Non Store Retail Format


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An assignment on "Non Store Retail Format"
Includes definition, Types, Advantages and disadvantages of each, future expectation of Non Store Retail Format.

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Non Store Retail Format

  1. 1. An <br /> Assignment <br /> On <br /> “NON STORE RETAIL FORMAT”<br /> Retail Management<br /> Submitted to: Submitted by:<br />Mr. S. Banarjee Virender Rana (38)<br /> <br /> <br /> <br /> <br /> Apeejay Institute of Technology, Greater Noida<br />List of contents:<br /><ul><li>Definition of Non Store Retailing
  2. 2. Types of Non Store retailing
  3. 3. In Home Retailing
  4. 4. Telephone Retailing
  5. 5. Catalogue Retailing
  6. 6. Direct Response Retailing
  7. 7. Automatic Vending
  8. 8. Electronics Retailing
  9. 9. Advantages and Disadvantages
  10. 10. E- Tailing in India
  11. 11. Precautions to be taken during Online Shopping
  12. 12. Future Expectations/ Growth of Non-Store Retailing
  13. 13. Conclusion
  14. 14. Bibliography</li></ul>Non-store Retailing:<br />The selling of goods and services without establishing a physical store is known as Non-Store Retailing. It includes such services as vending machines, direct-to-home selling, telemarketing, catalog sales, mail order, and television marketing programs.<br />The fast growing method used by retailers to sell products is through methods that do not have customers physically visiting a retail outlet. In fact, in many cases customers make their purchase from within their own homes.A large majority about 80% of retail transactions are made in stores. However, a growing volume of sales is taking place away from stores. It is estimated that non-store sales account for almost 20% of total retail trade.<br />Types of Non Store Retail Format:<br />Following are the six types of non store retailing: <br /><ul><li>Direct selling,
  15. 15. Tele marketing,
  16. 16. Online retailing,
  17. 17. Automatic vending,
  18. 18. Direct marketing, and
  19. 19. Electronics retailing. </li></ul>In Home Retailing<br />Telephone Retailing<br />Non Store RetailingCatalogue Retailing Non Store Retailing<br />Electronic RetailingAutomatic VendingDirect Response RetailingNon Store Retailing<br />Some global Non store Retail companies are:<br /><ul><li>The Home Depot, Inc.
  20. 20. Dollar Tree, Inc.
  21. 21. Forever 21, Inc.
  22. 22. The Bon-Ton Stores, Inc.
  23. 23. Costco Wholesale Corporation
  24. 24. J. Crew Group, Inc.
  25. 25. Army and Air Force Exchange Service
  26. 26. Bass Pro Shops, Inc.
  27. 27., Inc.
  28. 28. AutoZone, Inc.</li></ul>Advantages of Non Store Retailing:<br /><ul><li>Its freedom from a physical retail presence.
  29. 29. The high fixed costs of operating retail outlets are eliminated.
  30. 30. The breadth of customer coverage is considerably wider than is possible with an individual retail location.
  31. 31. Companies do not have to spend large sums or dilute stock building new locations, or acquiring them.
  32. 32. This truly gives the non-store retailer a global market from a cheap, centralized location. </li></ul>Disadvantages of Non Store Retailing:<br /><ul><li>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.
  33. 33. And since most of us do not have the luxury of a pricey T1 Internet connection, we must still deal with painfully slow connections. </li></ul>Direct Selling:<br />Direct selling is also defined as personal contact between a sales person and a consumer away from a retail store. This type of retailing has also been called in home selling. Annual volume of direct selling in India is growing fast from the beginning of the 21st century.<br />Like other forms of non-store retailing, direct selling is utilized in most countries. It is particularly widespread in Japan, which accounts for about 35% of the worldwide volume of direct selling. The U.S. represents almost 30% of the total and all other countries the rest. <br />The two kinds of direct selling are <br /><ul><li>Door to door
  34. 34. Party plan</li></ul>Direct retailing originated several centuries ago and has mushroomed into a $9 billion industry consisting of about 600 companies selling  HYPERLINK "" o " door-to-door" door-to-door, office-to-office, or at private-home sales meetings. The forerunners in the direct-selling industry include The Fuller Brush Company (brushes, brooms, etc.), Electrolux (vacuum cleaners), and Avon (cosmetics). In addition, Tupperware pioneered the home-sales approach, in which friends and neighbors gather in a home where Tupperware products are demonstrated and sold. Network marketing, a direct-selling approach similar to home sales, is also gaining prevalence in markets worldwide. Network marketing companies such as Amway and Shaklee reward their distributors not only for selling products but also for recruiting others to become distributors. In 2007, Amway’s parent company tested an Internet recruitment model by launching Fanista, a Web site that sells entertainment media such as books, movies, and music, while rewarding users for bringing other customers to the site<br />Reasons for the growth in direct marketing:<br />Advantages of Direct Selling:<br /><ul><li>Consumers have the opportunity to buy at home or at another convenient Non-Store location that provides the opportunity for personal contact with a sales person.
  35. 35. For the seller, direct selling offers the boldest method of trying to persuade ultimate consumers to make a purchase.
  36. 36. The seller takes the product to the shopper’s home or work place and demonstrates them for the consumer.</li></ul>Limitations of Direct Selling: <br /><ul><li>Sales commissions run as high as 40 to 50%of the retail price; of course, they are paid only when a sale is made.
  37. 37. Recruiting sales people most of whom are part timers are difficult tasks.
  38. 38. Some sales representatives use high pressure tactics or are fraudulent.</li></ul>Telemarketing:<br />Sometimes called telephone selling, telemarketing refers to a sales person initiating contact with a shopper and closing a sale over the telephone. Telemarketing many entail cold canvassing from the phone directory. Many products that can be bought without being seen are sold over the telephone. Examples are pest control devices, magazine subscriptions, credit cards and cub memberships.<br />Telemarketing is not a problem free retailing. Often encountering hostile people on the other end of the line and experiencing many more rejections than closed sales, few telephone sales representatives last very long in the job. Further some telemarketers rely on questionable or unethical practices. For instance firms may place calls at almost any hour of the day or night. This tactic is criticized as violating consumers' right to privacy. To prevent this, some states have enacted rules to constrain telemarketers' activities.<br />Despite these problems, telemarketing sales have increased in recent years. Fundamentally, some people appreciate the convenience of making a purchase by phone. Costs have been reduced by computers that automatically dial telephone number, even deliver a taped message and record information the buyer gives to complete the sale. The future of telemarketing is sure to be affected by the degree to which the problems above can be addressed and by the surge of online retailing.<br />Advantages and Disadvantages of Telemarketing:<br />There are many advantages and disadvantages of telemarketing. Telemarketing is a somewhat stressful career choice. It really depends on what type of telemarketing that you do. Collection call telemarketing can be one of the worst telemarketing jobs that you can have. No matter which path of telemarketing you take you will run into a lot of rude people. Everybody knows that people do not like to get interrupted by telemarketers at home. When I see a telemarketer call or when I hear a pause on the line, I hang up the phone. You can do telemarketing from home. Usually companies will pay you at least ten dollars an hour to do this from your home. One company that hires telemarketers is known as BabyToBee. This job is better than your average telemarketing companies because you are calling expectant mother and fathers and offering them baby coupons. Usually these people sign up on the website to receive these things and they are happy to hear from you. It's probably one of the only telemarketing jobs that people will be excited to talk to you.As with any telemarketing company you will run into dead leads such as people sign up and can't remember or they never signed up. With a lot of companies it has been a long time since they signed up for whatever it was they were looking to get. The best way to have a successful call is to establish a rapport with your parent. If they trust you and you are friendly they will be more likely to end the call with you on a good note. With telemarketing you cannot get upset with people who call you names and hang up on you. Telemarketing allows you to stay at home and work which means that you save on gas money and other things. You can wake up and sign on whenever you choose to, as long as you get the hours in that are required. All you need for telemarketing is a computer with an internet connection and some type of headset which has a built in microphone. You can purchase a headset from Best Buy or an electronics store for around $30.00. It's not one of these jobs where you need to purchase $300 worth of things to get started working from home. It allows you to stay at home and have a flexible schedule.<br />Online Retailing:<br />When a firm uses its website to offer products for sale and then individuals or organizations use their computers to make purchases from this company, the parties have engaged in electronic transactions (also called on line selling or internet marketing).<br /> Many electronic transactions involve two businesses which focus on sales by firms to ultimate consumers. Thus online retailing is one which consists of electronic transactions in which the purchaser is an ultimate consumer.<br />Online retailing is being carried out only by a rapidly increasing number of new firms, such as, Pets Mart and CD Some websites feature broad assortments, especially those launched by general merchandise retailers such as Wal-mart and Target. Some Internet only firms, notably are using various methods to broaden their offerings.<br />Whatever their differences, e-retailers are likely to share an attribute. They are unprofitable or best, barely profitable. Of course, there are substantial costs in establishing an online operation. Aggressive efforts to attract shoppers and retain customers through extensive advertising and low prices are also expensive. The substantial losses racked by online enterprises used to be accepted, perhaps even encouraged by investors and analysts. The rationale was that all available funds<br />should be used to gain a foothold in this growing market.<br />Despite these challenges, online retailing is expected to grow, rapidly and significantly for the foreseeable future. Online sales represented about 1% of retail spending in 2005, but one research firm estimates that consumer purchases on the Internet with triple by the year 2010.<br />Which product categories are consumers most likely to buy on the Internet in the future? <br />Consumers' shopping intentions in 2005 placed the following goods and services at the tope of the list: books, music and videos, computer hardware and software, travel and apparel. Of course, given that change on the Internet occurs, these categories soon may be surpassed by others - perhaps groceries, toys, health and beauty aids, auto parts or pet supplies.<br />Advantages of Online Retailing:<br />Bargaining power of consumers. They enjoy a wider choice<br />Supplier power. It is more difficult for consumers to manage a non-digital channel.<br />Internet increases commoditization.<br />Threat of new entrants. Online means it is easier to introduce new services with lower over-heads<br />Threat of substitutes<br />Rivalry among competitors. It is easier to introduce products and services to different markets<br />Automatic Vending:<br />The sale of products through a machine with no personal contact between buyer and seller is called automatic vending. <br />The appeal of automatic vending is convenient purchase. Products sold by automatic vending are usually well-known presold brands with a high rate of turnover. The large majority of automatic vending sales comes from the " 4 C's" : cold drinks, coffee, candy and cigarettes.<br />Automatic vending is a unique area in non-store merchandising because the variety of merchandise offered through automatic vending machines continues to grow. Initially, impulse goods with high convenience value such as cigarettes, soft drinks, candy, newspapers, and hot beverages were offered. However, a wide array of products such as hosiery, cosmetics, food snacks, postage stamps, paperback books, record albums, camera film, and even fishing worms are becoming available through machines.<br />Advantages and disadvantages:<br />Vending machines can expand a firm's market by reaching customers where and when they cannot come to a store. Thus vending equipment is found almost everywhere, particularly in schools, work places and public facilities. Automatic vending has high operating costs because of the need to replenish inventories frequently. The machines also require maintenance and repairs.<br />Future Expectations:<br />The outlook for automatic vending is uncertain. The difficulties mentioned above may hinder future growth. Further, occasional vending-related scams may scare some entrepreneurs away from this business.<br />Vending innovations give reason for some optimism. Debit cards that can be used at vending machines are becoming more common. When this card is inserted into the machine, the purchase amount is deducted from the credit balance. Technological advances also allow operators to monitor vending machines from a distance, thereby reducing the number of out-of-stock or out-of-order machines.<br />Direct Marketing:<br />There are no consumers on the exact nature of direct marketing. In effect, it comprises all types of non-store retailing other than direct selling, telemarketing, automatic vending and online retailing. In the context of retailing, it has been defined as direct marketing as using print or broadcast advertising to contact consumers who in turn, buy products without visiting a retail store.<br />Direct marketers contact consumers through one or more of the following media: radio, TV, newspapers, magazines, catalogs and mailing (direct mail). Consumer orders by telephone or mail. Direct marketers can be classified as either general - merchandise firms, which offer a variety of product lines, or specialty firms which carry - only one or two lines such as books or fresh fruit.<br />Under the broad definition, the many forms of direct marketing include:<br /><ul><li>Direct mail - in which firms mail letters, brochures and even product samples to consumers, and ask them to purchase by mail or telephone.
  39. 39. Catalog retailing - in which companies mail catalogs to consumers or make them available at retail stores.
  40. 40. Televised shopping - in which various categories of products are promoted on dedicated TV channels and through infomercials, which are TV commercials that run for 30 minutes or even longer on an entertainment channel.</li></ul>Advantages of Direct Marketing:<br />Direct marketing provides shopping convenience. In addition, direct marketers enjoy comparatively low operating expenses because they do not have the overhead of physical stores.<br />Disadvantages of Direct Marketing:<br /><ul><li>Consumers must place orders without seeing or touching the actual merchandise. To off-set this, direct marketers must offer liberal return policies.
  41. 41. Furthermore, catalogs and to some extent, direct mail pieces are costly and must be prepared long before they are issued.
  42. 42. Price changes and new products can be announced only through supplementary catalogs or
  43. 43. brochures.
  44. 44. Direct marketing's future is difficult to forecast, given the rise of the Internet.
  45. 45. The issue is whether or not firms relying on direct marketing can achieve and sustain a differential advantage in a growing competition with online enterprises.</li></ul>E-Retailing:Internet Retailing or e-retailing as is usually referred to as covers retailing using a variety of different technologies or media. It may be broadly be a combination of two elements. Combining new technologies with elements of traditional stores and direct mail models using new technologies to replace elements of stores or direct mail retails. Internet retail also has some elements in common with direct mail retailing. For example, e-mail messages can replace mail messages and the telephone, that are used in the direct mail model as means of providing information, communication and transactions while on-line catalogues can replace printed catalogues. <br />As with direct mail businesses, critical success factors include:(i) Use of customer databases<br />(ii) Easy ordering<br />(iii) Quick Delivery<br />Operational elements that the Internet retail model shares with both the retail store and direct mail models include:(i) Billing of customers(ii) Relationships with supplier<br />There are, therefore, many elements that Internet retail and more traditional retail models have in common. Indeed many of the most successful Internet retailers have been those that have been able to successfully transfer critical elements from traditional retailing to the Internet, such as customer service and product displays.<br />E-Retailing in India:<br />Bottlenecks Faced By E-Retailing in India: (1) Problems with the Payment System<br />People in India are not used to the online shopping system and moreover the online payment system through the credit card is also totally alien to them. Most of them do not avail of the transaction facilities offered by the credit cards. They are also dubious regarding the online payment system through the credit cards. Hence different payment options should be made available to them like the credit card, cash on delivery and net banking to give them further assurance. <br />(2) Problems with Shipping: The customers using the online shopping channel should be assured that the products that they have ordered would reach them in due time. For this the retail companies have resorted to private guaranteed courier services as compared to postal services. <br />(3) Offline presence:The customers should be assured that the online retailers are not only available online but offline as well. This gives them the psychological comfort that these companies can be relied upon. (4) Products offered at discounted rates:The online retailers save on the cost of building and employee salaries. Some part of this benefit should also be enjoyed by the online customers by a reduction in the price of the product. The customers should be conveyed this message that they are getting the products at a discounted price. (5) Language Problem:<br />Most internet retail shops use English as their mode of communication. English may not be comprehensible to the majority of the Indian population. To increase the customer base, content in the online retail shops should be provided in local language. <br />Another reason why the concept of e- retailing or online retailing has not gained prominence in India is that the Indians prefer to touch the products physically before buying them. This facility is provided through the multi-brand outlets, not available online. Studies have revealed the preferences of the customers towards the traditional shopping methods. Hence the retailer online should first make it a point to spot the potential customers and accordingly plan out the product. If the customers are more open to online shopping, then nothing can be more beneficial. They save the time and effort to visit, departmental stores, shopping malls, etc. products can be delivered by a click of the mouse.<br />Precautions to be taken during Online Shopping:<br />Shopping online offers lots of benefits that you won't find shopping in a store or by mail. The Internet is always open — seven days a week, 24 hours a day — and bargains can be numerous online. With a click of a mouse, you can buy an airline ticket, book a hotel, send flowers to a friend, or purchase your favorite fashions. But sizing up your finds on the Internet is a little different from checking out items at the mall.<br />If you're buying items from an online retailer or auction website, following are the advice to help you make the most of your shopping experience:<br />(1)Know who you're dealing with:<br /> Anyone can set up shop online under almost any name. Confirm the online seller's physical address and phone number in case you have questions or problems. If you get an email or pop-up message while you're browsing that asks for financial information, don't reply or click on the link in the message. Legitimate companies don't ask for this information via email.<br />(2) Know exactly what you're buying: <br />Read the seller's description of the product closely, especially the fine print. Words like " refurbished," " vintage," or " close-out" may indicate that the product is in less-than-mint condition, while name-brand items with " too good to be true" prices could be counterfeits.<br />(3) Know what it will cost:<br />Check out websites that offer price comparisons and then, compare " apples to apples." Factor shipping and handling — along with your needs and budget — into the total cost of the order”. Do not send cash under any circumstances.<br />(4)Pay by credit or charge card: <br />If you pay by credit or charge card online, your transaction will be protected by the Fair Credit Billing Act. Under this law, you have the right to dispute charges under certain circumstances and temporarily withhold payment while the creditor is investigating them. In the event of unauthorized use of your credit or charge card, you generally would be held liable only for the first $50 in charges. Some companies offer an online shopping guarantee that ensures you will not be held responsible for any unauthorized charges made online, and some cards may provide additional warranty, return, and/or purchase protection benefits.<br />(5) Check out the terms of the deal, like refund policies and delivery dates:<br /> Can you return the item for a full refund if you're not satisfied? If you return it, find out who pays the shipping costs or restocking fees, and when you will receive your order. A Federal Trade Commission (FTC) rule requires sellers to ship items as promised or within 30 days after the order date if no specific date is promised.<br />(6)Keep a paper trail: <br />Print and save records of your online transactions, including the product description and price, the online receipt, and copies of every email you send or receive from the seller. Read your credit card statements as you receive them and be on the lookout for unauthorized charges.<br />(7) Don't email your financial information:<br /> Email is not a secure method of transmitting financial information like your credit card, checking account, or Social Security number. If you initiate a transaction and want to provide your financial information through an organization's website, look for indicators that the site is secure, like a lock icon on the browser's status bar or a URL for a website that begins " https:" (the " s" stands for " secure" ). Unfortunately, no indicator is foolproof; some fraudulent sites have forged security icons.<br />(8) Check the privacy policy:<br /> It should let you know what personal information the website operators are collecting, why, and how they're going to use the information. If you can't find a privacy policy — or if you can't understand it, consider taking your business to another site that's more consumer-friendly.<br />How to Report if You Have Been a Victim of an Online Shopping Fraud:<br />If you have problems during a transaction, try to work them out directly with the seller, buyer or site operator. If that doesn't work, file a complaint with:<br /><ul><li>The attorney general's office in your state.
  46. 46. Your county or state consumer protection agency. Check the blue pages of the phone book under county and state government.
  47. 47. The Better Business Bureau.
  48. 48. The FTC.</li></ul>Future Expectation/Growth of Non-store retailing:<br />Non-store retailing grew at a much faster rate than store-based retailing during the review period. While direct seller Amway embarked on an aggressive brand campaign in 2008, it was Internet retailing which drove growth, riding on increasing Internet penetration, the reduced cost of Internet access, and greater familiarity with on-line purchasing.<br />With some market observers predicting that by the year 2000 non-store retailing will handle 30 percent of all general merchandise sold, non-store channels may become a powerful force in the retailing industry. <br />This graph represents that the importance and the share of the retail online sales is increasing at an increasing rate. It also signifies that with the time constraint coming in the life-style of many buyers the non-store based retailing and e-tailing will be the core of the retailing business around the world in near future. <br />Conclusion:<br />Five major forms of non store retailing such as direct selling, telemarketing, automatic vending, on line retailing and direct marketing are discussed in detail. Each type has advantages as well as drawbacks.<br />The importance and the share of the retail online sales are increasing at an increasing rate. It also signifies that with the time constraint coming in the life-style of many buyers the non-store based retailing and e-tailing will be the core of the retailing business around the world in near future and in India as well.<br />Bibliography:<br />Websites:<br /><br /><br /><br /><br /><br /><br /><br /><br />Book:<br />Retail Management <br /> -By Sapna Pradhan<br />