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O-level commerce Notes(page3/5)

O level commerce notes

Retail cooperative society

  • A large scale retail outlet found in the private sector.
  • Formed by customers to enable bulk buying from manufacturing companies at low prices.
  • May buy from cooperative wholesale societies.
  • Sells to both members and non members.
  • Membership is open to customers by paying subscription of buying shares in the cooperative.
  • Members are paid dividends after a year or get a rebate which is an amount of surplus shared in proportion to the amount they would have sent in purchasing goods in the cooperative society.
  • Sells a variety of goods at low prices .
  • May offer special benefits to members.
  • Members may be trained in business management.
  • Members exchange info and ideas.

Mail order firms

  • A large scale retail outlet found in private sector located on the industrial are or outskirts of town.
  • Operates from a warehouse.
  • Does not need expensive displays.
  • Has low rental expenses.
  • Advertises through magazines.
  • Employs part time agents.
  • Sell wider range of goods.
  • Goods maybe returned if customer is not satisfied.
  • Normally deliver goods .
  • Incurs high cost of postage,packing and advertising.

Mail order firms

  • A large retail outlet found in the private sector.
  • Located in busy shopping areas and out of city centers.
  • Operates from cheap premises.
  • Sells household goods.
  • Buys goods in bulk at low prices.
  • Sell at low prices.
  • Sell goods on cash and carry basis.

Voluntary chain stores

  • Independent retailers may join together to form a voluntary group.
  • Buys in bulk from manufactures.
  • Buys at low prices and sells at low prices.
  • Distribute goods among the group members.
  • Advertises on behalf of all members.

Tied Shops

  • They sell products or offer services of only one manufacture.
  • Usually use the name of the manufacture.
  • Have same decorations.

Advantages of large scale retailing

  • The retailers have enough capital which enables they to: Buy goods in bulk at low prices
  • Advertise goods.
  • Build own warehouses.
  • Employ specialists.
  • ENjoys economies of sale.
  • Can prepack goods.

Disadvantages of large scale retailing

  • Difficult to manage.
  • Loss of personal touch with customers.
  • Requires large capital to establish.
  • Take long to respond to market changes.
  • Fail to make quick decisions.
  • Have large overhead expenses and running costs.

Trade Discount

  • A deduction from gross invoice price or catalog prices.
  • Given by one trader to another .
  • Usually the rate is high.
  • Not recorded in the books of accounts.
  • Encourages customers to buy.

Cash Discount

  • An allowance from the net invoice given to any customer who pays promptly.
  • Deducted at the point of payment.
  • Rate is usually low than that of trade discount.
  • Encourage early payment of the amount due.
  • May increase the rate of stock turn.
  • Recorded in the books of accounts.

Ways of improving sales in retailing

  • Review prices and make them competitive.
  • Improve quality of services by employing qualified staff.
  • Sale quality products.
  • Offer free samples to customers.
  • Give gifts to customers.
  • Open for long hours.
  • Advertise continuously.
  • Provide personal service ie delivery.

Morden trends in retailing

    These are developments which are taking place in retailing due to changes in technology or other factors.
    • It is a system of buying and selling goods and services electronically. The system operates through a computer connected to the Internet or on televisions which have satellite connections.
    • The product sold should be coded,fully described,in picture form and individually priced.
    • When making payment, the customer provides the following details electronically:customer name,Address and account number.
    • Choice of delivery.
    • Terms of payment.
    • Total price of purchasing is displayed on the screen of the customer.
    • The system reduces cash payment.
    • The electronic shop is opened for 24 hours.

Disadvantages of E-commerce

  • Leads to impulse buying and overspending.
  • At times the pictures does not show the truth quality of items.
  • Lakes personal touch.
  • Can be open to hackers and fraudsters.

Vending machines

  • These are machines that are installed in busy areas.The machine maybe hired or leased.
  • They operate for 24 hours and use the self service method of selling.
  • save labor and time.
  • Use of a machine increase sells and profit.

DIY Products

  • These are products which are semi assembled or in kits and are sold with accompanying instructions.
  • The products are mainly sold in supermarkets.
  • Customers gain satisfaction by doing the work themselves.

Shopping Malls

  • Areas exclusively devoted to shops.
  • They consist of a whole range of shops.


    An agreement in which a trader gives the right to another trader to use the name of the business and to sell the franchisers products in a given geographical area.Through franchising, the franchise would:
  • Enjoy freedom of profit of the business.
  • Have high chances of success as the business will be well known.
  • Enjoy legal protection from the franchiser.
  • Save foreign currency needed to import goods and services as this is often done by the franchiser.
  • Be assisted.
  • Advertising products and services.

Channels of distribution

  • PRODUCER → MARKETING BOARD → WHOLESALERS → CONSUMERS(or retailers then consumers)

Hire Purchase

    It is used when consumer’s durable are sold on credit…furnitures,motor vehicle and tv sets.
    • A written agreement is a requirement.
    • A deposit is paid followed by installments.
    • A cooling off period is required if the agreement is signed outside trader’s premises.
    • Buyer can cancel the agreement and return the goods when at least half of the purchase price has been paid.
    • A court oder is required to repossess goods if the buyer had paid at least one-third of the purchase price.
    • There is no need for the buyer to save money for buying the goods.
    • Buyer can use the goods whilst paying for them.
    • Can buy expensive goods eg cars, houses.
    • Payments are spread over a long time.
    • Enjoys an improved standard of living.

By: T.Titus Nyakudyara
Twitter: @NyakudyaraTitus

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