e., between the producers and the consumers in the chain of distribution of
products.

Chain of Distribution

The middlemen provide useful services to both producers and consumers. For the
producer, they free him of the complexities of arranging for transport, warehousing,
financing and marketing of his products to a large extent. The responsibility of the
producer gets limited to producing the product. Largely all efforts to sell and distribute
the same are taken up by these middlemen. For the consumers too, these middlemen
are beneficial as they make the products available at the place and time of convenience
to them.

Now let us, learn in detail the role of the wholesalers and retailers in the chain of
distribution.

18.3.1 ROLE OF MIDDLEMEN IN THE DISTRIBUTION OF GOODS

(a) Role of Wholesalers: The wholesalers through their services offer a number
of benefits to the producers and retailers. They save the time and effort of the
producers and allow them to concentrate on production of the goods while
distribution is taken care of by the wholesalers. They deal with goods in bulk
and reap the benefit of economies of scale. They provide goods in relatively
small quantities to the retailers and provide them with facility of credit purchase.
They provide information to the producers about the consumers' preferences,
changing taste and fashion, market demand etc. Wholesalers also bear the risk
involved in holding of stock of goods and their transportation.

(b) Role of the Retailers: Retailers are engaged in selling the product to the end
users or the consumers. They cater to the demand of the customers by providing
a variety of products procured from different locations. The retailers may offer
credit facility to the customers. They also offer pre-sales and after-sales services
and communicate to the consumers the technique of usage of the products.

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They act as salesmen of the product and persuade buyers to purchase goods Trade
and services. They provide information to the manufacturers or wholesalers the
feedback or consumer's response to the product.

18.3.2 EVALUATION OF THE ROLE OF MIDDLEMEN IN THE CHAIN

OF DISTRIBUTION

As seen above, the middlemen provide a number of services in the process of

Note
distribution. Do they charge any money for their services? Yes, these services of
middlemen do not come free of cost. They do charge their share of profit margin in
return for the product for the services they provide. This increases the sale price of the
product considerably, as compared to the cost incurred in producing it.

For example, a pen that costs Rs. 5 to produce, may be sold by the producers to the
wholesalers for Rs. 6. In turn the wholesaler may sell it to the retailer for Rs. 7, who in
turn may sell it to the ultimate consumer for Rs. 8.50. The middlemen's share of profit
here is Rs. 3.50 that has added considerably to the price of the product.

It is often debated that the middlemen do not serve any useful purpose, but only
escalate the price of a product unnecessarily. However, we must not forget that they
render useful services to the producers and the consumers. To that extent, they are
justified to get their share of profit in the sale of the product. But it should be reasonable
and not too high so as to become a burden on the consumers.

We must also consider some of the problems that arise from the presence of middlemen
in the chain of distribution.

If there are too many middlemen between the manufacturers and the consumers, each
charging his share of profit or commission, the final consumer ends up paying a very
high price for the goods. Some middlemen indulge in unfair trade practices like hoarding
and adulteration to increase their gains from the business. They, at times, promote the
sale of inferior quality goods and exploit the consumers to get a high profit margin for
themselves. The middlemen do not bear risk such as loss due to strikes, lockouts,
changes in fashion and consumption habits. These have to be primarily borne by the
producers. Sometimes, the transfer of goods from one middleman to another causes
delay in the smooth flow of goods, instead of facilitating it.

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Trade Nonetheless, when we compare the benefits of middlemen with the problems they
pose, their benefits definitely outweigh the problems. In conclusion one can clearly say
that the middlemen play the role of a vital link between producers and consumers in
the chain of distribution.

Now, let us compare the wholesale trade with retail trade.

18.3.3 DIFFERENCE BETWEEN WHOLESALE TRADE AND RETAIL

Note
TRADE

Following are the differences between wholesale trade and retail trade:

Basis Wholesale trade Retail trade

1. Number of items Deals in a few items. Deals in a variety of items
2. Quantity of goods Large Small
bought and sold
3. Source of purchase Manufacturers Wholesalers/producers
4. Main activity Sells goods to the retailers. Sells goods for
consumption or final use.
5. Amount of capital Large Small
required
6. Nature of Direct link with the Indirect link with the
relationship producers and indirect producers and direct
with producers/ link with the consumers. link with the consumers.
consumers.
7. Location Located in the same Located near residential
area along with other areas.
wholesalers dealing
in similar products.
8. Display Does not require elaborate Requires attractive display
display of goods. of Products.

INTEXT QUESTIONS 18.2

1. The middlemen should be eliminated. Do you agree? Give one reason.

2. Correct the following sentences.

(a) A wholesaler has direct link with the consumers.
(b) The amount of capital required is less in case of wholesale trade.

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(c) Producer is a middleman in the chain of distribution. Trade

(d) Presence of too many middlemen increases the price of the product.
(e) The wholesaler purchases goods from the retailer.

18.4 TYPES OF RETAIL TRADE

You have learnt about retail trade in the previous section. In your village or town, you
Note
buy products from the nearby shops in small quantities. In cities you can buy a product
from a large shop or a variety of products from a large number of counters in one big
shop. They are all engaged in retail business.

We can classify the retail business on the basis of size as small scale, medium scale
and large scale. On the basis of forms of ownership, it may be sole proprietorship,
partnership, cooperative society or Joint Stock Company. But the most common way
of classifying retail business is whether they have any fixed place of business or not.
On this basis, one can have two categories of retail business:

1. Itinerant Retailing 2. Fixed shop Retailing

18.4.1 ITINERANT RETAILING

Itinerant retailing is a type of small-scale retail trade in which retailers move

around and sell a variety of items directly to the consumers. They do not have
a fixed shop where they can sell. You must have seen them distributing newspapers
early in the morning; selling peanuts, bangles, toys etc. in buses and trains; selling fruits
and vegetables in your locality using a cart, selling ice-cream, namkeens etc. on a
cycle; selling rice, earthen pots or even carpets by using a cart, etc. You can also see
them on pavements in your locality.

In towns and cities we come across different type of itinerant retailers.

1. There are traders who sell their articles on fixed days at different market places.
In villages these market places are called "Haat" and in towns or cities they are
called "weekly bazaars".

2. The itinerant retailing also includes persons selling products from door to door.
In most cases, the price of items is not fixed and mostly settled through bargaining.
Moreover, in most cases the items sold are not branded products.

18.4.2. FIXED SHOP RETAILING

Here, the retailers sell goods and services from a fixed place known as 'shop'. They
do not have to move from place to place to serve their customers. These shops are

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Trade usually located at market places or commercial areas or near residential localities.
These shops normally deal with a limited variety of goods. On the basis of the volume
of transaction or size of their operation, fixed shop retailing can be classified as:

(a) Small scale fixed shop retailing, and

(b) Large scale fixed shop retailing.

Note Let us know about these two categories.

(a) Fixed Shop Retailing - Small Scale

In every locality you find fixed shop retailers dealing with goods and services on
a small scale. They deal with limited variety and limited quantity of goods and
cater to the needs of a local area. They require less capital and provide goods to
a limited number of customers. The grocery shops of your locality come under
the category of small-scale fixed shop retailing. On the basis of the nature of
goods they deal in, we can classify these retailing businesses as:

(i) General store or Variety store (ii) Single line store

(iii) Specialty store (iv) Second-hand Goods shop

Let us understand the details of these stores.

(i) General Store

These stores, as the name suggests, deal with a variety of items of general use. They
sell products mostly required by people for their daily use. For example, in a variety
store you can find different items of toiletry, hosiery, biscuits and snacks items, grocery,
cosmetics, gift items and stationery, etc. Normally these retailers make direct sale by
cash only. However, for their regular customers, these retailers may give discount,
provide credit facility and also
free home delivery of goods.

(ii) Single Line Store

These sto res deal wit h a

specific line of goods. You must
have seen medicine shops,
bookshops, toy shops, ready-
made garment shops, etc.

Fig. 18.1 General Store

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These are all single line stores. They sell goods of different size, brands, designs, styles Trade
and quality of the same product line.

(iii) Specialty Store

These stores deal with products of a specific brand or company. All varieties of any
particular brand or manufacturer are made available in these stores. You must have
seen stores, like Woodland shoe shops where products starting from shoes to apparel
Note
produced by Woodland Company are made available to the customers.

(iv) Second-hand Goods Shop

Fig. 18.2 Second-hand Goods Shop

Now-a-days in cities and towns we find shops selling second-hand goods or used
goods. These shops generally sell goods like books, furniture, clothes and other
household items.

INTEXT QUESTIONS 18.3

1. What is meant by 'Itinerant Retailing'?

2. Identify the types of retailing business.

(a) Stores dealing with a particular line of good like books, toys etc.

(b) Stores dealing with a variety of goods of a particular brand.

(c) Stores dealing with a variety of goods of daily use.

(d) Selling goods on the pavement of a city.

(e) Stores selling used books or garments at cheaper price.

(b) Fixed Shop Retailing - Large Scale

Apart from small-sized outlets, as discussed above, there are a number of large-sized
retail shops that sell products on a large-scale. They come under large-scale fixed

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Trade shop retail trading category.

Large-scale retail trade is the type in which single type of goods or a variety of goods
is made available to a large number of consumers either in a big shop under a single
roof or in various shops at the convenience of customers or directly delivered to the
doorstep of the customers.

Types of Large-scale Retail Trade

Note
In India, generally we find the following types of Large-scale Retail Business:

(i) Departmental Store (ii) Multiple Shops

(iii) Super Market (iv) Consumer Cooperative Store

(v) Mail Order Retailing (vi) Franchise

Let us now discuss in detail all these types of retail trade.

(i) Departmental Stores

Departmental Store is a large-scale retail shop where a large variety of goods are sold
in a single building.

Features of Departmental Store

i. The entire building is divided into a number of departments or sections.

ii. In each department specific type of goods like stationery items, books, electronic
goods, garments, jewellery etc. are made available.

iii. All these departments are centrally controlled under one management. Once
you enter such a store you can do all your shopping by moving from one
department to another.

iv. To encourage people to do all their shopping in one store, these stores also
provide facilities like restaurant, telephone, toilet, ATM etc., for the convenience
of customers.

v. These stores also provide the facility like free home delivery of goods, execution
of telephonic order for goods, credit facility, etc.

vi. It is generally located at the main commercial centres of the cities and towns, so
that customers from different localities can easily come to buy goods as per their
convenience.

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vii. Big Bazar, Vishal Megamart, Ebony, Shoppers' stop are some of the leading Trade
departmental stores in our country.

Note

Fig. 18.3 Departmental Store

Merits of Departmental Stores

(a) They sell a large variety of goods to the consumers, under one roof. So it saves
time and effort of the customers.

(b) Departmental stores offer wide variety of goods produced by different

manufacturers.

(c) They buy large volumes of goods, at a time directly from the manufacturers, and
get good amount of discount from them. They are able to reap the benefits of the
economies of scale with reference to large-scale operations.

(d) Since these stores are organised on a large-scale basis, they can afford to employ
efficient and competent staff to provide the best services.
(e) Each department that is a part of the departmental store in a way advertises for
the other departments. While visiting one department customers are attracted to
see and even buy the goods displayed in other departments.

Inspite of these advantages, departmental stores have certain limitations .

Limitations of Departmental Stores

(a) Large amount of capital investment is required to start and run a departmental
store.

(b) They are generally located at places far from residential areas, so they are not
very convenient for buying goods of daily use.

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Trade (c) The operating cost of the departmental stores is very high since it includes cost
of location (in the form of rent or purchase price of building), decoration of
building, salary of a large number of employees and provision of various facilities
for the convenience of customers.

(d) There is no direct contact between the owners and customers in departmental
stores. It is the employees of the store who interact with the customers. The
Note owners do not get first hand information about the taste, preferences, likes and
dislikes of the customers.

Multiple Shops

In the previous section, we learnt that in a departmental store, the whole business is
carried on in one building and the customers are attracted to it. Now we shall learn
about multiple shops under which big manufacturers approach customers by setting
up shops near the customers.

Have you ever observed that there are some retail stores running in your town/city
having the same name, same decoration and dealing in the same type of products
under a single brand name? Yes, you may say, there is Raymonds, Nirula's, McDonalds,
Haldiram, Domino etc. These are multiple shops.

Features of Multiple Shops:

i. They sell similar range of commodities at the same price in all their shops.

ii. These shops are usually owned and run by big manufacturers/producers.

iii. They open a number of branches at different localities in a city or in different

cities and towns in a country. These shops are also called 'Chain Stores'.

iv. Multiple shops deal with similar types of goods mostly of everyday use e.g.,
shoes, textiles, watches, automobile products, etc.

v. The price is uniform for similar items in all the shops.

vi. These shops are usually conveniently located in the main market place or in busy
shopping centre.

Merits of Multiple Shops

The multiple shops offer the following advantages to buyers and sellers. Let us learn
about them:

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(a) All multiple shops are often built alike, that helps customers to recognise these Trade
shops easily. They have similar window display, interior decoration of the shop
and arrangement of the counter, furniture, sign boards etc.

(b) They facilitate elimination of middlemen (wholesalers and retailers) in the process
of distribution.

(c) These shops enjoy the benefits of large-scale purchase or production of goods
Note
(centralised purchase/production). Also, due to common advertisements these
shops are able to save on the cost of advertising.

(d) The customers can get the goods at a cheaper rate because of low operating
cost and elimination of middlemen in the process of distribution.

(e) Since the customers get genuine and standardised goods directly from the
manufacturers, chances of duplication of goods and cheating do not arise in
these shops. Also, standard quality and uniform price of products help in winning
the confidence of the customers.

Limitations of Multiple Shops

Inspite of all the above merits, multiple shops also suffer from the following limitations.

(a) These shops deal in a limited variety of products and restrict the choice offered
to the customers.

(b) Sales are made on cash basis only and the customer cannot avail of credit facilities
from these shops.

(c) Customers cannot bargain with sales person while buying the product. The prices
of the products are fixed by the head office and individual shops have no control
over it.

(d) Each of the multiple shops is generally managed by the branch managers and
they strictly follow the instructions of the head office. Often, they do not take
initiative or special interest in satisfying the customers.

INTEXT QUESTIONS 18.4

1. The decoration, display, signs boards etc. of the multiple shops are built alike.
Why? Give reason.

2. Answer the following.

(a) Who owns the departmental stores?

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Trade (b) Who owns the multiple shops?

(c) Which stores deal with variety of goods under one roof?

(d) Who manages the day to day affairs of the multiple shops?

(iii) Super Markets

Super Market is another kind of large-scale retail organisation from where we can buy
Note most of our household requirements for a week or a month in one visit. Let us learn
about this form of large scale retailing system in detail.

Super Market is a large scale retail store that sells a wide variety of products
like food items, vegetables, fruits, groceries, utensils, clothes, electronic
appliances, household goods etc. all under one roof. It is set up with the objective
of selling goods of daily necessity to general public at a reasonable price by eliminating
the middlemen in the process of distribution. These stores are centrally located and
also establish their branches near the residential areas. As compared to the departmental
stores, super markets do not offer free home delivery facility, credit facilities etc. You
will also not find salespersons to convince the customers to buy the goods. Here,
customers pick up the items of their needs and bring it to the cash counter, make the
payment and take the delivery of the goods.

Merits of Super Markets

Let us understand the merits of super markets.

(a) Super markets deal with a wide range of goods of daily household needs.

(b) It provides standard quality items to the customers. Chances of adulteration and
duplication are minimal/almost nil.

(c) Due to economies of large-scale purchase and avoidance of middlemen the

goods are available at a cheaper price in super market.

(d) In a super market normally services of salesmen and shop assistants are not
available. This reduces the cost of operation.

(e) A customer can find goods of different brands at one place. This makes
comparison and selection easy. You can take your own time to select items of
your choice.

Limitations of Super Markets

Following are some of the limitations of super markets:

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(a) Super markets require large amount of capital to start and run them. Trade

(b) Because of insufficient funds, benefits of professional management are not

available to the super bazaar.

(c) Goods are sold to the customers only on cash basis. Credit facility is not available
to them.

(d) Super markets follow the principle of self service. So the items which require the Note
service of salespersons are normally not sold by the super market.

(iv) Consumer Cooperative Stores

Consumer Cooperative Store is another form of large scale retail trade which
is owned by the cooperative society. When the consumers of a particular area or
group find it difficult to get the items of daily necessity they usually form a cooperative
society and run the retailing business. The consumer cooperative stores purchase the
goods directly from manufacturers or dealers and make them available at a cheaper
price. Let us learn about the various merits of consumer cooperative stores.

Merits of Consumer Cooperative Stores

(a) The consumer cooperative stores generally provide the goods at a price lower
than the market, because they eliminate the profits of middlemen in the process
of distribution.
(b) These stores sell the goods on cash basis. So the risk of bad debts is avoided.
(c) These stores are generally located near the residential area for the convenience
of the members as well as general public.
(d) The profits earned by the consumer cooperative stores are distributed among
the members as bonus.
Limitations of Consumer Cooperative Stores

(a) The consumer cooperative stores generally suffer from the limitations of
inadequate funds because these stores are formed by the people belonging to
the limited income group.

(b) Lack of fund or resources restrict the growth and expansion of business.

(c) These stores are managed by the members who may not have sufficient
experience in business management. Again, due to limited funds, it is also not
possible to engage professional managers.

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Trade
INTEXT QUESTIONS 18.5
1. List five items of daily necessity that are available in super markets.

2. Rewrite the following sentences making necessary corrections:

(a) Consumer cooperative stores are generally located at far off places from
the residential area.
Note
(b) The presence of sales person is very much required in super markets.

(c) The profit earned by the consumer cooperative stores is distributed among
the members.

(d) Professional managers are engaged in the consumer cooperative stores to

manage the day-to-day affairs.

(v) Mail Order Retailing

As the name suggests, this form of retailing makes use of the mail system (postal and
courier) to communicate with and deliver the goods to the customers. You must be
wondering how the customer comes to know about this retailer and the products he/
she is selling without visiting the shop? To answer this question, let's now discuss the
details of how the mail order retailing system operates.

The mail order retailers places the advertisements in newspapers, magazines, television,
social media etc. or publicise their products in booklets, catalogues, brochures and
handouts. These advertisements, leaflets, brochures etc. contain an order form or
other details on how to order the product apart from a detailed description of the
product being sold. On seeing the advertisement the interested customers can place
an order by post and the retailer on receiving the order, dispatches the goods by post
or courier. The payment for the same is either made by the customer through
the money order or demand draft (at the time of ordering the goods) or through
cash-on-delivery/VPP (Value Payable Post) arrangement (i.e., payment is made
by the customer on receiving delivery of goods, not in advance).

This method of sale can be conveniently used by the buyer to order goods of his
choice while sitting at home and the seller can sell his products even to customers living
in very remote areas. However, this system is not suitable for all types of goods.
Goods that do not need personal inspection and which can be understood by
description only (books, plants seeds, cutlery) and light weight, non-perishable products
(certain medicines, cosmetics, readymade garments, relatively low-valued electronic
gadgets, cameras etc.) that occupy less space are suitable for mail order retailing.

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Goods having high demand in the market and those having delivery charges relatively Trade
lower than their price are also suitable.

Merits of Mail Order Retailing

The mail order retailing system has the following merits:

(a) It is economical to start and run such a business because no shop has to be set-
up for it. This saves the cost of rent for the shop, its decoration, employment of Note
salespersons etc.

(b) There is not only low capital investment but also efficient use of that capital in
mail order retailing. There is no wastage of money in transporting the goods
from one middleman to another. Goods are directly dispatched to the customers.
Moreover there is no requirement of maintaining a stock of the finished product
or display of goods in shelf for sale. Goods may be manufactured or procured
after receiving an order from the customer. This reduces the need to block the
capital in maintaining stock of goods to minimum.

(c) Mail order retailers have a wide geographical reach. They can cater to customers
scattered over a wide area (in different countries also). The only requirement is
that there should be postal or courier services available in that area.

(d) Customers can order goods from the convenience of their home and receive the
goods at their doorstep under this system. People living in remote areas also get
access to a wide variety of goods.

(e) Customers also derive benefit from the comparatively low price that the mail
order retailers offer due to their low operating cost.

Limitations of Mail Order Retailing

Mail order retailing has certain limitations which are given as under:

(a) Since there is no opportunity for the customer to personally examine the goods
that he/she is buying, there is a probability that the customer may not get the
desired product. The product may vary in size, colour, design etc. from the one
that is shown in the advertisement or catalogue.

(b) There is no personal, face-to-face contact between the customer and the retailer.
As a result, the customer is unable to clear all his doubts regarding the product,
its use and its maintenance.

(c) Products that are ordered through this mode take some time to reach the customer.
The customers have to wait till the order reaches the retailer, then the procurement

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Trade and dispatch of goods by him and finally the goods reach the customer. Hence,
this is not suitable for perishable products or products required immediately or
at short notice.

(d) Mail order retailing is not suitable for all products. Items of daily consumption,
bulky or voluminous articles and perishable goods cannot be bought and sold
through it.
Note
(e) Mail order retailing is conducted mainly on cash basis. Credit facility is not
provided to the customers.

After going through the merits and limitations of mail order retailing, a question
may arise in our minds - Is mail order retailing a popular form of trade in our
country? Even though this system exists since a long time, its use is not widespread.
Have you wondered why is it not so popular, especially in our country?

Apart from its limitations that have been discussed above, there are certain
other reasons why this business has not been very popular in India. A large
section of our population is still illiterate due to which they are neither able to
read the advertisements/catalogues of mail order retailing nor place an order for
such goods. Due to some instances offraud and other malpractices by certain
retailers, customers do not have much faith in mail order retailers. Possibility of
fraud is more in this case than in face-to-face purchase of products from shops.
Also, lack of credit facility dissuades a large section of our population from
purchasing goods through the mail order system.

(vi) Franchise

You might have seen some restaurants, card and gift shops, readymade garments
shops that carry the same brand name/trademark and have almost the same decoration.
They sell the same products, yet they are not chain stores/multiple shops. This is
because they are not controlled and managed by a single owner. You may be wondering
how these different shops are able to use the same brand name, sell the same product
etc. even though they are not under the same management. Moreover, these shops are
run independently by different people in different localities. This is made possible through
a retail arrangement called 'Franchise'.

Franchise is a form of retailing wherein two parties enter into an agreement in which
one party authorises others to sell or produce and sell specified goods and services.
The party that develops a product/service or is the owner of an expertise is called the
'Franchiser'. The other party, called the 'Franchisee' is an independent business unit
that buys the right to sell the product/service of the franchiser in exchange of a specified

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amount of money. The franchisee functions as a retailer. He operates in certain Trade
geographical areas that he is permitted to, as per his agreement with the franchiser.

Franchising has gained popularity in our country, especially in the past decade. There
are many businesses like fast-food joints and restaurants (e.g., McDonalds, Wimpy's),
gifts and greeting cards shops (Hallmark, Archies), readymade garments (Benetton,
Numero Uno, Petals), computer education (NIIT, Aptech) that have grown nation-
wide and are flourishing with the help of franchise arrangements. Note

Features of Franchise

Let us now know more about franchise by looking at its features:

(a) It is based on an agreement between the franchiser and the franchisee, wherein
they enter into a commercial relationship, generally for an agreed period of
time.

(b) Under this agreement, the franchisee gets the right to use a particular brand
name, process or product owned by the franchiser, for the purpose of retailing,
in return for a fee.

(c) The fee is generally paid partly as an initial payment at the time of entering into
the contract and partly on regular payments either monthly, quarterly or annually.
This regular payment may be paid by the franchisee as a percentage of his sales
volume or profit or a fixed amount agreed upon in the contract.

(d) The franchiser may also be required to invest money in arranging a large space
in prime locations, in furnishing it and in procuring stock for the outlet. In most
cases all franchise outlets are required to maintain uniform pre-determined
decoration, method of serving customers, type of products etc.

(e) Franchise as a system of retailing is suitable for brands that have earned a name
for themselves in the market. Only then can a franchisee benefit from using that
name over a new brand.

(f) The franchiser is very cautious while choosing franchisees for his goods or
services. Only competent persons with requisite entrepreneurial skills and
commitment to quality/customer-satisfaction, in addition to, of course, a sound
financial position will be able to run this business successfully. A franchisee who
fails will bring disrepute to the brand and also hamper the franchiser's future
business prospects.

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Trade Merits of Franchise

(a) The franchiser can expand his business without investing additional capital. The
franchisee invests this money and also pays fee to the franchiser in return of the
right to use the brand name, products etc.

(b) The franchisee can capitalise on the goodwill of the existing brand of the franchiser.

Note (c) The customer gets assurance of standardised goods and services both in terms
of quality and price. With the network of franchisees, the product and service
becomes widely available to consumers.

Limitations of Franchise

(a) The Franchiser does not have close control over the activities of the franchisee.
The franchisee's poor performance in dealing with customers may bring a bad
name to the brand due to which the franchiser's business may be adversely
affected.

(b) If the franchisee is not able to make adequate profit out of the franchise business,
the franchise fee may become a burden for him.

(c) If consumers have complaints regarding the product/service, he may face a

problem about whom to go to, the franchiser or the franchisee. Each may blame
the other for the problem and not take on the responsibility of redressal of the
grievance.

INTEXT QUESTIONS 18.6

1. Name any five products that are suitable for mail order retailing.

2. Define the following terms.

(a) Franchise (b) Franchiser (c) Franchisee

18.5 RECENT TRENDS IN DISTRIBUTION

With the advancement in the information technology (i.e., use of computers, telephone,
internet etc.) methods of distribution of goods from producers to consumers have
witnessed new developments. Today consumers can conveniently buy products of
their choice without leaving their home or office, any time during the day or night.
Certain channels of distribution eliminate the long and expensive chain of middlemen.
Manufacturers are directly approaching consumers, either through their websites using
Internet or through their agents (direct selling).

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Some of the recent trends in distribution are discussed below. Trade

(a) Direct Marketing : Under this method of distribution the manufacturers

bypass the chain of middlemen and approach the consumers directly and
sell them the goods and services, without the help of wholesalers and retailers.
The manufacturers inform the prospective customers about their products and
its uses through advertisements (in newspapers, television, radio, social media)
or catalogues, letters and brochures. If the customer wants to buy the product, Note
he/she may place an order to the manufacturers over the telephone or through a
letter sent by post or e-mail. The product gets delivered to the customer through
courier, post or by salespersons.

The benefit of direct marketing to the producer as well as consumer is in the

form of doing away with the profit margin of middlemen. The manufacturer is
able to supply goods to the consumer at a lower price, even after keeping a
larger share of profit margin as compared to the situation of distribution through
middlemen. Also, the time consuming process of the product changing hands
from the producer to the wholesaler, then to the retailer and finally to the
consumers, is avoided. Transactions are faster when the producer is face-to-
face with the consumer. Also, the producer gets direct feedback from the
customers for improvement in the products.

Direct marketing may be classified into different types, based on the mode of
communication used by the manufacturers to approach the customers. The
manufacturers may use
 Printed catalogues to inform the customers about the products called
Catalogue Retailing;
 Television advertisements called Televised Shopping; and
 Brochures, letters etc. sent by mail called Direct Mail Retailing.

Products that can be conveniently and safely sent to the customers by post/courier
and whose utility and description can be easily communicated through a catalogue,
letter or television advertisement, are generally sold using the method of direct marketing.
This includes books, magazines, physical exercise equipments, certain types of furniture
etc.

(b) Internet Marketing: With the widespread use of computers and Internet,
today it is possible to buy and sell products over the internet, through websites
maintained by producers. Products can be ordered instantly from anywhere in
the world, 24-hours of the day, from the convenience of one's home or a nearby

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Trade cyber-cafe.

On the website we can see the picture of the product, read about it and then
order it, just with the click on the mouse of the computer. The payment for the
product may be made using a credit card or by bank draft etc.

Internet marketing makes it convenient to do shopping anytime, anywhere and it

is easy to compare prices of the same product charged by different producers.
Note
The only thing we have to do is to open different websites on the Internet. There
is no need to physically go from one shop to the other, or one market to the
other.

We can buy all types of products from flowers to foods, clothes to computers,
from the producer located even at a far-off place in some other country or
continent. The producer is able to cater to a larger number of customers sitting
anywhere in the world, efficiently and speedily, using Internet marketing.

But a drawback of this means of distribution is that the consumer can only see
the image of the product. He/she cannot see the actual product nor touch it, try
it nor witness a live demonstration of its use. Full information about the product
may not be available on the website.

(c) Telemarketing : Some producers/manufacturers approach the consumers

overthe telephone, to tell them about the product and its uses and ultimately
persuade them to buy the product. This method is often used to sell credit cards,
subscription to certain books and journals and also membership of certain clubs
etc.

A marketing representative of the concerned producer calls up prospective

customers over the telephone and tells them about the product and its uses.
While interacting the caller can gauge the interest level of the customer towards
the product and influence his decision to buy the product. If the customer is
willing to buy the product, it is delivered to him by courier or post.

Nowadays, if a large number of customers are to be approached through telemarketing;

computerised calling system is used instead of a person calling up customers. The
desired telephone numbers are dialled mechanically and the computer plays a pre-
recorded voice message for the consumer. The consumer is given the option, after
hearing the message, to record his own message that may be a query about the product
or the order to purchase the product.

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18.5.1 RETAILING IN THE CHANGING TIMES Trade

You have read in the previous sections about the different forms of retailing, from
hawkers and peddlers to huge departmental stores; from local general stores to mail
order retailing to Internet Marketing and Telemarketing.

As business has evolved over the ages, retailing, an important and dynamic part of it,
has also kept pace with the changes. However, in the recent past there have been such
Note
drastic and far-reaching developments in this field that it is said that we are presently
experiencing a 'retailing revolution', not only in India, but the world over.

Retailing has come a long way today in our country, from the local Kirana shops that
existed since long, long ago. The focus now is not only on making retailing more
convenient for the customer but also on making shopping an enjoyable experience for
him/her.

The shift in approach in retailing aims at earning profit by offering customers more
choice, more conveniences and better facilities.

Let us now read about some of the interesting trends that have emerged in retailing,that
you may have also observed on your own.

 In keeping with the changing lifestyles of consumers where they now have more
purchasing power but lesser time, retailers are offering services like free home
delivery, packed food products (milk, juice etc.), after-sales services,
convenience of shopping for different products under one roof (departmental
stores) and shopping through the Internet, e-mail, post, SMS or telephone.

 Many businessmen who were earlier focusing only on manufacturing of

products, are now venturing into retailing (vertical integration). They are
either opening their own exclusive showrooms/outlets under their brand name
or tying up with existing retailers or employing direct selling agents (that link the
manufacturer to the consumer by directly selling goods to final consumers,
eliminating wholesalers and other retailers from the chain).

 In order to encourage consumers to buy products, retailers are offering

attractive schemes of financing for purchase of products, especially for
consumer durables like refrigerators, television, air-conditioners etc. Very low
rates of interest are charged by the retailer for financing the product. Some
retailers also have tie-ups with banks for the purpose of providing consumer
finance.

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Trade  With a view to offer variety to consumers with convenience and easy accessibility,
today retailing includes automatic vending machines. Through these machines,
consumers can buy items like newspapers, magazines, chocolates, contraceptives,
cold drink cans and so on by inserting requisite denomination of coins and pressing
a button. The item gets delivered from the machine without any human intervention.

 Shopping malls have been another outcome of the 'retail revolution' in urban
Note areas. They are like a huge shopping complex, housed in a single building,
generally offering services like parking space, recreational facilities like cinema
halls, variety of food outlets/restaurants (food courts) apart from a number of
shops selling different goods. They may include a departmental store spread
over multiple storeys/ floors, apart from a number of other independent shops,
all under the same roof. Shopping malls have gained popularity with consumers
because they offer a convenient shopping experience to them, due to the many
other facilities that they provide They are generally designed in such a way that
they are accessible to the differently abled persons also with facilities like ramps,
wheel chairs etc.

 Another development in recent times has been the use of multiple channels
for retailing a single product i.e., selling the product through mail order as well
as through departmental stores or through itinerant retailers, general stores as
well as over the Internet at the same time (for e.g., Amul Ice cream is sold
through pushcarts, in local grocery shops, in departmental stores, and over the
[Link] website).

Some retail outlets are also using multiple format retailing, where the retail outlet
combines the features of two different types of retailers. For e.g., a departmental
store and chain store combination in the form of a chain of departmental stores
across different parts of the country like Big Bazar, Vishal Megamart.

 The combination of a super market and a departmental store forms a

hypermarket. It is a large scale retail facility which provides enormous range of
products under one roof. A consumer can buy all his/her weekly or monthly
requirements in one trip from the hypermarket.

Thus, we can see that trade within the country (internal trade) may assume different
forms, depending on the needs and demands of consumers. Newer features in existing
forms or newer forms of retailing keep developing with changing times and changing
consumer preferences.

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18.5.2 CHAMBER OF COMMERCE AND INDUSTRY Trade

Chamber of commerce is a voluntary association of business people. Manufacturers,

merchants and other business persons in a particular region or country will be the
members of Chamber of Commerce and Industry. This organisation is formed to
promote general business interests of all the members. Chamber of Commerce
promotes the growth of commerce and industry in a particular region or country. This
is a non-profit making organisation. Note

18.5.3 DOCUMENTS USED IN INTERNAL TRADE

Following documents are used in internal trade :

1. Proforma Invoice : It is a document sent prior to the actual sale to the buyer. It
informs the buyer about the amount he is required to pay for the specified goods
purchased by him. It provides almost the same information as an invoice provides.

It is sent in the following cases:

a) When goods are sent on consignment basis.

b) When goods are sent abroad.

c) When supplier expects payment before dispatch of goods.

2. Invoice: It is a document sent by the seller to the buyer when goods are [Link]
is a document which shows the rates and terms of payment at which goods will
be dispatched. Invoice perform the following functions:

a) It help the buyer to locate error in the order and supply of goods.

b) It is a basis for recording transactions.

c) It informs the buyer about the dispatch of goods.

d) Seller can have an idea of the amount to be collected from buyer.

3. Debit Note: It is a document prepared by one party (either by the seller or the
buyer) to inform the other party (either the seller or the buyer) that receiver's
account has been debited with the specified amount and for the specified reasons.

Seller may send a debit note to the buyer in the following cases:

a) When the goods are undercharged in the invoice.

b) When some goods are not included in the invoice by mistake.

c) When some more items have been sent than invoiced.

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Trade Buyer may send a debit note to the seller in the following cases:

a) When the goods are returned by the purchaser to the seller and seller is ready to
give allowance to the buyer for the same.

b) When the seller failed to sent same goods charged in the invoice.

c) When the price charged in the invoice is higher.

Note 4. Credit Note: It is a document prepared by one party (buyer or seller) to be
sent to another party (buyer or seller) to inform the receiver that his account has
been credited with the amount mentioned and for the reasons stated therein.

A seller may send a credit note to the buyer in the following cases:

a) When goods are returned by the purchaser.

b) When same goods are damaged and acceptance has been made by the buyer at
a reduced price.

c) When less goods have been sent than invoiced.

A buyer may send a credit note to the seller in the following cases:

a) When the seller has by mistake sent more goods than invoiced.

b) When same item has not been charged in the invoice by mistake.

18.5.4 LORRY RECEIPT (LR)

When the goods are sent through a transport company, a Lorry Receipt is issued by
Transport Company at the time of booking.

1. Name, address and phone number of the transporter.

2. Name, address and phone number of the sender.

3. Name, address and phone number of the person to whom the goods are likely
to be delivered.

18.5.5 TERMS OF TRADE

i. Cash on Delivery (COD): It is a type of transaction in which payment for goods

is made at the time of delivery. If the purchaser does not make payment when
the goods are delivered, then the goodwill be returned to the seller.

ii. Free on Board (FOB): This includes all charges at the post of shipment upto the
loading of goods on board the ship and export duty, if any.

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iii. Cost Insurance and Freight (CIF): This includes the cost of goods, all expenses Trade
incurred for taking the goods to the port of destination and insurance charges.

iv. Errors and Omissions Excepted (E & OE) : It is an expression that is used as
a disclaimer against clerical errors.

INTEXT QUESTIONS 18.7

Note
1. What is meant by 'Shopping Mall'?

2. Name the method of distribution in the following cases :

(a) The manufacturer approaches the customers directly.

(b) The marketing representative calls the customers over telephone.

(c) Sale of goods and service by using internet.

(d) Sale of goods through machines without any human intervention.

TERMINAL EXERCISE
Very Short Answer Questions

1. What is meant by 'Internal Trade'?

2. State the meaning of multiple shops.

3. Mention any two benefits of wholesaler.

4. Define the term 'Franchise'.

5. Name any four types of large scale retailing business.

Short Answer Questions

1. Explain the role of wholesaler in the distribution channel.

2. State any four merits of departmental stores.

3. Give any four points of distinction between a retailer and a wholesaler.

4. Explain the merits of super markets.

5. What is meant by 'mail order retailing'?

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Trade Long Answer Questions

1. State the features of departmental Stores. How is a departmental store different

from multiple shops?

2. Describe the role of middlemen in the channel of distribution.

3. What is meant by Consumer Cooperative Store? Explain its merits in brief.

Note 4. Explain the features of Franchise as a form of large scale retailing business.

5. Describe in brief the recent trends in distribution.

ANSWERS TO INTEXT QUESTIONS

18.1 2. WT : (a), (c), (d) RT : (b), (e)

18.2 2. (a) A retailer has a direct link with the consumers.

(b) The amount of capital is less in case of retail trade.

(c) Wholesaler/Retailer is a middleman in the chain of distribution.

(d) No change

(e) The retailer purchases goods from the wholesaler.

18.3 2. (a) Single line store (b) Specialty store

(c) General store or variety store (d) Itinerant retailing

(e) Second hand-goods shop

18.4 1. (a) Same ownership (b) Easy to recognise

2. (a) Big businessman (Individual or group)

(b) Big manufacturers or producers

(c) Departmental store

(d) Branch manager or anybody appointed by the owner.

18.5 1. (a) Food items (b) Vegetables (c) Fruits

(d) Groceries (e) Utensils

2. (a) Consumer Cooperative Stores are generally located near the

residential areas.

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(b) The presence of salesperson is not required in super markets. Trade

(c) No change

(d) The Consumer Cooperative Stores are managed by the

members who may not have professional expertise in business
management.

18.6 1. (a) Medicine (b) Books (c) Toys Note

(d) Cosmetics (e) Plant seeds

2. (a) Franchise is a form of retailing where two parties enter into an

agreement in which one party authorises the other to sell or
produce and sell specified goods and services.

(b) The party that develops a product/service or is the owner of

an expertise who authorises other to sell or produce and sell a
particular item.

(c) The party that buys the rights to sell or produce and sell any
item under the contract of franchise is known as franchisee.

18.7 2. (a) Direct marketing (b) Telemarketing

(c) Internet Marketing (d) Automatic vending machine

DO AND LEARN
1. Visit at least five retail shops in your locality and record the following to get a
clear picture.

(a) Name of the store if any.

(b) Location of the store.

(c) Variety of products being sold.

(d) Place of procurement of the products (whether from wholesalers or

producers).

(e) Transportation used.

(f) After-sales service, if any provided.

(g) Any information that the retailer communicates to the wholesalers/

producers.

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Trade (h) Any other relevant information.

2. Identify at least twenty different retail shops of your locality and classify them
according to the different types you learnt in this lesson. Prepare a chart.

3. Given below is a word search, the clues are given below to help you find the
word. Identify the word and encircle/ highlight in the word search.(First one is
done for you)
Note
a. They sell goods of different sizes, brands, designs, styles and quality of the
same product line.(SPECIALITY SHOPS)
b. These stores deal with products of a specific brand or company /
(S_ _ _ _ _ L _ _ _ S_ _ _ ES)
c. This is a large-scale retail shop where a large variety of goods are sold in
a single building.(_E _ _ _ _M_ _ _ _ _ S _ _ _ _)
d. They open a number of branches at different localities in a city or in different
cities and towns in a country. ( _ _A_ _ S _ _ _ _)
e. This method of sale is suitable for goods that do not need personal
inspection and whose use can be understood by description only./
(M _ _ _ _ _ _ _ _H_ _ _ _ _ _)
f. A form of retailing wherein two parties enter into an agreement in which
one party authorises other to sell or produce and sell specified goods and
services.(F_ _ _C_ _ _ _ )
g. Under this method of distribution the manufacturers bypass the chain of
middlemen and approach the consumers directly and sell them the goods
and services. (D_ _ _ _ _M_ _ _ _ _ _ _ _)
h. It is a document prepared by one party (buyer or seller) to be sent to
another party (buyer or seller) to inform the receiver that his account has
been credited with the amount mentioned. (_R_ _ I _ _ _ _ E)
i. Itinforms the buyer about the amount he is required to pay for the specified
goods purchased by him(P_ _ F _ _ _ _IN_ _ _ _ _)
j. It is a document prepared by one party (either by the seller or thebuyer)
to inform the other party that receiver's account has been debited with the
specified amount and for the specified reasons. (_ _ _ IT N_ _ _)

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k. When the goods are sent through a transport company, this document is Trade
issued by Transport Company at the time of booking.
(_ _ _ _ _ R _ _ _ _ _T)

Z J E C B D A K Y X O M U P C S L D N T
T A V H D C B G P V Q M I W J E D I A P
X W Y V W H X C K N W Y W F Y R T R R I
G G O T R F Y V E H Y Q K W E O L E L E
L N N P A W R T E C L Z P R Q T P C I C Note
K T I I T U T A Y V U G O A Z S F T N E
E R O T S L A T N E M T R A P E D M C R
P I P T E U H L V C S R R F B N J A S Y
Y T F Y I K O Q Q N H O C R S I X R O R
Z X D N F C R H I G L I C V D L T K J R
U G O S R D O A R E D K S C T E A E A O
P F Y T G B H A M E S W B E Z L N T D L
Y Q E J D C U K P E D Z G N E G P I E O
C R E D I T N O T E L R L Y X N Y N B M
P C Z S G G P Z C A R E O T H I D G I H
I K M U P N V V M F V O T L F S L B T J
N R P R O F O R M A I N V O I C E K N Q
B I T U H R V S M N I G W P L A A I O Z
I Q A S C V K V W E R Q H V Z X M C T T
S P O H S Y T I L A I C E P S M W Z E W

ROLE PLAY
Satish, the younger brother of Suresh came to Delhi for the first time. Suresh took him
around Delhi to see the place. He was amazed to see the shopping complexes and the
market places.

One day Suresh along with his mother had to go for monthly purchases. He took
Satish along with them. Following is the conversation among them.

Satish : Bhaiya, I think it will take a whole day.

Suresh : Why do you say that?

Satish : You have to buy things of different variety and that too for a whole
month.

Suresh : So what?

Satish : It is going to be a tiring day.

Suresh : Why?

Satish : Naturally we will have to go different shops to buy the variety of

things that we need.

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Trade
What about our food? We will have to carry the things and look for
lunch too?

Suresh : Don’t worry brother! Have you ever heard of Departmental Store?

Satish : What? Departmental Store? What is that?

Suresh : Well! Let me explain.

Note
You are required to continue the conversation while assuming the role of Suresh and

explain to Satish all about Departmental Store.

Solution for Do and Learn activity 3

Word Search

a. Speciality Shop b. Single line Stores c. Departmental Store

d. Chain Store e. Mail Order Housing f. Franchise

g. Direct Marketing h. Credit Note i. Proforma Invoice

j. Debit Note k. Lorry Receipt

132 Business studies (319) Senior Secondary

WHAT HAVE YOU LEARNT