Trade:

Trade is an activity of buying and selling goods and services between two persons or parties with a views to generate profit.Trade is final stage of business activities and involves transfer of ownership. Buying and selling operations are carried on by traders who remove the hindrance of persons in   exchange of goods. A trader acts as an intermediary between the producer and the consumers.

Types of Trade

Trade is of following two types:

1. Home trade
2. Foreign trade

1)  Home trade:- The trade or the commercial activities which are carried on within the boundaries of a country is called home trade or internal trade. Payments of the value of the goods are made and received in the local currency of the country and both buyers and sellers belong to the same country. Home trade may further be divided into (i) Wholesale trade and (ii) Retail trade.

i)  The wholesale trade:- It involves buying and selling of goods in large quantities. A wholesale trade acts as a link between the producers and the retailers. The wholesaler buys the goods in large quantities from the producer and sells relatively in small quantities to the retailer. The wholesaler provides a valuable service to the consumers through retailer and helps to stabilize the prices of the goods.

ii)  Retail trade:– It is the last stage of distribution of goods to the final consumer. The retail trade may be in various forms like shops, venders, peddlers, market stall holders, mail order business, departmental stores, co-operative societies, super markets and self-service stores, Retailers buy the good from wholesalers in small quantities and sell them to the final consumer. A retailer serves as a link between the wholesaler, manufacturer, and the ultimate consumers.

2)  Foreign trade:- The trade which takes place between two or more than two nations is called foreign trade or international trade or external trade. It may be bilateral or multi-lateral. It means exchange of goods and services between two or more countries under separate political setup. It contributes to the maximum economic well-being of the people irrespective of geographical boundaries. It leads to best utilization of the natural resources of the world. Foreign trade may be divided into (i) Export trade (ii) Import trade and (iii) Entre-port trade.

i)  Export trade:- The act of selling products of a country to other foreign countries is known as export trade. In export trade, the excess products of a country are sold to the needy countries.

ii)  Import trade:- The act of buying the good/products of other countries by a country is called import trade. In import trade a country buys required products from other countries. For example, Nepal buys petroleum products, machineries and equipment’s from other countries.

iii)  Entrepot trade:- Entrepot trade is also called re-export trade. It involves importing foreign products by a country with a view to re-export them to other countries but not for home consumption. For example, most of the tea imported into Europe is first brought to London and re-exported to other countries.