DOMESTIC TRADE —MEANING, TYPES AND FEATURES

Domestic trade is defined as the buying and selling of goods and services within the geographical borders of a country.

It is the buying and selling of goods and services between people of the same country. 

Domestic trade is the exchange of domestic goods within the geographical barriers of a business.  

It can also refer to the process of purchasing, selling, and exchanging products and services inside a nation, whether at the retail or wholesale level.

Domestic trade is also called home trade, internal trade or regional trade.

An example of domestic trade is trading between a trader in New York and a consumer in New Jersey.

Types Of Home Trade

Home trade can be divided into retail and wholesale trade.

1. Wholesale trade: This is concerned with buying goods in large quantities directly or indirectly from the producer and then selling them to the retailer or final consumer.

It is the business of buying goods in bulk and selling in break-bull to the retailer or directly to the consumer.

A person who performs a deal in wholesale trade is called a wholesaler. 

Wholesalers serve as a link between the retailer/consumer and the final consumer.

They perform various functions in the distribution of goods and services

2. Retail trade: This is concerned with buying goods in small quantities from the wholesaler and selling them to the consumer.

A retailer is an intermediate distributor and serves as the final chain of production. Typically, retailers made the final sale of the products by dealing directly with the consumer.

Retailers can be classified into small-scale and large-scale retailers.

Small-scale retailers include peddlers and hawkers. On the other hand, large-scale retailers include departmental stores, supermarkets and hypermarkets.

Features of Domestic Trade

1. Home trade takes place within a country: Home trade takes place within the geographical barrier of a country. 

It involves the buying and selling of goods within a country.

2. Subject to domestic laws: Domestic trade is only subject to the domestic law of the country where it is carried out.

It is not subject to international laws and regulations.

To illustrate, any trade done within Nigeria is subject to the rules and regulations of the Nigerian government.

3. Domestic payment: The payment for goods and services transacted in domestic trade is made in the currency of the country where the trade takes place.

For instance, payment must be made in US dollars if the trade is domestic and takes place in the US.

4. No excise charge: Customs officers often collect customs duties on goods moving into and out of the country

Because domestic trade is done within the territory of a country, it follows that no customs duty is paid in domestic transactions.

No customs duty is paid in domestic trade because the goods are part of domestic production and domestic consumption.

Businesses and traders are, however, required to pay taxes to the government.

5. Fewer formalities: Unlike foreign trade, domestic trade required little to no formalities.

This is because domestic trade requires less paperwork than foreign trade.

If both parties agree on the method of payment and delivery of the goods or services, domestic trade can even be conducted without any formalities.

6. Mode of transportation: Domestic means of transport such as road, and railway are preferable in the home trade.

However, water and air transport may also be used in domestic trade, especially if it is an inter-city transaction.

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