Trade, or commerce, involves the transfer of the ownership of goods or services, from one person or entity to another, in exchange for money, goods or services. A network that allows trade is called a market. Trade between two traders is called bilateral trade, while trade between more than two traders is called multilateral trade. Trading can be classified based on geography of markets targeted : local, regional, national and international (export-import).
Trading can also be classified into various categories based on the level in the value chain the trader is. Some of the major methods of trading are described below :
Distributors frequently have a business relationship with manufactures that they represent. Many distributors maintain exclusive buying agreements that limit the number of participants or enables distributors to cover a certain territory. The distributor becomes the manufacture’s direct point of contact for prospective buyers of certain products. However, distributors rarely sell a manufacture’s goods directly to consumers. Wholesale representatives and retailers generally find distributors to buy products for resale.
Wholesalers generally buy a large quantity of products directly from distributors. High-volume purchase orders typically improve a wholesaler’s buying power. Many distributors provide discounts for a certain number of items purchased or the total amount spent on merchandise. Wholesalers acquire merchandise, such as telephones, computers, bicycles, clothing, televisions and furniture. The goods are frequently destined for retailers.
Retailers consist of small and large for-profit businesses that sell products directly to consumers. To realize a profit, retailers search for products that coincide with their business objectives and find suppliers with the most competitive pricing. Generally, a retailer can buy small quantities of an item from a distributor or a wholesaler. For instance, a retail merchant who wanted to purchase a dozen lamps could contact lighting distributors to inquire about pricing. Retail trade consists of the sale of goods or merchandise from a very fixed location, such as a department store, boutique or kiosk, online or by mail, in small or individual lots for direct consumption or use by the purchaser.
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b. Product Retail Associations eg. Federation of Auto Dealer Associations (FADA), etc..
Franchising is the practice of the right to use a firm's (called franchisor) business model and brand for a prescribed period of time. For the franchisor, the franchise is an alternative to building "chain stores" to distribute goods that avoids the investments and liability of a chain. The franchisor's success depends on the success of the franchisees. The franchisee is said to have a greater incentive than a direct employee because they have a direct stake in the business. The franchising of goods and services foreign to India is in its infancy. Franchise agreements are covered under two standard commercial laws: the Contract Act 1872 and the Specific Relief Act 1963, which provide for both specific enforcement of covenants in a contract and remedies in the form of damages for breach of contract. Examples of franchisors in India are Dominos Pizza, Natural Salon, etc.
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Direct selling is the marketing and selling of products directly to consumers away from a fixed retail location. Door to door sales is the oldest form of direct selling. Modern direct selling includes sales made through the party plan, one-on-one demonstrations, and other personal contact arrangements as well as internet sales. A textbook definition is: "The direct personal presentation, demonstration, and sale of products and services to consumers, usually in their homes or at their jobs."
According to the WFDSA, consumers benefit from direct selling because of the convenience and service it provides, including personal demonstration and explanation of products, home delivery, and generous satisfaction guarantees. In contrast to franchising, the cost for an individual to start an independent direct selling business is typically very low with little or no required inventory or other cash commitments to begin.
Direct selling consists of two main business models: single-level marketing, in which a direct seller makes money by buying products from a parent organization and selling them directly to customers, and multi-level marketing (also known as network marketing or person-to-person marketing), in which the direct seller makes money from both direct sales to customers and by sponsoring new direct sellers and earning a commission from their efforts.
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