Level 1: Trader

The sub-levels of level 1

Sub-levels are a first draft, being refined. A trader buys and sells goods or services that others make. Within this level, businesses differ mainly in how much stock they own, how much credit they give, and how far they reach. They are listed roughly in order of money needed, risk, control and value added; real businesses do not always climb in this order.

1. 1.1

   No-stock seller

   You sell, or arrange the sale of, goods or services without ever owning or storing goods. Drop shipping (your supplier ships straight to your customer), commission agents who sell goods on the owner's behalf for a commission (like a kacha arhtiya in a mandi), and hosts who sell their own service through someone else's platform all work this way.

   Example: A dropshipper's online store whose supplier packs and ships each order; a mandi commission agent selling a farmer's produce; a club leader selling tickets to weekly meetups through a meetup app.

   Money

   Almost none: no stock and no shop. You may spend on a website, listings, advertising or your own time.

   Risk

   Little money at risk, but thin margins and heavy dependence on the supplier's stock and delivery, or on the platform's rules, commission and customers.

   Control

   Low. The supplier or platform controls the product, much of the price, or the customer relationship.

   To climb

   Find products or services that sell again and again, then start holding some stock yourself or building your own customer list, so you control quality, delivery and margin.

   Read: Hosting meetups on a platform: what Misfits shows about no-stock service businesses

   Read: New platform micro-businesses in India: who earns what, and who holds the power

2. 1.2

   Shopkeeper or retail stockist

   You buy goods, keep them in your own shop, godown or online store, and sell them to final customers.

   Example: A kirana or general store; a hardware or mobile-accessories shop; an online seller who keeps its own stock and ships orders.

   Money

   Small to moderate: rent and deposit for the shop, fittings, and the first stock.

   Risk

   Stock that does not sell or goes bad, and customers who buy on credit (udhaar) and pay late.

   Control

   You choose what to stock and at what price, within what local customers will pay.

   To climb

   Learn which items turn fastest, earn credit from suppliers, and start supplying other shops, not only final customers.

3. 1.3

   Wholesaler or distributor

   You buy in bulk and sell to other businesses (shops, hotels, offices) rather than to final customers. A wholesaler buys and resells the goods of many companies. A distributor is appointed by one or more companies to supply shops in a territory: it stocks, takes orders, delivers and collects. A sub-stockist does the same job in smaller towns.

   Example: A multi-brand FMCG distributor supplying soap, biscuits and oil to kirana shops; a rice and pulses wholesaler.

   Money

   Moderate: a godown, delivery vehicles and salesmen, and above all working capital for stock and for the credit you give shops.

   Risk

   Money stuck in stock and in shop dues, thin margins, and companies changing their schemes or their distributors.

   Control

   More than a shop: you choose which shops to serve and on what credit, but companies set prices and schemes.

   To climb

   Tight credit control, more brands or a bigger territory, and the warehouse space and working capital to supply other distributors.

4. 1.4

   Super stockist or C&F agent

   You work one step closer to the company, for a whole region. A super stockist buys in bulk from the company, owns that stock, and resells it to distributors in its region. A carrying and forwarding (C&F) agent runs a warehouse for the company and dispatches its goods to distributors, usually without owning the stock, for a commission.

   Example: A super stockist supplying an FMCG company's goods to distributors across several districts; a C&F agent running a company's depot for a state.

   Money

   Large: big warehouse space, transport, systems and staff. A super stockist also needs working capital for bulk stock.

   Risk

   Big volumes on small margins, dependence on a few companies' contracts, and, for a super stockist, unsold bulk stock.

   Control

   You manage the flow of goods for a region, but the company sets prices and can redraw its network.

   To climb

   Proven systems and finance for large volumes; then buying directly from abroad, selling abroad, or running several regions.

5. 1.5

   Importer, exporter or trading house

   You buy goods from other countries, sell goods to other countries, or run trading branches in many cities. Importing or exporting goods from India needs an Importer Exporter Code (IEC) from the Directorate General of Foreign Trade (DGFT).

   Example: An importer of electronic components who sells to Indian distributors; a merchant exporter who buys handicrafts from makers and ships them to foreign buyers.

   Money

   Large: big orders, advance payments or letters of credit, shipping and warehousing.

   Risk

   Exchange-rate swings, changes in customs duty and trade rules, long shipping times, and foreign buyers or suppliers who are hard to chase.

   Control

   The most a trader gets: you choose markets and suppliers worldwide, though prices still follow the market.

   To climb

   The next step is a new level: sell one brand as its authorised partner (Level 2), or make what you now trade (Level 3).