(a) State six distinguishing features of a mail-order business
(b) Give four disadvantages of a mail-order business
Explanation
(a) The distinguishing features of a mail-order firm are:
(i) It is shopping by post.
(ii) It requires considerable or intensive advertising. The use of expensive advertisements is because buyer and seller need not see the goods physically nor inspect them.
(iii) It is particularly peculiar with cash on delivery (C.O.D.) transaction and cash with order (CWO) terms of payment.
(iv) It is capable of dealing in consumer durable goods only.
(v) It is one of the means of bypassing the wholesaler and retailer by the manufacturer.
(vi) Packages are usually to customer’s tastes.
(vii) It makes use of catalogues.
(viii)Goods are delivered at the buyer’s destination.
(ix) It maintains a large warehouse.
(b) The disadvantages of a mail-order are:
(i) The cost of advertising is very high.
(ii) The cost of postage is very high for the retailers and the buyer.
ii) There is the absence of personal contact between buyer and seller.
(iv) The pictures and descriptions in the catalogue may be misleading.
(v) Time is wasted while waiting for the goods to arrive.
(vi) Not all goods can be sold using this method of selling.
(vii) There is the absence of physical inspection of the goods before a purchase is made.
(viii) It involves a large amount of capital.
(ix) Goods can be lost or damaged in transit.