Small Scale Retailers - Home Trade | High School Business

i) Itinerant Traders

- retailers who move from place to place selling their goods either on foot or bicycles and move door to door or town to town

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.

Advantages of small-scale retailers without shops

i) Require a small amount of capital to start and operate their businesses.
ii) Are convenient since they take goods to the customers within their reach.
iii) They incur low costs of doing business
iv) Most of their goods are low-priced and hence more affordable to customers.
v) The business is flexible. It is easy to change from one business to another
vi) They require few legal requirements
vii) The financial risks involved in these businesses are minimal
viii) They do not suffer bad debts since they sell on cash bases
ix) They interact at personal level with the customers and can convince them to buy their goods.

Disadvantages of small-scale retailers without shops

i) It is tiring for as they move from place to place
ii) The traders face stiff competition from other traders with more resources
iii) They offer a limited variety of goods
iv) They are affected by unfavorable weather condition
v) Lack of permanent operating premises denies them a chance to develop permanent customers
vi) They face a lot of certainty, especially in terms of a steady flow of income
vii) They sometimes sell defective or low quality goods because customers expect to pay little money for them.

- with permanent locations to operate from.

Single Shops

- mostly located in the trading or market centres in rural areas or in the residential areas of high towns
- operated from fixed premises and usually run by one person who may get assistance from him/her family or employ attendance
- deal in one line of commodity such as houses, clothing

Advantages of single shops

- Minimal capital is required
- Running costs are usually low as the owner may use the services of family members
- They may offer credit facilities to some customers
- They are easy to start because only a license is required
- They usually have a loyal group of customers
- Flexibility. The owner can change his or her line of business at will
- They are easy to start since the owner does not have to meet any manufactures requirements
- Products prices are fixed by the shop owners
- The owner has the freedom of creativity and independence
- They are convenient since they ensure goods are within easy reach of their customers

Disadvantages of single shops

- Expansion is difficult due to limited funds
- They face stiff competition from large businesses
- The absence of the owner may result in closure and loss of business
- May suffer bad debts
- Provide limited variety of goods
- The operations of the business are affected by the owner's commitment

Tied shops

- shops that mainly sell the products of one particular manufacture or are owned by a specific supplier of certain goods eg bata shops

Disadvantages of Tied shops

- Availability of goods is assured at all times
- The supplier carries out promotion for the goods
- The manufacturer/supplier can easily give credit to the shops
- Customers can return or change faulty goods at any of the shops
- The shops are easily identifiable due to their similarity
- Traders are financed by the manufacture
- They get loyal customers who keep buying their branded products
- Advertisement expenses are met by the manufacture
- They get technical advice from the manufacture
- Some operate from permanent premises owned by the manufacture.

Disadvantages of Tied shops

- Decision making is slow because the manufacturer must be consulted
- The variety of goods is limited
- The shops cannot sell goods from any other manufactures even if customers require them
- Prices are fixed by the manufacture and sometimes profit margins may be low
- They inhibit the retailers creativity and innovations
- There is a likelihood of disagreements between the manufacture and the tied shop owners

Differences/Distinction between a tied shop and single shop

Single shop	Tied shop
Owner is free to stock whatever he/she wishes	Dealership can be withdrawn if operators stock competing products
Owned by individual or a group of people	The owner is normally the manufacturer
Sells products from different manufacturers	Sells products from a single manufacturer
Design of shop according to owners wish	Shops usually have the same design
Prices of goods determined by shop owner or different manufactures	Prices of goods set by the manufacturer
Operators not trained by manufacturers	Operators are usually trained by manufacturer

Advantages of small scale Retailers

a. Easy to raise capital to start
b. Retailers are in close contact with the consumers and may give credit to credit worthy customers.
c. Are able to use free or cheap labour from family members d. The risks involved in their businesses are small
e. The business is simple to start and manage
f. Few legal formalities required to start and run the business
g. The trader can easily change from one form of business to another i.e. the business is flexible

Disadvantages of small-scale retailers

a. Traders have limited access to loan facilities
b. They may not afford to hire specialists or technical staff
c. May suffer bad debts if they give credit to customers without proper assessment
d. Do not enjoy economies of scale
e. Have a low turnover because of the little capital invested