Retail trade
- 1. 2. RETAIL TRADE (RETAILING) • identify functions of the retailer as the middleman between manufacturer and consumer • evaluate possible responses to changes in customer requirements and expectations • describe the characteristics of different types of retailer, including: large and small (hypermarkets, supermarkets, multiples, department stores, speciality shops, unit/independent retailers, street markets) • discuss the advantages and disadvantages of each type of retailer • discuss the advantages and disadvantages of large-scale retailing • discuss the effects of large-scale retailers on wholesalers, other retailers and consumers • explain why the small-scale retailer often survives, including: personal service, opening hours, additional services provided • discuss the importance, advantages and disadvantages of selling techniques, including: branding, own brands, logos, packaging, self-service, after-sales service, barcoding, Electronic Point of Sale (EPoS), direct mail, factory outlets, shopping centres and internet auctions • describe the use of computers to aid retailing • describe characteristics of mail order, telesales, television shopping, online shopping (e-tailing) and discuss the advantages and disadvantages to retailers and consumers of these methods of selling • evaluate the likely implications for retail outlets and consumers of the growth of online shopping and e-commerce • describe trends in retailing, including: omnichannel retailing, self-service check-outs, development of loyalty programmes, virtual retailing, mobile retailing (m-commerce), shopping anywhere/anytime
- 2. Retail means to cut off small portions from large lumps of goods. The retailer buys from a wholesaler and then divides the whole bulk into small parts. (Intermediary distributer) CHANNEL OF DISTRIBUTION This is the way in which goods are delivered from the producer to the customer. Channel of distribution ends when goods are delivered to the point of consumption. Ends when the form of good is changed. DIFFERENT CHANNELS OF DISTRIBUTION Producer to the consumer - Expensive, technical, perishable, exclusively made for one customer. Producer to retailer to consumer - Large scale retailer, producer’s own outlet, suitable for perishable items for example bakery. Producer to wholesaler to retailer to consumer - Standardized, consumer items, low value and high shelf life, suitable when demands of products are seasonal or the production is seasonal. Producer to agent to wholesaler to retailer to consumer - only in case of international trade. Overseas producer appoints a agent in home market. For example, imported cars and cosmetics
- 3. FACTORS AFFECTING CHOICE OF CHANNEL OF DISTRIBUTIONS 1. Producer capabilities Can producer open his own retail outlets? 2. Producer philosophy Exclusive distribution (distribution at certain shops) Extensive distribution (distribution at every shop) 3. Type of customer Own use: from retailer Business use: from producer 4. Size of order Small: from retailer Large: from producer 1. Nature of product Perishable: small channel Long shelf life: long channel 2. Value of product Expensive: small channel Cheap: long channel 3. Size of market Small: small channel Large: long channel 4. Nature of market Home or International
- 4. FUNCTIONS OF A RETAILER Keeping ready stock of the products. Wide range of goods- Provide customers with various varieties of goods manufactured by different firms both local and foreign, thus providing a variety of choice of brands to the customer. Storage- Retailer provides warehousing of goods to hold reserves of stocks and maintain uninterrupted supply to consumers. Retailer- store goods on his premises; Large retailer- buys directly from manufacturer and stores products in warehouses. Personal advice- The retailer keeps his customers well-informed about trends in production and offer expert advice about the merits and uses of various products. Example: Which product is cheaper, durable etc. In large retail shops which practice self-service, trader has no direct contact with customers. After sales service- Retailers especially those selling electrical goods, cars, watches etc. provide after sales and repair services. Credit- Short term credit facilities are offered to regular customers and bills can be paid at the end of every month. Delivery service- (home delivery, orders place mail by or phone); (Branding and Advertising)
- 5. FACTORS TO CONSIDER WHEN SETTING UP A RETAIL BUSINESS Experience and Knowledge of business in mind- Previous experience (can be gained by first working as an employee) is desirable for business success. Location of premises- The business must be set up in an area where there is no competition from other shops selling the same product unless the goods can be offered at lower price. Adequacy of capital- The retailer must have enough capital to buy or rent the premises and when required, capital can be obtained from past saving, relatives or loans. Sources of supply of goods- Sources to purchase the goods are necessary as some wholesalers may offer goods at a better discount and provide credit facilities. Law and Regulations- It is necessary to trade goods authorised by laws and that the retailer has an appropriate licence to sell such goods.
- 6. SMALL SCALE RETAILERS Features - They operate as sole trader or as a partnership. - They require small amount of capital which can be raised from personal savings or can borrow from friends or relatives or can obtain money from banks as loans or overdraft when the retailer has collateral security (E.g. house, land) - They usually buy on a small scale from the wholesalers and not from the manufacturers who sell only in bulk. - The sole trader normally runs his shop with the help of a few assistants which permits personal contact with his customers.
- 7. Why Small Sale Retailers are still surviving In spite of intense competition from large shopping centres, a number of small independent retailers have still managed to survive. Personal advice and service is given to customers. Consumers prefer to buy goods by such a retailer who provides a personal touch in the dealings. Credit facilities are offered to regular customers. They provide home delivery services to customers. Example newspapers and bread. The goods are sold at lower prices as overhead expenses are minimal when compared to large retailers. The small shop is easy to manage and usually family members help in the running of the business. Long hours of business at customer’s convenience. They provide an informal (no formality) and friendly atmosphere which may appeal to many.
- 8. How Retailers can improve their Profits. By improving the quality of products. By offering variety- different qualities and brands should be available to cater for the needs of different customers By offering competitive prices. By properly advertising and giving incentives. By improving shop layout, better display of goods and better hygiene. By changing location. By controlling costs of routine operation.
- 9. Why a small retailer buys from the wholesaler 1 Small capital – He cannot afford to buy in bulk as his capital is limited. 2 Limited market – The market for his goods is only limited to the people living in the vicinity of his shop. 3 Small turnovers- His total sales volume per month is small. If he buys in bulk his capital will be tied up in stocks for a long time. 4 Need for credit – Manufacturers are often unwilling to give credit. However, the wholesaler is often willing to give small retailer credit to secure business. 5 Variety of goods – A manufacturer sells only one or a few related items of goods. The number of brands manufactured by a particular manufacturer is also limited. A wholesaler on the other hand stocks a variety of brands of a particular good. He also sells a wide variety of related goods. 6 Regular visits from the wholesalers- The small retailer gets to know the latest products in the market through sales man from wholesaling companies who visit him periodically
- 10. Disadvantages of small scale retailers 1. The small retailer doesn’t employ any specialist buyer. He himself undertakes the task of buying goods from the wholesaler and selling it to consumers’. He also has to manage the store, keep the accounts, display, store-keeping etc. He is unable to specialise in a particular field since he is not an expert and may have no previous experience in retailing. (Jack of all trade and master of none) 2. Lower trade discount- Since the small retailer gets his goods from the wholesaler, it is natural that he will have to pay a higher price for his goods since he gets a lower trade discount.
- 11. LARGE SCALE RETAILING Features A large-scale retailing business is normally run as a public limited company. The capital needed is very large. The retailers buy in bulk directly from manufacturers. Some retailers have their own factories. Large assets owned make it easier for the company to raise money from the bank or the public in the form of debentures. Debentures- Loan capital raised by companies, the holders being creditors (person to whom is owed) of the companies; they carry a fixed rate of interest.
- 12. Why a large retailer buys directly from the manufacturers? 1 Sufficient Capital- they can buy in bulk since they have large capital. 2 Better trade discounts they get better trade discount since they buy directly from the manufacturer. Hence, they pay lower price for their goods. 3 Cash payment- Since large retailers have sufficient capital, they can afford to pay in cash and get even better terms than those buying on credit. 4 Large retailers can afford to employ expert specialist buyers who have good knowledge of the market locally and overseas. 5 They have their own warehouses and specialist staff can be employed to manage storing, bulk- breaking, branding, stock-keeping etc- to ensure that goods are not over stocked for long period of time thereby tiding up capital or under stock goods. 6 Large turnovers- They can buy in bulk since the volume of turnover is large and goods are sold quickly enough.
- 13. TYPES OF LARGE SCALE RETAILING MULTIPLE SHOPS (CHAIN STORE) Main features -It consists of many similar branch shops spread over the various localities of a city or a number of cities of the country but under the direct control of a central headquarters. -Every branch shop is decorated in the same style with same name, sells the same goods at standard prices which are fixed by the central office. -They normally sell goods for everyday use like clothing, food, shoes & pharmaceuticals. -The term of sale is normally cash. -It provides for customer convenience in the examination and selection of goods on open display. There are shop assistants nearby to help. All branches have almost similar windows display and shop layout. -Most shops operate on the principle of self service to keep operating cost low and sometimes provide credit facilities, (Example furniture/electrical appliance sales) Example Fast food chains Mc Donald & Pizza Huts
- 14. Organisation 1) Most multiple shops operate as public limited companies with control in the hands of a board of directors. The basic feature of organisation is centralisation of buying and administration and decentralisation of selling through branches. 2) The central headquarters is divided into different sections each of which is assigned a job of buying, warehousing, transport, advertising, sales promotion, finance and general administration under the control of manager and directors. 3) Purchases reach branches direct from manufacturers wherever possible, but reserve stocks are held in warehouses often located in areas they are intended to serve. This ensures speedy delivery; transports cost low and prevent both shortage and surplus. Some multiple shops manufacture their own goods. 4) Every branch shop has its own branch manager who actually has very little say in the running of the business. Detail regarding sales and stocks have to be sent periodically to headquarters. This helps the chain to identify fast and slow-moving lines and enables it to instruct suppliers to expand, contract or stop production of particular lines if necessary. 5) Central headquarters sends out inspectors to make regular checks on all branches.
- 15. DEPARTMENT STORES Main features -It is a large-scale retail institution comprising of a number of departments each dealing in separate line of products, Example clothing, hardware, jewelry. -Such department stores have developed due to the growth of large cities and improvement in transport has enabled people from all corners of the city to visit the central city area. Example Harrods & Selfridges (London); Myer (Australia). - They occupy very large premises and have a distinctive atmosphere with small touches of luxury through out the store. -Goods are well displayed with prices clearly marked so that customers can move around and compare prices. - Most dept stores provide mail order facility for customers who cannot visit the stores. ORGANISATION & CONTROL -Most dept stores operate as limited companies with control in the hands of a board of directors. Actual management is delegated to a managing director, assisted in most big stores by a general manager. -The section manager is responsible for a division of the business, comprising several departments. Each department is under the charge of its manager.
- 16. VARIETY CHAIN STORES Main features It combines both the features of the multiple shops and the department store. It offers a wide range of retail goods ranging from stationery, groceries, toys, clothing etc. It is based on the principle of centralization of buying and administration and decentralisation of selling. They have many branches all around the country and these branches have the same name and sell the same products. The shop fronts are kept uniform in all towns. Goods are sold against cash payments but some chain shops provide credit card facility and some offer extended credit and hire purchase facilities. E.g. Mark & Spencer (England); oriental Emporiums in Singapore. Organisation It is similar to multiple chain stores & dept stores.
- 17. HYPERMARKET AND SUPERSTORE. Main features These are very large supermarkets. At least 2 times larger than a supermarket. Superstores which have at least 2500m2 of selling space. Hyper stores which have at least 5000 m2 of selling space. They offer a wider range of products at a relatively low price. They are usually situated at the outskirts of large cities. Thus, they avoid the high rents and charges of city centres. The hypermarket has the advantage of lower costs since it buys in bulk direct from the manufacturers and makes use of self-service for customers. There is provision for extensive parking space and congestion free shopping
- 18. SUPERMARKET Main features A large scale self service organization selling a wide range of foodstuffs, daily household items, households durables, etc.. They must have a minimum sales area of over 200 m2 and at least 3 check points. Goods are attractively displayed and within the easy reach of customers. The aim of the supermarket is quick turnover of goods. Goods that are bought regularly are put in less prominent positions. Another technique is advertising ‘loss leaders’ (goods sold at a little or no profit but which attract shoppers to the shop). Only goods that can be easily sold are stocked. Many amenities are offered to shoppers, e.g. air conditioning, car park, toilet….
- 19. POSITIVE EFFECTS OF LARGE SCALE RETAILING. ON RETAILER Bulk purchase – Buying in bulk directly from the manufacturer give the large-scale retailer better trade and cash discounts and hence a lower cost price. Employment of specialist buyers and other specialist staff - Better quality goods will be purchased at competitive prices due to sound knowledge of market conditions. Savings on transport – Since he buys in bulk, large retailers can have his own fleet of transport which is more economical than hiring them. Smaller shop staff – A minimum sales staff to keep an eye on goods and to assist customers since self service method is offered. Staff required will pack goods, fill shelves and operate the ‘checkout’ points. Quick turnover – Sales volume is so large that large scale retailers can afford to make a small profit on each sale, thereby attracting customers with lower prices. Use of information technology – Large retailers can make use of IT such as bar coding and electronic point of sales thereby increasing efficiency of business and reduce labour cost. ON CONSUMER Competitive prices – Sometimes, prices are lower since a large retailer makes use of ‘loss leaders’ to attract customers. One-stop shopping – There is a wide variety of goods offered under one roof which is very convenient to customers. Convenience – Goods are easy to collect, well displayed and prices clearly marked and customers can go around on his own with the trolley provided to him. Customers can shop in comfort (car park, air conditioning, escalators, restaurants,)
- 20. NEGATIVE EFFECTS OF LARGE SCALE RETAILING: ON RETAILER Large capital – Large amount of capital is needed as it buys in bulk directly from the manufacturers. Pilfering – To combat this, large retailers have to install cameras and other security equipment and employ extra staff which requires large investment. Greater risk of loss – Since the overheads is high (e.g. rent, electricity, advertising, wages…) and if turnover does not come up to expectations, profits will even fall faster. Moreover, should the demand for the goods fall due to changes in taste, there is risk of loss since large retailers’ stock large amount of goods in their warehouse. ON CONSUMER Loss of personal touch - Since self-service is the norm for large retailers, customers do not normally deal with the owner or manager. No credit – Customers are not offered credit facilities, however, customers may choose to pay through credit cards. Only standard goods are stocked – Large retailers are normally interested to sell standardized goods that can be sold very quickly to a large number of people.
- 21. NEW TRENDS IN RETAILING Branding and packaging Branding means giving a name to the product by which it should become known to the consumer. Thus, goods are sold under a brand name or trade mark of the manufacturer, retailer or wholesaler. Its aim is to differentiate the goods of one manufacturer from others, even they are basically the same. Product differentiation aims at earning the goodwill of customers and will be loyal to only one brand name. Branded goods are of uniform size, weight and quality and sometimes price and are widely advertised to create a mark preference for the products. Packaging not only serves as protection for the product but also to identify branded products and to give them an attractive appearance that would appeal to potential customers. Product presentation and packaging design have become very important features especially with self-service retailing rise. Customers are very often guided by the external quality of the packaging (size, weight, appearance, design, and texture).
- 22. Advantages of Branding and packaging TO THE MANUFACTURER Through successful advertising campaigns the manufacturer creates brand loyalty amongst consumers for his brand. This assures the manufacturer of a regular market since he acquires monopoly in the market. Brand name and label cannot be used by other manufacturer once it has been registered under the trade marks act. When a particular brand name is used by a consumer with satisfaction, it will result in increased turnover. The manufacturer can thus enjoy certain reduction in the average costs of production (or economies of large scale production). This is cost of wages, advertising, rent etc… do not rise proportionately with the rise in the level of output.
- 23. POSITIVE EFFECTS OF PACKAGING AND BRANDING ON THE RETAILER Branded goods are uniformly packed so they can be ordered without any prior inspection Branded goods are easy to handle. The retailers don’t have to weight or wrap them. The retailer doesn’t need any special knowledge of the goods he is selling, since instructions are printed on the labels or in leaflets or given in advertisements. The retailer need not advertise branded goods since advertising is carried out by the manufacturers. The retailer can convert his shop into self-service, since customers can serve themselves by choosing the brand they want. The retailer need not resort to price cutting as the price of a particular brand is normally fixed. ON THE CONSUMER Consumer is well informed about the product through advertisements, friends or from his own experience besides labels on package which may provide valuable information on hoe to use the product. The branded good is of uniform quality (size, weight & quality), time is not waste in inspecting the product before buying it . The consumer may be able to enjoy a wider choice since they can choose from many brands of the same good, e.g. Sony. The consumer can pay lower price for the good which can be mass produced.
- 24. NEGATIVE EFFECTS OF PACKAGING AND BRANDING ON THE MANUFACTURER It is difficult for a new manufacturer to acquire a share of the market as consumers tend to buy familiar brand. Much must be spent on advertising campaign to introduce a new product. Some new manufacturer with small capital may resort to produce imitation goods especially of popular branded goods. ON THE RETAILER The retailer has to stock many different brands of the same product to meet consumer demand. More capital is tied up in stocks and also a bigger storage space is needed. A retailer normally stocks many lines of goods of the same brand. Adverse publicity of a particular brand may result in difficulty to sell these off and he might have to incur loses. ON THE CONSUMER Consumers may have to pay higher prices for branding and packaging of goods. Branding leads to the influx of imitation goods into the market. Consumers may have to pay high price for something whose quality may not be guaranteed. Competitive advertising and misleading claims may create confusion in consumers’ mind.
- 25. AFTER SALES SERVICE It refers to the repair of faults which occurs to the product that is sold within a period of time. Maintenance service at regular intervals could also be undertaken after the sales of the product. Sometimes this undertaking is known as warranty. It is provided for permanent or durable goods like machinery, motor cars, t.v sets... (Highly complex and technical goods.) The after sales service or maintenance services require the services of trained agents. Reasons for development of this trend It is an important way of creating customer goodwill. Permanent and durable goods require regular after sales services because after sales services provides help to customers in handling and maintenance of these goods. Various mechanical faults can be repaired regularly. Faulty parts may be detected and replaced through maintenance services.
- 26. ADVANTAGES OF AFTER SALES SERVICE To the manufacturer & retailer After sales service improves goodwill and creates a good image of the product thus increasing its competitiveness with rival manufacturers. Sales can be increased in the future. To the consumer He is assured of an efficiently working product during the warranty period. At times, when the fault is irreparable the goods may be replaced by the manufacturer at no extra cost. Agent provides expert technical advice about the maintenance and use of the articles. The technical staff providing the after sales service is properly trained.
- 27. DISADVANTAGES OF AFTER SALES SERVICE To the manufacturer & retailer High overheads are needed to maintain a technically-trained staff. Sometimes there is a need to maintain workshops fitted with proper equipments at every shop of the country Sometimes goods must be replaced if the fault cannot be detected or goods are irreparable. Replacements have to be written off as losses. To the consumer Cost of the after sales is included in the cost of the product so the customers pay for the services even when he does not make use of such services. After sales is only available during the warranty period. If fault is detected after this period, the consumer has to pay the repair bill.
- 28. BAR CODING A bar code consists of parallel black stripes of differing thicknesses. The arrangement of the stripes can be read by using special scanners. The information is then sent to a computer to be processed. Information such as type of goods, weight, country of origin, etc… can be easily accessed. UPC bar code system is widely used in the supermarket industry. POSITIVE EFFECTS On the retailer It saves time and hence labour cost, since vital information can be read accurately and quickly by special scanners that are linked to computers at the check out points. This avoids the possibility of human error. The retailer can thus manage his business efficiently from data collected. It helps in controlling and supervising the movement of inventory in the premises. The retailer can know his daily sales and whether to pass orders if necessary. The retailer can know his daily sales and whether to pass orders if necessary. The retailer saves because he need not hold excess stock. On the customer The queue at checkout points is decreased and consumers get a better-quality service.
- 29. BAR CODING NEGATIVE EFFECTS On the retailer High investment cost in terms of buying equipment and training of staff is needed. The whole retail outlet has to be fully computerized. On the customer He does not remember the cost of each item he intends to buy since the bar code can only be read by special scanners. He is not able to do a quick calculation of the prices before he pays at the cash counter.
- 30. ELECTRONIC SHOPPING Customers can order goods direct to the online retailer in any part of the world via the internet. Online retailers can develop their own websites to advertise their products to potential customers. Payment can be made by cash or credit cards. Goods will be sent by post or courier direct to the customer’s doorstep after payment confirmation. POSITIVE EFFECTS OF E-SHOPPING On retailer Customers can shop worldwide and the service is available on a 24/7 basis. Not expensive to set up. A personal computer with communication facility, an internet account and a web browser is needed. Fewer errors will be made as all information is processed electronically. It allows quick exchange of information and feedback from customers. It is very suitable to market products like banking, greeting cards, books, etc. On customer Consumers do not have to face traffic jams, parking problems etc.. It is convenient, cost saving and time saving. Goods can be bought from any part of the world. He is able to shop at anytime at his own convenience.
- 31. NEGATIVE EFFECTS OF ESHOPPING On Retailer There is only a small clientele as not every household has a P.C. It takes time for a potential online retailer to implement an internet strategy properly. Specialised staffs who are experts in marketing and computer technology need not be employed. On customer Customer cannot verify the authenticity and integrity of the online retailer. There is lack of privacy and security as there is the possibility of ‘intercepting’ a customer’s credit card number. There is likely to be no after sales service.
- 32. MAIL ORDER BUSINESS It is undertaken by manufacturers, large department stores or wholesalers. The post office is the channel through which the mail order business is conducted in the absence of direct contact between buyers and sellers. Goods sold under mail order business is limited and should meet the following conditions: Goods that is easy to use by the general people. Goods that is easy and simple to describe so that they can be easily advertised. Goods must allow a large margin of gross profit. Goods must be available at attractive prices. Goods can be dispatched without a great risk of deterioration or spoilage.
- 33. REASONS FOR DEVELOPMENT OF THIS TREND Consumers can obtain goods at home without bearing the inconvenience of city crowds and traffic jams. Mail order business is promoted to a large extent by beautifully printed catalogues which are persuasive for the sales o goods. The company may offer special discounts on certain products. The post office provides important and reliable facilities like mail order delivery, parcel service, remission of money via money order or postal order, cash on delivery …… Ease of obtaining credit facilities. Goods not wanted can be returned back to the mail order house. ADVANTAGES Time and expense of shopping is saved as customer need not travel and bear inconvenience of traffic jam. Consumers can examine products carefully at home and he can make arrangement till the goods is delivered. Goods can be returned back if consumer is not satisfied. DISADVANTAGES Expenditure on advertising may be high and catalogue may provide information which is misleading and creates a wrong impression about the product, cost of mailing and warehousing any be high. There is no direct contact between buyers and sellers. The orders may take a long time to be executed.
- 34. VENDING MACHINE Such machines can be installed in a number of localities such as factories, schools, offices, bus stations…. A number of products from drinks, sweets, cigarettes etc. can be sold. It caters the individual needs all round the clock. The correct amount of money designated on the machine has to be fed into the machine’s slot. Such machines can be bought or hired by the operator.
- 35. VENDING MACHINE ADVANTAGES DISADVANTAGES To the operator It can be installed in convenient places and do not require a shop. It saves the cost of labour except for repair and maintenance and refilling of the machine. To customer They provide day and night service to the customer of a wide variety of products. To the retailer 1) Cost of such machines is very high. 2) There is risk of vandalism. 3) Money can be pilfered as the machine can be easily broken. To customer Mechanical failures can cause inconveniences especially if operators cannot be immediately informed.
- 36. FRANCHISING Franchise means a formal permission to sell a company’s product or service in a particular area especially (fast foods). It is a contractual arrangement whereby the franchisers (suppliers) provide the equipment, products or services for sale and managerial services. E.g. Mc Donald, Kentucky etc. On the purchase of a franchise, the franchising company offers the franchiser a chance to go into business with a relatively small investment with the right to use the trade name. Training and advice is also given and get the benefits of advertising campaigns. The franchiser still controls the pricing, advertising and selling of the products and he receives a regular amount usually a percent of sales from the franchiser.
- 37. SELF SERVICE Products are displayed on open shelves. Customers have to select them put them into trolley, take it to cash counter, make payment and arrange for their transportation. Generally used in large scale retailing especially supermarkets. To Retailers 1. Lesser requirement of shop staff. 2. More sales in given time. 3. More sales due to impulse buying. More turnover. 4. Attraction to the customers. To Customers 1. Shopping can be done in free environment. 2. Freedom of choice. 3. Quicker shopping. 4. Low price. To Retailers 1. More capital required (for space, shelves and variety). 2. Shop lifting. 3. Security expenses increases. To Customers 1. Impersonalized way of sales. 2. Impulse buying. 3. No delivery is provided.
- 38. E-COMMERCE Also known as Electronic Commerce, Internet Commerce and Web commerce. It is a branch of commerce in which commercial activities are carried out electronically. ADVANTAGES To Retailers 1. Wide market. 2. Low competition. 3. No requirement of retail outlet. 4. More chances of involving potential customers into sales. 5. Products can be displayed and specified on web. 6. Low labor cost. 7. Computer can help keeping a variety of information regarding customers and employees. To Customers 1. More variety. 2. Benefit of arm chair shopping DISADVANTAGES To Retailers 1. Capital cost increases. 2. Expenses of developing and operating websites. 3. Danger of hacking. 4. Dependence on skilled labor. 5. Market is limited. (only computer literate people) To Customers 1. Fraud. 2. Customers can check product only after it is delivered to them. 3. Impersonalized way of buying.
- 39. ELECTRONIC POINT OF SALE (EPOS) & ELECTRONIC FUNDS TRANSFER SYSTEM (EFTS) EPOS or EFTS refers to the computer-based systems used to perform financial transactions electronically. ADVANTAGES To Retailers 1. Accuracy in billing. 2. Minimum cash handling in case of EFTS. 3. Increased sales in case of EFTS. 4. Security of cash. To Customers 1. Purchasing power increases. 2. Minimum cash handling. 3. Get itemized bill. DISADVANTAGES To Retailers 1. More capital. 2. Skilled labor required. 3. In case of EFTS, retailer has to pay bank charges. To Customers 1. Irrational buying.
- 40. INTERNET AUCTIONS Virtual auctions using the Internet, e.g. E-Bay, UBid, Etsy etc… A vendor sells a product or service to the person bidding the highest price. Goods and services are available 24/7 and worldwide. Both new and second-hand goods can be sold. Payment can be made either via credit card or PayPal. TELESHOPING Place orders through telephone or cell phone and home delivery. Many fast food outlets like pizza accept orders by phone and organise delivery through a fleet of motor bikes or scooters. TELEVISION SHOPPING Some TV channels like QVC and HSN sell products using live demonstration, often hosted by experts or guests. The demos and expert explanation persuade people to buy by calling the telephone number given in the programme.