COLLEGE OF BUSINESS EDUCATION (C.B.

E)
MBEYA CAMPUS

*** G R O U P NUMBER ONE ***

NO.
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REG NO
BC.146F/D4.2014
BC.147F/D4.2014
BC.148F/D4.2014
BC.149F/D4.2014
BC.158F/D4.2014
BC.163F/D4.2014
BC.167F/D4.2014
BC.210F/D4.2014

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BC.257F/D4.2014
BC.263F/D4.2014

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BC.290F/D4.2014
BC.301F/D4.2014

MODULE:
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SEMESTER:
NTA:
FACILITATOR:

COURSE
B.C.PS
B.C.A
B.C.BA
B.C.A
B.C.PS
B.C.PS
B.C.PS
B.C.MK
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B.C.A
B.C.MK
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B.C.A
B.C.PS

PRINICPLIES OF COMMERCE
BAT 04102
ONE
LEVEL 4
MR. BEN

SIGNATURE

RETAILER
Retail is the sale of goods and services from individuals or businesses to the end-user. Retailers
are part of an integrated system called the supply chain hence retailer purchases goods or
products in large quantities from manufacturers directly or through a wholesale, and then sells
smaller quantities to the consumer for a profit. Retailing can be done in either fixed locations like
stores or markets, door-to-door or by delivery While retailing is a combination of all activities
which are engaged in in issuing retailer services by buying goods from wholesaler in large
quantity and selling them to customes/consumers at small quantities for a higher price so as to
make profit
FUNCTIONS OF RETAILER
General function:

The retailer buys a variety of products from the wholesaler or a number of wholesalers.
He thus performs two functions like buying of goods and assembling of goods.

The retailer performs storing function by stocking the goods for a consumer.

He develops personal contact with the consumers and gives them goods on credit.

He bears the risks in connection with Physical Spoilage of goods and fall in price.
Besides he bears risks on account of fire, theft, deterioration in the quality and spoilage of
goods.

He resorts to standardization and grading of goods in such a way that these are accepted
by the customers.

He makes arrangement for delivery of goods and supply valuable market information to
both wholesaler and the consumer.

To Customers:

He provides ready stock of goods and as such he sells and quantity of goods desired by
the customers.

He keeps a large variety of goods produced by different producers and thereby ensures a
wide variety of choice to the customers.

He relives the consumers of maintaining large quantity of goods for future period because
he himself holds large stock of goods.

He develops personal relationship with the customers by giving them credit.

he provides free-home delivery service to the customers.

He informs the new product to the customers.

he makes arrangement for replacement of goods when he receive complaints.

To Wholesaler:

He gives valuable market information with regard to taste, fashion and demand for the
goods to the wholesaler.

The retailer maintains direct contact with the customers and so he relieves the wholesaler
with regard to maintenance of direct contact.

He helps the wholesaler in getting their goods distributed to the consumer.

He is regarded as an important link between the wholesaler and the consumer.

He creates demand for the products by displaying the goods to the consumers.

QUALITIES OF A RETAILER
The followings are some of the essential qualities of a retailer:

He is regarded as the last link in the chain of distribution.

He purchases goods in large quantities from the wholesaler and sell in small quantity to
the consumer.

He deals in general products or a variety of merchandise.

He develops personal contact with the consumer.

He aims at providing maximum satisfaction to the consumer.

The retailer should be honest to the customers i.e. avoiding cheating and an "I don't care"
attitude to customers.

The retailer should forecast future demand in terms of quality, quantity, price, brand and
package.

TYPES OF RETAILERS
A. SMALL SCALE RETAILERS
Small-scale retail trade is one where a limited variety and also limited quantity of goods are sold
within a local area. These are Dependant on wholesaler for their supply.hence have a Limited
capital is involved and their capital can be raised from personal sources (savings and loans) They
Normally do not employ specialist staff. Small-scale retailers may be classified as those with
fixed shops and those without them. Examples of retailers who have no fixed shops are itinerant
traders, road-side sellers, hawkers and mobile shops. Those with fixed premises are those with
single shops and tied shops. The following are the main Features of Small Scale Retailers
ITINERANT TRADERS - These include traders who usually have no fixed premises and
carry very little stock. 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. They deal in a variety of goods such as ice-cream,
fish, fruits, vegetables, soaps, cigarettes, magazines and newspapers. Examples of
Itinerant Traders are:
ROAD-SIDE SELLERS - These are mainly found at the sides of roads and can be found at
places like Sitting next to a country bus stop, a market place, or a public hall, road-side
seller offers small items like cigarettes, sweets, boxes of matches, fresh fruit, etc. While
traveling long distances anywhere,
HAWKERS - is a vendor of merchandise that can be easily transported, These sell from a
vehicle travelling from one area to another. Sellers of vegetables and food stuffs to
various local markets, milk and bread are traders involved in hawking selling goods from
one place to another while moving.
MOBILE SHOPS -This type of retailing business is similar to itinerant trading in all
details, except the volume of stock held and means of transport. Not so common in rural
areas, mobile shops either consist of a van or a lorry on which the merchandise is
arranged. Goods usually include second-hand and new clothing, utensils, shoes, e
SINGLE SHOPS - These shops have fixed premises, are usually owned and run by one
person, They usually offer a limited variety of goods and are often restricted to selling
only one class of them, for instance clothes, books, groceries, etc. They have little capital,
which prevents them from large-scale practices.
TIED SHOPS - A tied shop is one which agrees to sell a particular brand of goods for
example Petrol Stations selling one brand of petrol like caltex or mobil, a license selling
one type of beer or soda. Other examples are Bata Shoe shops in Tanzania.
LARGE SCALE REATILERS
. They carry a lot of stock, serve many more customers and their volume of sales is bigger. They
operate from well established fixed premises. They may be multiple shops, Departmental stores,

supermarkets or general stores. The following are the types of large scale retailers: It deals in a
variety of goods of daily need and makes these goods It purchases goods in bulk directly from
the manufacturers, thus It generally sells goods to the customers on cash basis.
DEPARTMENTAL STORES - A departmental store is a combination of shops or
departments under one management and one roof. Each department specializes in or sells
a particular line of goods, A departmental store therefore offers a wide variety of goods
under one roof, The goods sold may include furniture, toys, flowers, food stuffs, books
and stationary, electronics, e.tc in each department within the departmental store
SUPER MARKETS - A super-market is a large self-service store in which a variety of
goods is available. Other characteristics of this type of retail operation are large variety of
goods; a clean bright roomy shopping area, no credit, usually no delivery, and free
parking. Customer services are kept to a minimum i.e. self service no credit, no delivery;
Super markets handle well-known brands of merchandize.
MULTIPLE SHOPS - A multiple shop system is a combination of similar retail shops or
stores found at various locations, controlled and owned by a single firm. It is a group like
selling units selling a limited range of goods such as clothes, shoes, drugs, books and
stationery. Examples include Bata, tigo shop, voda shop, e.t.c
MAIL-ORDER SHOPS - The mail-order shop is a retail operation which receives most of
its orders from customers by mail and delivers most of its goods ordered by the same
means. Deliveries may be made by mail or by the stores own trucks or by contact
delivery services. The goods sold by mail include, among others, papers, shirts,
magazines, boats, household appliances, garden. These goods are listed in a catalogue
which is mailed to prospective customers, who then order from it.

INSTALLMENT SELLING

Installment selling is when goods are sold by a seller to the buyer, under which the goods will be
paid over different of fixed periods of time so as for the transaction to be completed, it can be in
a form of hire purchase or defferd payment, It is a a transaction in which the sales price is paid in
two or more periods for the amount to be completed, For example Juma goes to buy shoes under
installment selling which cost 12,000 Tshs and is required by Mnyapara the seller to pay 1,000
Tshs each month
ADVANTAGES OF HIRE PURCHASE SYSTEM:
ENABLE PEOPLE WITH LESS INCOME TO BUY GOODS - The buyer is greatly benefited as
he has to make the payment in installments. This system is greatly advantageous to the
people having limited income.
INCREASED VOLUME OF SALES TO SELLER - This system attracts more customers as the
payment is to be made in easy installments. This leads to increased volume of sales.
INCREASED PROFITS - Large volume of sales ensures increased profits to the seller.
ENCOURAGES SAVINGS - It encourages thrift among the buyers who are forced to save
some portion of their income for the payment of the installments. This inculcates the
habit to save among the people.
HELPFUL FOR SMALL TRADERS - This system is a blessing for the small manufacturers
and traders. They can purchase machinery and other equipment on installment basis and
in turn sell to the buyer charging full price.
EARNING OF INTEREST TO SELLER - The seller gets the installment which includes
original price and interest. The interest is calculated in advance and added in total
installments to be paid by the buyer.
DISADVANTAGES OF HIRE PURCHASE SYSTEM:
HIGHER PRICE OF GOODS DUE TO HIGH RATE OF INTEREST - A buyer has to pay higher
price for the article purchased which includes cost plus interest. The rate of interest is
quite high.

 HIGH RISK - Under installment system of selling it can be risky if the buyer can not
complete the installments which may lead him to be acted upon according to the
conditions agreed with the seller, for example if he agreed with the seller to put his house
as a financial security if he fails to pay then the seller has the right to sell his house as
par the conditions agreed .
DIFFICULTIES IN RECOVERY OF UNPAID INSTALLMENTS - It has been observed that the
sellers do not get the installments from the purchasers on time may have to waste time
and incur extra expenditure for the recovery of the installments. This sometimes led to
serious conflicts between the buyers and the sellers.

MAY LEAD TO RISE OF BAD DENTS - Some

buyers can not be trusted since they are not

honest and may run away with goods without paying for them, also it may happen the
buyer is dead which may lead to the treatment of the buyers accounts as bad debts who
can not finish payments.

MODERN TRENDS IN RETAIL TRADE

Competition and changes in consumer tastes, requirements, and in technology have led to
various changes in retailing practices. The most important trends are;
BRANDING - This is the selling of goods already packed under a specific name, symbol,
design or slogan, so that they appear different from other goods of the same type even
though they are basically the same. A brand is thus the name used to identify the product
of a particular manufacturer. Common examples are Omo, kiwi, Kilimanjaro, e.t.c
PACKAGING - This involves the sale of products already packed and often ready for
cooking or consumption. This is the wrapping of goods in special containers to protect
them against atmospheric conditions especially pouring and contamination.

 SELF-SERVICE RETAILING - One way of eliminating retailing costs is to see the customer
serve himself. With the self-service system the customer does not need to wait for service
except at check points. This saves his time and reduces selling expenses.
AUTOMATIC VENDING MACHINES: This involves, the sale of goods by coin-operated
machines to the ultimate consumer. Post Office, for example, sells stamps and Telephone
services by this method. Other goods that are sold in this way are drinks and sweets
E-COMMERCE this can be referred to as electronic commerce and involves trading
electronically for example in internet where people can buy products online also in
Tanzania people can send money , receive money and perform transaction by M-pesa or
Tigo -pesa
AFTER-SALE SERVICE: - Some retailers have realized that they can increase their sales
through the development of a first-class after-sale services promoted as a pre-sale
incentive. Such service include among other things free delivery and installation, periodic
servicing of such goods like lifts, television sets, watches, radios and cars.
MAIL-ORDER BUSINESS: - This can be described as selling by post. The goods are
supplied either on order or cash on delivery basis. When the goods are sold through an
agent who gets commission the system is called a mail order club if the sale is direct to
the consumer it is called a mail order shop.

Wholesale trade is the trade that involves selling of commodities in large quantities
either to the retailers or special consumers. In marketing, a middleman is any person or firm,
engaged in the distribution of goods from the producers to the consumers or users. The three
main types of middlemen are retailers, wholesalers and agents. The wholesaler is a
middleman between the producer or manufacturer, and the retailer. He is a businessman who
buys products in large quantities from the original manufacturer or producer and sells in smaller
quantities lo retailers, industrial users and governmental users while wholesaling is a
combination of all activities perfumed in wholesale trade i.e buying goods from manufacturers in
bulk and selling them to retailers in small quantities

FUNCTIONS OF A WHOLESALER
SERVICES TO THE MANUFACTURER
Financing Production:- By buying in large quantities and paying promptly, the
wholesaler provides the manufacturer with funds for mass production. The producer's
money is not locked up in finished stock,
Minimizing Storage Expenses and Risk of loss:- By taking away commodities
quickly and maintaining their own wholesale warehouse, the wholesalers reduce the
manufacturer's storage expenses and minimize their possible losses that might result
from goods being stolen, damaged or going bad.
Minimizing Marketing Expenses:-Wholesalers also reduce the manufacturer's
expenses and burden involved in the marketing of goods like transport costs,
salesmen's salaries, advertising, market research and debt collection. One order from
the wholesaler is equivalent to so many small orders from individual retailers. This
reduces clerical work and stationary expenses.
Provision of Promotional Material and Service:-Wholesalers complete some of the
finishing operations like breaking the bulk, packaging, blending, sorting, grading,
advertising, window display and so on.
Price Maintenance:- By regulating supplies from their warehouses wholesalers
enable producer keep prices of the products fairly stable.
SERVICES TO THE RETAILER
Breaking Bulk: He assembles goods purchased from various manufacturers and breaks
them in reasonable quantities or sizes according to the requirements of the retailer. He
saves the retailer valuable time, transport and packaging expenses.
Offering variety of goods - By buying from several manufacturers, wholesalers provide
retailers with a variety of choice and bring the goods nearer to them.
May offer credit facilities: Wholesalers allow retailer long periods of credit so retailers
may sell the goods before paying for them.
Packaging and grading products: The wholesaler offers pre-packs, grades and prices
the goods ready for sale. This reduces the retailers' work and enables him to serve his
customers more quickly.

 Providing information to retailers: The wholesalers keep retailers up-to-date with sales
models, designs, trends, and give them advice.
Storage facilities: The wholesalers store the foods for retailer and this economizes
storage space, reduces the risk of losses through unsalable stock, and regulates the price
of the goods.
Delivery and Transportation of goods - Sometimes the wholesaler delivers the goods to
the retailer's premises, and cuts down the retailer's transport and transit expenses.

SERVICES TO THE PUBLIC

Steady supply of goods: By holding large stocks and releasing them regularly, a
wholesaler helps the consumer to get steady supplies throughout the year.
Keeping prices stable: He plays an important role in keeping prices stable, which is an
obvious advantage to the public by ways such as controlling demand and supply.
Essential in the chain of distribution for goods to reach public: The main object of
any commercial activity is to bring goods within reach of a consumer. The wholesaler
plays his part in the smooth distribution of goods.

TYPES OF WHOLESALERS
NATIONWJDE WHOLESALERS These are wholesalers who supply
their goods or services all over the country, They buy products from
manufacturers in bulk and distribute them to retailers in small
quantities on a nationwide basis, examples of nationwide whole salers
in Tanzania are like METL - Mohammed Enterprise Tanzania Ltd
REGIONAL WHOLESALERS - These are wholesalers who supply their goods or
services all over the region e.g only in mbeya, they buy products from manufacturers in
bulk and distribute them to retailers in small quantities on a region wide basis, examples
of region wide wholesalers im Tanzania are like maji Rungwe in Mbeya Region.

 SPECIALIZED WHOLESALERS - These are wholesalers who supply only one

particular line of products,e.g only clothes, cigarettes , e.t.c it does not matter whether
they distribute products nation wise of region wise They buy a particular line product
from manufacturers in bulk and distribute them to retailers e.g. ZAM-ZAM stationary
wholesalers..
FACTORS DETERMINING NUMBER OF WHOLESALERS IN PARTICULAR
FIELD
THE NATURE OF GOODS:- wholesalers of technical and high value goods like cars and
of goods with few users

usually sell directly to the ultimate consumers or users.

Commodities which require special servicing and installation may also be sold this way
which lead to few wholesalers.but goods of low price and many users have many
wholesalers.
MARKETING COSTS:-Some goods require special marketing facilities like refrigeration,
storage, as for example, tea, tobacco vegetables and fruits, while others need sufficient
technical and selling ability. Where there are no knowledgeable and willing middlemen to
handle the products, the wholesalers has no alternative but to sell directly. But if he is not
financially sound, then he has to look for agents to distribute the goods for him.
MARKETING RISKS:-Some wholesalers prefer to sell their products through
intermediaries to avoid the risks of changes in fashion, particular demand, fall in value or
reduction in weight.
SIZE AND NATURE OF THE MARKET:- Where the market is local and therefore nearby
and the purchase are large, the direct sale to the consumer or user is economically
feasible. On the other hand, if the market is composed of numerous widely scattered
buyers whose purchases are relatively small in terms of quantity and value, the use of
middle
GOVERNMENT REGULATION:-Sometimes the government can restrict wholesalers in
distributing a particular line of goods, goods like weapons are restricted to be distributed
only by government authorised wholesalers e.g Ammu nation in Tanzania.
PROBLEMS IN HOME TRADE / INTERNAL TRADE

 restricts the variety of goods available to customers; In home trade it consists only of
goods which are produced locally within the country for example in Tanzania we cannot
get mobile phones through home trade since Tanzania cannot make mobile phones.
reduces quality of goods due to lack of competition from abroad: Home trade goods are
produced locally if there is no supply of goods from abroad it may reduce competition in
the market hence poor quality and high prices of products
Makes it difficult to dispose off the surplus products. When there is an excess of goods
in the home market these goods will have nowhere to be sold or dumped, and may end up
expiring, which may be loss to producers.
leads to restricted amount of foreign exchange: When goods are only sold within the
country it will restrict the foreign exchange of othe country currencies since the goods will
only be sold through the home country currency
may bring about scarcity of goods: when there is no other source for supplying gods in
the country like abroad countries it may lead to scarcity of particular goods if they have
high demand,
Limits economic international relations with other countries. Home trade limits
competition in trade hence promotion of poor quality goods.

REFERENCES
LECTURER HANDOUTS
COMMERCE SIMPLIFIED REVISED EDITION FOR EAST AFRICA by n.a saleemi