Mail Order Houses
These are the retail outlets that carry out sales of their goods through mail. There is normally no direct personal contact between the purchasers and the vendors in this form of trading. For getting orders, potential consumers are approached by advertising in newspapers or magazines, circulars, catalogues, samples and bills, and tariff sent to them by post. All the related information about the goods like price, features, delivery terms, terms of payment, etc., are described in the advertisement. On getting the orders, the products are cautiously scrutinized with respect to the specifications asked for by purchasers and are complied with through the post office. They can have various alternatives for getting payments. First, the consumers can be asked to make whole payment in advance. Secondly, the products can be sent by Value Payable Post (VPP). By this arrangement, the products are sent through post and are given to the consumers only on making the complete payment for the same. Third, the products can be delivered through a bank, which is instructed to deliver the items to the customers. Under this arrangement there are no risks of bad debt, as the items are handed over to the purchasers only after he makes complete payment. However, there is a requirement to ensure the purchasers that the items dispatched are in accordance with their specifications. This form of business is not adaptable for all types of items like for example, products that perish or are bulky and cannot be easily managed, are never recommended for mail-house trading. Only the products that can be
- Graded and standardised,
- Easily transported at less expense,
- Always have demand in the market,
- Are available in large scale all round the year,
- Involve minimum competition in the market and
- Can be described through pictures etc., are suitable for this type of trading.
- Limited Capital Requirement: This business doesn't require large expenditure for building and rest of the infrastructural facilities and thus it can be started with relatively less amount of capital.
- Elimination of Middle Men: The biggest merit of this business from the point of view of customers is that unnecessary middlemen between the buyers and sellers are eliminated and thus results in lot of savings for both to the buyers as well as to the sellers.
- Absence of Bad Debt: Because the mail order houses don't provide credit facilities to the customers, there are no chances of any bad debt on account of non payment of cash by the customers.
- Wide Reach: By mail-order system the products can be sent to all the locations having postal services and thus opens wide scope for business as a large number of people throughout the country can be served through mail.
- Convenience: By the mail-order system products are delivered at the doorstep of the customers and results in great convenience to the customers in purchasing these products.
- Lack of Personal Contact: As there is no personal contact between the purchasers and the vendors in this system of mail order selling, there are more possibilities of misunderstanding and mistrust between the two. The purchasers are not in a position to examine the goods before purchasing and the sellers cannot pay personal attention to the likes and dislikes of the buyers and cannot clear all their doubts through catalogues and advertisements.
- High Promotion Cost: This business has to rely mostly on advertisements and other ways of promotion in order to inform and persuade the potential purchasers to buy their products. Thus it results is large expenditure on promotion of the goods.
- No After Sales Service: In this way of selling, the purchasers and vendors may be situated very far away from each other and there is no personal contact between the two. Thus, there is absence of after sales services and its important for the satisfaction of the consumers.
- No Credit Facilities: These do not give credit facilities to the purchasers. Thus, consumers with limited means are not interested in this form of trading.
- Delayed Delivery: There is no immediate delivery of products to the consumers, as receipt and execution of order through mail takes some time.
- Possibility of Abuse: This form of business gives greater possibility of abuse to dishonest traders to cheat the consumers by making false claims about the goods or not honoring the commitments made through hand bills or advertisements.
- High Dependence on Postal Services: The success of this business relies largely on the availability of efficient postal services at a location. But in a big country like ours, where many locations are still without postal facilities, this form of business has limited prospects.