O-level commerce Notes(page3/5)

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.
1. E-COMMERCE(ELECTRONIC COMMERCE)
   • 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.

Franchising

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 → WHOLESALERS → RETAILERS → CONSUMERS
• PRODUCER → WHOLESALERS → CONSUMER
• PRODUCER → LARGE SCALE RETAILERS → CONSUMERS
• PRODUCER → MAIL ORDER FIRMS → CONSUMERS
• PRODUCER → MANUFACTURE’S OWN RETAILER → CONSUMERS
• 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.
• CHARACTERISTICS
  • 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.
• ADVANTAGES TO BUYER
  • 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.

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By: T.Titus Nyakudyara
Twitter: @NyakudyaraTitus
 

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