Introduction to Trade

Q1) What is trade? What are the different types of trade?

Ans: The act of buying and selling goods and services with a motive to earn profit is called trade. There are two types of trade, they are; a) Home Trade and (b) International Trade.

Q2) Define Home trade and explain its procedures in brief.

Ans: The process of buying and selling goods and services within the country itself is called home trade.
Its procedures are explain below;

• Enquiry: The process of making enquiry to the suitable suppliers regarding the price, quantities, qualities, cash and trade discount, and other  terms and conditions of trade.
• Quotation: It is the letter written by supplier to the buyers in response to the enquiry made by them, which includes the details of price of the goods, quantity and other terms and conditions.
• Purchase order letter: After receiving the letter of quotation letter, if the buyer is satisfied with the price and other terms and conditions of trade, the buyer write a letter of order with the details of quantities of goods, their brands, quality, delivery time and means/mode of transport.
• Letter of acknowledgement: After receiving the order letter from the buyers, the supplier write a letter of confirmation to inform the buyers about the delivery of required goods at the particular time.
• Collection of goods: In this steps, the supplier collects the necessary goods form his stock, if it is not available, he/she will manage from different sources to supply to the buyers.
• Packing of Goods: In this step, the collected goods are packed up in wrappers, sacks, box, cartoon according to the demand of the buyer. The necessary instruction such as handle with care, breakable, etc are written on the pack.
• Invoice: An invoice is simply a document which contains the details of the goods like the quantity, price, discount to be offered and other terms of payment which is sent along with the delivery of goods.
• Sending the goods to the carrier: After the required quantity of goods have been packed, the goods are handed to the particular transport company for the delivery of goods in time.
• Receipt of goods: This is the step in which buyer received the goods from the transport company and tally the goods received with invoice.
• Payment of bill: This is the last step of the home trade where buyer will made the payment of the bill of the goods.