The document discusses various channels of distribution for retail businesses, including department stores, chain stores, mail order businesses, consumer cooperative stores, and hire-purchase trading houses. It provides details on the characteristics, advantages, and disadvantages of each type of distribution channel. The purpose is to educate readers on the different options for retailers to sell their products directly to consumers.

1. CHANNELS OF DISTRIBUTION-2
*
RETAIL DEPARTMENT STORE, CHAIN STORE, MAIL
ORDER BUSINESS, CONSUMER COOPERATIVE
STORE, HIRE PURCHASE HOUSE
Presented By:
Mr. S.M. Ambore
Asst. Professor,
DK Patil Institute of Pharmacy, Loha. Nanded

2. LEARNING OUTCOMES….
RETAIL DEPARTMENT
STORE
MULTIPLE SHOPS OR
CHAIN STORES
MAIL ORDER BUSINESS
CONSUMERS
COOPRERATIVE STORES
HIRE-PURCHASE TRADING
HOUSE
2

3. DKPatilInstituteofPharmacy
3
RETAIL DEPARTMENT STRORE
1. It is large scale retail organization comprising
number of departments.
2. It deals with wide range of products.
3. The main object is to satisfy consumer needs
at one place to save botheration to
consumers.

4. DKPatilInstituteofPharmacy
4
ADVANTAGES
1.It provides great convenience in shopping.
2.It keeps large variety of goods.
3.They are located in mainly in central part of city.
4.It buys its requirement in large quantities which
reduces its cost and increases profit.
5.Due to huge sale selling cost per unit becomes
very low.
6.Provides telephone, recreation and free home
delivery facilities.
7.It can afford to employ competent sales persons
to attend its consumers.

5. DKPatilInstituteofPharmacy
5
DISADVANTAGES
1.Initial cost is relatively very high.
2.It located in central place so people living in
distant place find it difficult to visit.
3.Prices of articles are comparatively very higher
than those charge by small retailers.
4.There may not be personal contact or
coordination between various departments in a
departmental stores.
5.Sales are controlled by employees so owner
cannot establish personal contact with
customers.

6. DKPatilInstituteofPharmacy
6
MULTIPLE SHOPS OR CHAIN STORES
1. They are the groups of shops in same
branch of retail trade.
2. All the branches are centrally controlled and
have informality of operation.
3. Examples, VAIDHANTH, DABUR,
HAMDARD, etc.

7. DKPatilInstituteofPharmacy
7
ADVANTAGES
1.It results in bulk buying which reduces cost of
product.
2.There is considerable increase in sale because
majority of branches.
3.Fixed price and standard quality of goods helps
in winning confidence of customers.
4.There is a informality of window display and
shop decoration.
5.There is direct contact between producer and
consumers, so middlemen profit is unlimited.

8. DKPatilInstituteofPharmacy
8
DISADVANTAGES
1.Multiple shops deal in limited range of
product , so consumers do not have any
choice,
2.Generally there is no effective control on
staff working in its branches.
3.The staff at multiple shops has little freedom
to make its own decision.
4.There is no provision for any facilities.
5.Here successes of organization depend
upon branch managers.

9. 9
DEPARTMENTAL STORE CHAIN
STORE
They offers wide variety of
products.
They generally sell particular
type of product.
Do not have uniform pricing
system.
Prices are uniform in all
branches.
Located in the centre of city. Multiple shops establish in
various localities.
Mainly cater to needs of rich
people.
Mainly cater for general people.
There is no uniformity in
decoration.
There is uniformity of decoration
and window display.
They sell goods both on cash
and credit.
They sell goods only on cash.
They provides number of
services and amenities.
There is no provision for service
or amenities.

10. DKPatilInstituteofPharmacy
10
MAIL ORDER BUSINESS
1. A type of retail trade in which all business activities takes
place trough mail (post), called as “mail order business”.
2. Generally, the goods are send trough V.P.P. (value payable
post).
3. Types of mail order business as follows;
i.Manufacturer mail order house.
ii.Departmental mail order business.
iii.Middlemen mail order business.

11. DKPatilInstituteofPharmacy
11
MAIL ORDER
BUSINESS
Manufacturer
mail order
house.
Departmental
mail order
business.
Middlemen mail
order business.
Concerned only
with sale of
goods by mail.
Executing
orders received
from outside
Established
for selling the
goods.

12. DKPatilInstituteofPharmacy
12
ADVANTAGES
1.It does not need shop or showroom.
2.Running expense is low because it does not
required large number of employees.
3.Very useful for those who live in remote areas of
country.
4.It can be start with small amount of capital.
5.Direct link between manufacturer and customers.
6.There is no danger of bad debts.
7.Sellers gets very wide market to sell products.
8.Lot of advertisement is required as a result it can
be estimate from no. of orders secured, quantity
of goods ordered.

13. DKPatilInstituteofPharmacy
13
DISADVANTAGES
1.Buyer cannot examine goods before purchases.
2.Large amount is spend on advertisement,
packaging which increases price of goods.
3.Credit facilities are not available.
4.There is a risk of damage of goods during
transportation.
5.Illiterate customers cannot get benefits of this
system.
6.There is a chance of cheating by dishonest trader.
7.Lack of personal contact between manufacturer
and customer.

14. DKPatilInstituteofPharmacy
14
CONSUMERS COOPRERATIVE STORES
1. The basic purpose is to eliminate middlemen.
2. Even poor consumers can become members of such
societies.
3. Stores are usually managed by honorary members but
sometimes sales managers may also be appointed.

15. DKPatilInstituteofPharmacy
15
ADVANTAGES
1.Consumers can get better quality goods at
lower prices.
2.It thrifts among members and increases their
economic security.
3.Consumers have complete control over society
running store.
4.Overhead expenses are reduced because
unnecessary expenditure on advertisement and
decoration is not required.

16. DKPatilInstituteofPharmacy
16
DISADVANTAGES
1.Lack of ability, experience and business
training, who running the stores.
2.They have meagre resources, thus these
cannot run on large scale.
3.There is much to be desired as regards
loyalty of the members.

17. DKPatilInstituteofPharmacy
17
HIRE-PURCHASE TRADING HOUSE
1. Here, the buyer gets credit from the seller against
security of lien on goods purchased by him.
2. It has equal number of periodical installment (i.e.
monthly, half-yearly, or yearly).
3. In case of default, seller is free to take back goods from
buyer.
4. These installment always include interest as seller has
to wait for sometimes till full price is received.

18. DKPatilInstituteofPharmacy
18
ADVANTAGES
1.The system provides facility to costly goods,
such as, houses, T.V. refrigerator, etc.
2.Small and large scale manufacturer can install
required machinery and tools without paying
total amount.
3.It helps to increase sale of costly and non-
essential luxury articles.
4.Invest their money else where to earn more
profit.

19. DKPatilInstituteofPharmacy
19
DISADVANTAGES
1.People may be temped by installment
plans to buy things which they cannot
afford.
2.The traders deals to arrange large capital
to finance their business.
3.Goods purchased on these basis are
costlier than its actual price because they
includes interest on installment.

20. 20