Hello welcome to this blog on Mail Order in business: We will look at the Features of mail order, the meaning, advantages and disadvantages of mail order in commerce.
Table Of Contents
- Mail Order
- Features of mail order.
- Advantages of mail order
- Disadvantages of mail order
Meaning of Mail Order
Meaning: Mail order is a form of large retailing in which buying and selling is carried out by post. They contact prospective customers by Mail, receive their order by Mail and make their deliveries by mail. It involves the use of specially prepared catalogues that present the retailer’s product both visually and writing.
Payment is either cash with order, cash on delivery or by installments. This form of trading is very common in the developed countries of the world which have well developed postal service system.
Features of Mail Order
The distinguishing features of Mail Order firms are:
- Shopping by post: Shopping is usually Carry out by post.
- Intensive advertising: It requires considerable or intensive advertising. The use of expensive advertisements is because buyers and sellers need not to see the goods physically nor inspect them.
- Peculiar transaction: It is particularly peculiar with cash on delivery (C.O.D) transaction and cash with order (C.W.O) terms of payment.
- Deals on durable goods: It is more suitable in dealing on consumer durable goods only.
- Elimination of middlemen: It is one of the means of by-passing the wholesaler and retailer by the manufacturer.
- Attractive packaging: Packages are usually to customer taste.
- Use of catalogues: It makes use of catalogues.
- Home delivery: Goods are delivered at the buyer’s destination.
- Warehousing services: It maintains large Warehouse.
Advantages of Mail Order
- Advert opportunity: There is opportunity for advertising through catalogues.
- Provide credit facilities: They usually provide credit facilities to customers.
- Reduction in back debt: To the trader, the risk of bad debt is reduced as goods are sold on cash on delivery.
- Availability of postal services: Goods can be sold in both rural and urban areas where there are post offices.
- Provide convenience for customer: Mail business provide convenience for customers who cannot visit the office during opening hours because of the nature of their jobs or the distance involved.
- Direct link with producer: Customers have the opportunity to buy in large quantity directly from the producer which help to reduce price.
- High profit: The operating profit margin is very high.
- Inventory level is minimal: The inventory level is minimal.
- No cost of exhibition: Fixtures and display are not needed.
Disadvantages of Mail Order
- High cost of advertising: The cost of advertising is very high.
- High cost of postage: The cost of postage is very high for the retailers and the buyers.
- Absence of personal contracts: There is the absence of personal contact between buyer and seller.
- Catalogue may be misleading: The pictures and descriptions in the catalogue may be misleading.
- Time wasted: Time is wasted while waiting for the goods to arrive.
- Method must suitable for all goods: Not all goods can be sold using this method of selling.
- Absence of physical inspection: There is the absence of physical inspection of the Goods before purchase is made.
- Huge Capital: It involves Large amount of capital.
- High risk of losses: Goods can be lost or damaged in Transit.
Revision Questions
- State six distinguishing features of a mail order business.
- Give four disadvantages of a mail order business.
- Give four advantages of Mail Order business