36 Types of Retailing- non-store retailing-peddlers, mail order houses, electronic catalogues, video shopping and home television, internet shopping

K. Sangamithirai

epgp books

 

 

 

 

 

OBJECTIVES

 

This lesson will enable you to

  • Understand the different types of Non store Retailing.
  • Differentiate the types of Retailing Methods
  • Understand the strategy used for retailing various products.
  1. INTRODUCTION

Retailing is the distribution of finished products to the ultimate consumer.It is also defined as a set of activities or steps used to sell a product or service to consumers for their personal or family use. This is the last link in the distribution chain and is the direct interface of the process with the customer. It not only involves sale of products in the store but also includes services like those offered in the restaurant, parlour, or car rental agencies.

  1. TYPESOF RETAILING

Retail industry provides innumerable opportunities to entrepreneurs and workforce as salespeople and clerks.This industry also has opportunities for people interested in determining what goods will be sold, getting these goods to the right place at right time, and managing the operations, finances, and administration of retail companies. Retailers usually carry out specific activities such as anticipating customers’ wants, developing assortments of products, acquiring market information and financing. In present situation our retailer not only exist in the brick and mortar form alone. She or he can do it by using the telephone, direct mails, television in the form of teleshopping networks, e-mails, using the Internet or absolutely impersonally by using vending machines.

Retailing units can be classified into two groups on the basis of the nature of interaction between retailers and customers, namely

 

·         Store retailing

·         Non-store retailing

 

Store retailing is the traditional form of retailing wherein a customer physically goes to the store to buy goods or services. Retail transactions are carried out through face-to-face interactions between retailers and customers in case of a retail stores. In Store retailers operate from fixed point-of-sale location to attract a high volume of walk-in customers. Usually stores have extensive displays of merchandise and use mass media advertising to attract customers. They sell products and service to the customers for personal or household consumption, but some retailers also serve business and institutional clients such as office supplies stores, computer and software stores, banks, building material dealers, and electrical supplies stores. In addition to selling products some store retailers also provide after-sales service such as repair, alterations and installation.

 

Non-store retailing sells products to customers in absence of a retail store. Sometimes interactions between two entities take place without face-to-face interactions. Most of the non-store retailing mediums are well-known on account of the medium used by them to interact with their customers.

 

3. NON-STORE RETAILING

 

Non-store retailing is the selling of goods and services outside the confines of a retail facility. This term generically describes that retailing taking place outside of shops and stores (i.e., off the premises of fixed retail locations and of markets stands). This non-store distribution channel can be divided into direct selling (out of store premises sales) and distance selling which includes all forms of electronic commerce. Direct selling includes the party sales and all forms of selling in consumers’ homes and offices, and even garage sales.

 

In Non-store Retailing the retailer has direct relationship with his customer. In around twenty percent of retail sale inIndia is from non-store. The proportion of non-storeretailing is growing steadily.It is classified asDirect Selling, Mail order, Tele Marketing, Automatic Vending, Electronic retailing .

   3.1.1. Direct selling.

 

In Direct selling,there is no fixed retail location. Here direct contact of the retailer is made with his ultimate customers. It is highly an interactive form of retailing. Mostly products like cosmetics, jewellery, food items are sold in such manner. The retailers visit home place or work place of the customers to sell the products. It is also known as network marketing where the products and services are sold face to face.

 

Methods of Direct Selling

 

Three common methods of direct selling are Person-to-person selling: Representatives frommanufacturers and companies sell services and products directly to consumers at home, office, or workplace on one-to-one basis.

 

Party Plan: This is a system in which sales are made to individuals who are part of a group. In this method the sales person invites a ‘hostess’ to hold a ‘party’for eight to ten potentialclients.The products are demonstrated and audience are made to feel the products. Eg. Eureka Forbes.

 

Multilevel Network: Under this system,sales person work as distributors and also recruit some other people to become distributors in their network.A distributor with a multilevel  company receives commission through the sales of the products and through recruiting other distrubutors and receiving a portion of the income these distributors generate.

 

Some of the benefits of direct selling are personal attention to customer, convenience of time and place of presentation. This method provides an opportunity to meet and socialize with people.Further direct selling provides flexible schedules and is a good way to earn extra income and own business.Limitations are its high costs which make it the most expensive form of selling and consumersnegative view of direct selling.

 

3.1.2.  Distance selling

 

Distance selling can be done through mail order, catalogue sales, telephone calling, and automated vending and Electronic commercewhich includes online shopping, Internet, global distribution systems, and teleshopping.

  • Mail order and catalogue sales:Buying of goods or servicesis by postal delivery. The customer places an order for the required products with the seller through some remote method such as through a telephone call or web site. Then, the products will be delivered to the customer, directly to an address given by the customer.
  • Telemarketing:It is also called telephone selling,where sales person initiate contact with a buyer and completes a sale over the telephone. This method is sometimes considered as cold canvassing as the clients are selected from the phone directory.
  • On line shopping:Here consumers directly buy goods or services from a trader over the Internet using a web browser.
  • Vending Machine retailing :Products or services are stored in a machine and dispensed to consumers when they deposit cash or use a credit card.

In non-store retailing, retailers approach their customers and sell their product with methods such as

  1. Peddlers
  2. Mail order houses
  3. Electronic catalogues
  4. Video shopping
  5. Home television
  6. Internet shopping.

3.2. PEDDLERS

 

Peddlers are persons who sells things in small amounts often by traveling to different places or one who offers products for sale along the street or from door to door.We can define peddler as a retaildealerwhobringsgoodsfromplace to place,exhibitingthemforsale.Peddlers usually travelled on foot, carrying their wares, or by means of a person- or animal-drawn cart or wagon (making the peddler a hawker).

 

Modern peddlers may use motorized vehicles to transport themselves and their commodities. Typically, they operate door-to-door or at organized events such as fairs.

 

Peddlers had a significant role in supplying isolated populations. In modern times their market share has been drastically reduced due to various reasons such as increasing density of population and buying power, encouraged sedentary, modern transport, mail order, refrigeration. And other technology allows even rural clients alternative channels of purchase.The large advances in industrial mass production and freight transportation ,modern retail and distribution networks, the rise of popular mail order catalogues offered another way for people in rural or other remote areas to obtain items not readily available in local stores.

 

3.3.  MAIL ORDER HOUSES

 

Mail order houses are retail formats in which product details are communicated to the customers through a catalogue, letters or brouchers. Usually this method of retailing is suitable for specialty products. This system includes buying and selling merchandise or services through the post. Catalog and direct mail retailers contact customersusing printed material.

 

Mail order retailing relies on the effective product description to sell the merchandise. Magazines, CDs, clothing, and assorted household items are often sold through this format. Mail order provides convenience selling but only limited service. This method is an efficient way to cover a very large geographical area when buyers are not within one location.

 

3.3.2. Method of mail order

 

Flyer or catalog are used to communicate with the customer. A mail order catalogue is a company’s publication that contains a list of products from a company. Companies that publish and sent mail order catalogues are referred to as cataloguers within the industry.

 

The customer place an order for the products with the trader through methodslike a telephone call or web site. The products are delivered directly to an address specified by the customer, such as a home address. Some retailers also allow the products to be sent directly to a third party consumer, which is an effective way to send a gift to an out-of-town recipient.

 

Two types of organisations retail their products through the mail. They are (1) general merchandise and specialty catalogue retailers and (2) direct mail retailers.

  1. General merchandise catalogue retailers: Assorted products are published in catalogs and are periodically mailed to theircustomers. Specialty catalog retailers focus on particular product categories. Eg. Cosmetics or designer wear.
  2. Direct mail retailers:They mail brochures and pamphlets of a specified product or service to buyers at a specific time.

Most direct mail retailers are interested in making a single sale from a particularmailing, while catalogue retailers like to maintain relationships with customers over time.

 

Somesupermarket does mail order their products for promotions. Customers do not make face-to-face contactwithsellers. Mail order firms (also calleddirect mail firms) use personalized letters and catalogs. Address listsare bought from mailing researchfirms .They also generate enquiries and orders through advertisements in suitable media including internet. Nowadays except industrialequipment and too bulky goods, almost everything is sold through mail order..

 

3.2.2. Effectiveness of Mail Order

 

Generally, rural consumers, who lack ready access to retail stores, prefercatalog and direct mail retailing. Also the rise of dual-income families and people with limited time for shopping in stores, helped catalog retailing gain popularity.Now it appeals to a broad cross section of consumers.Some productslikeapparel, hosiery, computer hardware and software, gifts, and pharmaceuticals categories experience higher than average growth.

 

Direct mail refers to the delivery of an addressed mail by post. This offers flexibility in terms of planning. The supplier determines when the mail is to be sent out. It remains as a penetrating medium. It approaches the customer at a time when he or she will not be distracted. In this way it possesses a high degree of confidentiality. In mail order catalogues the seeing or reading process that recipients participate in is divided into four stages. During the first stage customers scan the message to determine if it is relevant to them. Next they look into the headers , images, postscript or possibility of replying. Then the decision and in the last stage confirmation.

3.2.3.    Elements of Mail Orders

 

Each of the elements of a direct mail pack proves its value during one or more of thesephases.It consists of

  1. The Envelope
  2. II.The Letter
  3. III.The enclosed Folder, newspaper, brochure and Information Leaflet
  4. Reply card/ reply envelope

The Envelope :Its exterior should arouse interest. It should also be stamped with a regular postage stamp or a postage paid stamp.

 

The Letter : it should entice the reader to read it and appear pleasant at first glance. It also should contain main message point repeated further on in the letter.

 

The enclosed Folder, newspaper, brochure and Information Leaflet: It is seen as the performance itself.It should have full description of what must be communicated.

 

Reply card/ reply envelope: The primary function of the reply card is to facilitate and stimulate an immediate response to the mailing.

  • Direct mail and catalog retailing provides business opportunities because the start-up costs are relatively low. But mailing and printing costs of catalogs are high, and it is hard to capture consumers’ attention each year. Also the time required to design, develop, and distribute catalogs makes it difficult for catalog and direct-mail retailers to respond quickly to new trends and fashions

3.3.   ELECTRONIC CATALOGUES

 

Electronic catalogues or otherwise electronic product catalogues (EPCs)play an important role in improving retailing on the WWW. they provide opportunity to firms to showcase their productsto a larger market on the Internet.Informationabout the products with textual descriptions and photos,or, in some cases, including audio and video clips are also provided.

 

Several factors are involved increating EPCs.They may be basic criteria that must be met to have successacross any sales format such as representativeand interesting product display/description, prompt delivery, a varietyof payment options, and responsivecustomer service.

 

3.3.1. Key factors for Electronic Catalogues

 

The EPC contains basic product information,with printed catalog image. The possibilitiesare significant for enhancing the informationand providing a user-friendlyinterface, by photos, textual description, personal shoppers andproduct demonstrations. To market theproduct these catalogues must contain sufficient andpertinent information about the product.It usually consists one to two paragraphsof text describing the product, additional accessory options;choices of color, size, and quantity. It helps consumers to performa comparative shopping thanthe traditional paper format.

 

Electronic catalogues will usuallypresent the photos with a transparentbackground to give the image acleaner, sharper look.Some companies use low-resolution graphics to speedup the process of viewing a page since accessing speed is a critical factor for displaying product imagesin an electronic product catalog. Computer, beverage, music, and clothingindustries are some of the industries which use EPCs.

 

3.3.2. Advantages of Catalogues

  • Customers can shop when it is convenient for them
  • One save resources on account of time and travelling cost and parking problems.
  • Relevant product information is available in detail
  • There is no undue pressure to buy unlike the retail store shopping
  • There is space for unlimited product display.
  • Catalogue helps to reduce cost of sales and for lower overheads.
  • Selling process is completely under the control marketer.
  • Can maintain accurate inventory control and timely and accurate analysis .
  • Can be operates 24 hours a day, seven days a week through toll-free telephone lines and call centres.
  • Customers can be reached irrespective of geographical location.
  • Modern direct marketing techniques allow prospective clients to be targeted, based on their known interest.

3.4. VIDEO SHOPPING

 

Another technology adapted in retailing is Video Shopping. The retailer place some of its catalogues on discs or tapes for in-home and at store viewing. The company mails catalogues in the form of video tapes to consumers. The discs contain motion sequences plus colour pictures. Product demonstrations, fashion shows and footage from commercials are included in it.

 

Some marketing consultants however, question whether people will spend 30 to 60 minutes watching an entire tape and fiddle to locate products they want to take a second look at. Catalogue designers also note that a video tape has the capacity to show a very limited number of products and that the production costs of such a venture could be costly. Retailers use video to provide prerecorded answers to questions frequently asked by customers. When used in-store, the device increase productivity because they reduce the need for sales person to provide basic information.

 

3.5. HOME TELEVISION

 

The humble TV in our homes set to become a ‘third wave’ shopping channel, revolutionising the way we buy goods and services online.Teleshopping is a retail format in which existing and prospective customers watch a television programme demonstrating products and then place their orders for the same either through telephone, e-mail, or internet.Consumers can shop in privacy through home shopping rather than visiting brick and mortar stores and shopping malls.

 

There are three types of television shopping, namely Cable channels meant for shopping, infomercials and direct-response advertising shown on TV. Informercials are TV programmes that mix entertainment with product demonstrations following which interested customers place orders through telephone or e-mail. However direct-response advertising includes advertisements on TV that provide details about merchandise and an opportunity to order. In India the Asian Sky Shop (ASK), TSN, TVC, TSNM Telebrands are key players in television shopping.

 

The main benefit of using Television for retailing is it can  There are also some disadvantages as it is time-consuming and costly in trainingthe staff, need to appoint outside service provider to prepare a script, that might lead to losing thecontrol over the sales.

 

3.6.  INTERNET SHOPPING

 

Internet shopping can be defined as the act of purchasing products or services over the Internet. It can also be called online shopping, e-shopping or e-retailing.It is a form ofelectroniccommerce whereby consumers directly buygoods or services from a seller over theInternet without an intermediary service.Availability of internets in small towns, higher disposable income, and limited reach to branded retail outlets are the reasons for internet shopping.Everything from flowers to books, from personal computers to jewelry is being brought and sold online. Customers opt for internetshopping not only for its high levels of convenience, but also because of broader selections, competitive pricing, and greater access to information. Many leading companies seek to offer online shopping for it allows retailers to save on inventory handling and maintenance costs, and offers access to a worldwide market, increases customer value, and builds sustainable capabilities.

 

In the Internet shopping consumers visits a website or search engine and finds their required product. He then uses shopping cart software to collect various items and can adjust quantity as in a store. The mode of payment can be selected by the customer and the deal is is made through the internet. The product may be delivered to the address mentionedby the customer. If any problem occurs in the product delivered or dissatisfied consumers can return an item in exchange for either the correct product or a refund. This can be done by the consumer contacting the retailer , pay the shipping and sending back through post. Some online companies have more generous return policies to compensate for the traditional advantage of physical stores.

Advantages of Internet Retailing

 

Internet retailing appeals to marketers and retailers on account of the following factors.

 

Internet retailers can avoid expensive capital investment on stores and instore fittings, sales persons, and inventory holding costs.Internet retailers depend on IT integration from their store – front to order processing all the way back to their suppliers. This helps to reduce the costs of processing all the way back to their suppliers. This helps to reduce the cost of acquiring and delivering throughout the value chain, which in turn helps the marketers to share benefits with customer. Internet retailing widens the market to be served and provides national or international presence.

 

Disadvantages of Internet Retailing

 

Customers must have access to the Interne, they should also have a valid method of paymentto shop and complete a business. Usually people with higher levels of education and personal income only favoursonlineshopping. Risk of fraud is higher than face-to-face transactions.Merchants also risk fraudulent purchases using stolen credit cards or fraudulent repudiation of the online purchase.

 

If the process goes poor it can create a thorny situation. Some of the problems that shoppers usually face are identity theft, faulty products, and the accumulation of spyware. Internet retailing has had a positive impact on the economy of the nation in particular and the world at large. In India it will be a mixture of e-tailing and retailing that is likely to succeed. More and more companies are working hard on reaching out to their consumers with the help of internet.

  1. ADVANTAGES AND DISADVANTAGES OF NON STORE RETAILING
  • It is free from a physical retail store. overheads operating retail outlets are eliminated.
  • Customer coverage is wider compared with an individual retail location.
  • Companies do not have to spend large sums or dilute stock building new locations, or acquiring them.
  • This provides a global market for the retailer with a cheap, centralized location.
  • This helps to save time and effort in visiting, departmental stores, shopping malls, etc.

Some of the disadvantages are

  • There is also the fear of credit card abuse and mail fraud, both related to the sense of detachment that not holding a prospective purchase brings.
  • Slow Internet connectivity may be a problem.

5.FUTURE OF NON-STORE RETAILING

 

Non-store retailing is growing at a much faster rate than store-based retailing. Various forms of non-store retail practices have also become common. Though direct selling had created a hold in Indian market, Internet retailing and its growth is increasing. Easy acesss to internet, its reduced cost, and greater familiarity with on-line purchasing are some of the reasons behind the growth. Some observers predict that non-store retailing will handle 30 percent of all general merchandise sold, and is a powerful force in the retailing industry. The time constraint in the life-style of many buyers enhances the non-store based retailing. In the near future E-tailing will beocme the core of the retailing business around the worldand in India as well.

you can view video on Types of Retailing- non-store retailing-peddlers, mail order houses, electronic catalogues, video shopping and home television, internet shopping

 

References

 

  • Chetan Bajaj, RajnishTuli, Nidhi Varma Srivastava, Retail Management, Oxford University Press, New Delhi, 2010,Second Edition.
  • Ed peelen, Customer Relationship Management, Pearson Education Ltd.,New Delhi, 2009
  • Lamba A J., The Art of Retailing, Tata Mc graw-Hill Publishing Company Limited, New Delhi,2003.
  • Ramkishen Y., International Retail Marketing Strategies, Jaico Publishing House, Mumbai, 2010.
  • http://en.wikipedia.org/wiki/Non-store_retailing
  • http://www.yourarticlelibrary.com/stores/retail-stores-store-based-retailer-and-non-store-retailing/7586/
  • http://www.businessdictionary.com/definition/mail-order.html#ixzz3ZWLJWTX3 http://www.collinsdictionary.com/dictionary/english/mail-order-catalogue