Home Trade 1

Topic Objectives: By the end of the topic, the learners should be able to:

i. Explain the meaning and importance of trade.
ii. Classify trade
iii. Explain the forms of home trade
iv. Discuss the types and functions of retailers
v. Discuss the types and functions of wholesalers
vi. Describe the documents used in home trade and the circumstances under which they all used
vii. Explain the means of payment used in home trade and the circumstances under which they are used
viii. Explain the terms of payment used in home trade and circumstances in which they are used.

Meaning of Trade

This is the buying and selling of goods and services with the aim of making a profit.

Importance of trade:

Trade plays a vital role in any economy. The various roles played by trade in the economy include:

i. Helps people to acquire what they cannot produce

ii. Avails a variety of goods and services thereby improving the peoples living standards

iii. Creates an outlet for goods thereby enabling the producers to dispose of their surplus produce

iv. Creates employment opportunities

v. Encourages specialization and division of labour

vi. Promotes peace, social relations and understanding the parties involved since they depend on one another

vii. Provides revenue to the business and the government in form of taxes and fees charged on the various trading activities

viii. Ensures steady supply of goods and services

ix. Exploitation of local resources as traders create goods and services using locally available resources

x. Encourages economic growth and development
Classification of Trade

a) On the basis of geographical location of the portion involved, These are:

i. Home trade

Also called internal, local or domestic trade.
- It refers to the buying and selling of goods and services within the boundaries of a given country.
- It is further divided into retail trade and wholesale trade.

ii. International trade (foreign trade)

-This is trade that is carried out beyond the boundaries of a country

-This is trade carried out between individuals or government of different countries e.g. trade between a citizen of Kenya and a citizen of Tanzania, or trade between the government of Kenya and the government of Southern Sudan

-International trade carried out between two countries is referred to as bilateral trade and international trade carried out among many countries (more than two countries) is referred to as multilateral trade.

International trade is classified into the following;
i) Export Trade-Which is the sale of goods and services by a country to another country or individuals in one country to another country or
individuals in one country to individuals in another country.

ii) Import Trade-Which is the buying of goods and services by one country from another country or by individuals in one country from individuals in another country.

Forms of Home Trade

i) Retail Trade

Retail trade involves the buying of goods and selling them to the final consumer.

A retailer is the trader who buys goods with a view of selling them to the final consumer.

Classification of Retail Traders

Retailers are classified/categorized according to the amount of capital they need to start and operate their businesses and their sales volume.

Thus retailers can be classified as;

i) Small scale retailers

ii) Large scale retailers

i) Small-scale Retail businesses/small scale Retailers

These are retailers whose capital requirement is low and their sales volume also low.

They form the majority of retail traders and all found in all parts of the country.

Small scale businesses are easy to start and in most cases they are operated as one-man’s business.

A small scale trader serves the needs of people in the immediate neighbourhood and deal mainly in fast moving goods such as foodstuffs, detergents, kerosene e.t.c

Categories and Types of small scale

These are two main categories of small-scale traders as shown below;

a) Small scale Traders without shops

-Itinerant Traders (Hawkers and peddlers)

-Roadside sellers

-Open air market Traders

b) Small scale retailers with shops

-Single shops -Tied shops -Kiosks -Mobile shops

-Market stalls -Canteens -Mail order stores

a) Small scale Retailers without shops

i) Itinerant Traders

These are retailers who move from place to place selling their goods either on foot, by bicycles or motor cycles -They move from town to town, door to door and from village to village selling their goods.

Their goods may include clothes, utensils and foodstuffs.

Customers can buy goods without having to travel to look for them
-Examples of itinerant traders are hawkers and peddlers (Hawkers move around on bicycles, handcarts or motorcycles while peddlers walk around)

-The itinerant traders require a licence from the local authorities in order to sell their goods.

Characteristics of itinerant Traders

i) Are found mainly in densely populated areas

ii) Move from place to place in search of customers

iii) They are very persuasive

iv) Their prices are not controlled.

Advantages of itinerant Traders

1. They require little capital to start

2. They are convenient because they bring goods closer to the people

3. The business is flexible in that they can move from place to place.

They can also change from line of business to another
4. Few legal formalities are required

5. They usually do not suffer bad debts because they sell in cash.

Disadvantages of itinerant Traders

1. The traders get tired because of moving from one place to another while carrying goods.

2. The business is affected by bad weather conditions

3. The traders sale a limited range of goods

4. It is difficult to transport goods from one place to another.

5. Do not offer guarantee, in case items are to be found defective

6. They are constantly in conflict with the local government.

ii) Roadside sellers

These are traders who sell their goods at places where other people pass by and at busy places such as along busy roads, bus stages, road junctions and entrances to public buildings.

They place their goods on trays, cardboards, empty sacks and mails They sell items such as fruits, utensils, sweets, clothing and some hardware.

iii) Open-air market Traders

Open air markets are places set aside by the government through the local authorities where people meet to buy and sell goods.

Traders selling similar commodities are allocated a special area. Such markets are open on particular days of the week.

The variety of goods sold here is wide and include agricultural produce, clothing, household items, animals, foodstuffs and even furniture.

The traders move from one market to another depending on the various market days.

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