Classification of Trade

2. Classification of Trade

Trade is classified on the basis of the geographical area it is conducted within:

A. Internal Trade (Home Trade / Domestic Trade) — buying and selling of goods that takes

place within the boundaries of one country. Both the buyer and the seller are residents of

the same country, transactions are settled in the domestic currency, and the goods move only

within the country's own transport and legal system. Internal trade is further divided into:

1. Wholesale Trade — buying goods in bulk from producers/manufacturers and selling them in comparatively smaller lots to retailers (or, occasionally, to large institutional buyers) — dealt with in detail in the next section.
2. Retail Trade — buying goods (typically from wholesalers) and selling them in small quantities directly to the final consumer — also dealt with in detail below.

B. External Trade (Foreign Trade / International Trade) — buying and selling of goods

that takes place between two or more different countries. It necessarily involves

crossing a national/customs border, dealing in foreign exchange, complying with each

country's import-export regulations, and (usually) longer transport distances and transit

times than home trade. External trade is further divided into:

1. Import Trade — purchasing goods from a foreign country and bringing them into one's own country.
2. Export Trade — selling and sending out goods produced/manufactured in one's own country to a foreign country.
3. Entrepot Trade (Re-export Trade) — importing goods from one country not for consumption at home, but for re-exporting them (after storage, minor processing, or re-packaging) to a third country. A country engaged in entrepot trade essentially acts as a trading hub between two other countries.