Posted in Marketing and Strategy Terms, Total Reads: 538
Definition: Trading Company
A trading company is an intermediary between buyers and sellers of the same or different countries. It does not involve itself in storing or owning the merchandise or whatever the products being traded are. A trading company normally earns its money through the commission paid by sellers to the company for every sale that they make.
Trading companies trade different types of products which are meant to be purchased by/for consumers, government, or business purposes. Most of the trading companies are talked about in reference to B2B companies internationally today. They specialize I one type of products or a category of goods and have strong logistics as one of their strengths. There are two types of businesses in trading:
i. Importers or wholesalers: They maintain a stock of products and deliver it to their end customers, i.e. shops etc. They work in large geographical areas.
ii. Customers: These are the customers of the importers or the wholesalers described above, i.e. shops etc. They work in smaller geographical areas like small neighbourhoods.
There are various business models followed by these trading companies, which have undergone many changes because of changes like faster distribution and modern marketing today. Trading companies also perform the tasks of brokering the products and coordinating their delivery to their customers.
A few examples of global trading companies are East India Company, Indonesia Trading Company, Bombay Burmah Trading Corporation, etc.