Complete information on different forms of direct selling with merits and demerits of each

1. Selling through own shops

Most of the manufacturers in textiles, leather wares, moulded luggage, sell directly to the consumers. This system is called as multiple-shop system is based on the idea of central ownership and management for the decentralized selling. The best examples of this in India are Batas, Carona, Flex and Swastika in case of shoes, retail shops opened by textile mills such as Binnys, Mofatlals, Bombay Dyeing, Vimal and so on in case of textiles, and VIP and Safari moulded luggage units in luggage line.

Merits:

(a) Consumer vicinity

The consumers of a particular locality get the products of known companies in their locality. It is because; the manufacturer is coming nearer to the consumer instead, the consumer going near to the producer.

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(b) Cash and carry terms

Chain stores or multiple shops sell on “terms cash” and, hence there are no problems of bad debts and maintenance of track of credit consumers. This is perhaps, the greatest advantage of these chain stores.

In case of chain stores, the showrooms, showcases, window displays, and counter is plays are identical which results in bulk advertising, publicity and promotion. As a result, the costs are reduced and advertising is made more effecting. One can very easily identify a Bata Shoe Shop, a Bombay Dyeing Showroom, or a VIP Luggage selling unit as they have unique planning and presentations, symbolism and display.

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(d) Merits of quick turnover

Both the consumers and the manufacturers stand to benefit by the quick turnover. Quick turnover is the result of concentrated sales efforts as the selling unit speaks of its own products and there are not competitors’ products. Consumers stand to benefit in terms of fresh stock and reasonably low prices.

(e) No dependence

The manufacturers are the kings as they can decide everything that affects their line of activity. He is not at the mercy of the middlemen. The fortunes of manufacture are not decided by the intermediaries.

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Demerits:

(a) No consumer credit

Mostly the chain stores work on the principles of “cash and carry”. This deprives the firm, the class of customers who are willing to buy on credit basis.

(b) Consumer Satisfaction

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Consumer satisfaction is likely to be enhanced when t firm gives the widest choice through varieties colour combinations and assortments. Unfortunately, since competitive products and their varieties are not stored, consumers are handicapped to that extent because they have to get satisfied with, whatever; limited assortments of the firm are available.

Each unit has its own overheads particularly administrative, accounting, collections, packing, publicity and delivery. Of course, there is economy in promotion and publicity as it is common for all the chain shops. However, other overheads are really very high that makes the consumers to pay a pretty higher price.

2. Selling Through Post

Selling through post is known as mail order selling. This is a form of direct selling where the customer’s attention is drawn through advertisements, circular letters, sales letters, literatures sent to them through post. Thus, orders are booked from the interested parties and goods are supplied through post. This is known as V.P.P. – value payable by post. It works in the idea of P.O.D. payment on delivery. A manufacturer doing business renders this form, prepares first the ‘mailing test’ a list consisting of names and addresses of actual and potential customers through various reliable sources such as directories, inquiries, local dealers, member lists of clubs, associations and the like. Then the sales literature and circular letters, catalogues are sent to them from time to time. Along with these, order forms are also sent. The interested or the convinced customers place orders and these orders are processed and executed.

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Merits:

(a) Goods at door-steps

The consumer has the advantage of having the goods at his door steps. He need not waste his valuable time and money on visiting shopping center.

(b) Economy in dealings

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Both the manufacturer and the consumers are benefitted in terms of economy as there are no selling costs, particularly on salesmanship and commission to the dealers. Even the customer saves in terms of transport costs and valuable time as there is door delivery.

Opening a mail order section is not at all a costly proposal. There are no investments in showrooms, show-cases, and display materials and so on.

(d)No danger of bad-debts-Mail order business works on the principle of P.O.D.-payment on delivery. The postman hands over the articles only on payment to the person concerned. Thus, there is no botheration of collection and head-ache of likely bad-debts.

Demerits:

(a) High costs of keeping track

As there is no personnel contract between the parties of exchange the work starts with consumer location identification, publicity and follow-upon. Much of the advertising fails as there is possibility of no reply’s or there many be idle inquiries. These days, the postal charges have go upon beyond ones imagination.

(b) A conditional success

Mail order business presupposes the existence of efficient and economical postal service in the country and that the customers are lit a conditional success- Mail order business presupposes the existence of efficient and economical postal service in the country and that the customers are literate to the extent of receiving, reading and replying the enquiries. Again, all products can not be sold through postal medium. Only those items which are popular, small, light, compact, of high value are most suited.

People hesitate to trust this practice. They look it as a prolific source of cheating. It is because; goods are passed on to the consumer only on payment.

(d) Loss of customers

Basically, there is not personal touch between the selling house and the customer. Hence, the causes of failure in effecting sales can not be found out easily. Replacement on return is really a problem. There is scope for cheating also. Further, as there is not credit facility, good deals of customers are lost.

3. House to house selling

Instead of keeping stock of goods in certain fixed places and inviting the consumers to come to the selling outlet and buy, the goods are sold by house to house canvassing, right at the door steps of the prospects. It is modernized peddling. Here the selling house employs large number of salesmen for a particular sales area. The articles of general utility, such as metal polish, brushes, dusters, articles requiring effecting demonstration such as vacuum cleaners, water purifier, soda-makers and certain services such as life insurance, saving schemes and educational services. Even poultry and diary products have a good potential for such door to door selling.

Merits:

(a) Assured clientele

The house to house canvassing makes it possible to have assured clientele, once the demand for a product or service is created. There is a possibility of loyal customer ship.

(b) Door-step service

Consumers like this method as it is most convenient to buy the goods at door step that too the products of an established house. There is a direct touch between the seller and customer and the complaints and adjustments are managed well.

The selling house gets first hand information from each customer about the products and services as to the consumer feelings and impressions so that necessary changes can be brought by modifying the product taste, colour, size, design and even package.

(d) Credit-facilities

As there exists continuous relationship between the selling house and the customers say, in case, if poultry and diary products or toiletries, the goods are sold on credit depending on the earnings and earning pattern of a customer. Such credit may be for a day, a week or a fort-night or a month.

(e) Least Investment

The selling house need not invest like a chain-store in real estate fixtures and fittings. The investment is in the form of effective sales army. The success depends on the ability of salesman and quality of salesmanship. Even the company need not spend heavily on publicity or promotion. It is the door to door canvassing with demonstration that does the work of publicity and promotion in an effective way.

Demerits:

(a) An expensive method

House to house selling is an expensive distribution method. The sales array is to incur heavy traveling expenses to contact the customers. This also adds to the final price.

(b) Sales-force maintenance

The entire success of house to house selling rests on the quality and number of salesmen. The company has a greater responsibility of recruiting, selecting, training, placing, remunerating, co-coordinating and controlling the sales-force and it activities.

There are many articles which are bought by consumers at convenient locations and outlets. House to house selling may not give wide choice. Where the consumers are interested in price range, variety and the widest assortment, this house to house selling is not encouraged.

(d) Loss of competitive advantage

The customers are moving in the same old groove for longer time. They are not exposed to competition. The customers do not have the chance of taking competitive advantage as they are tied to a typical service pattern of the selling house.

4. Mechanical Vending

Machine or mechanical vending or selling is tried by manufacturers in certain product lines. This is mostly applied to advance notions where labour is relatively costlier factor of production and distribution. Certain items of routine type are being sold through machines. Mostly news papers and magazines, tea, coffee, soft drinks, ice-cream, cups and cones, travelers’ tickets. Even, paid telephone booths and weighment machines, ATM machine are of this kind.

Merits:

(a) No need of a salesman

Once the machine is fed with the requisite quantity of stock for sale, it carries on its own. The working of machine depends on its capacity. It attends to the customer on its own on payment.

(b) Cash terms

Mechanical vending works on the tendering the exact price of the article and hence, only on insertion of the coin or coins of a certain denomination it releases the article. Thus, there are no danger bad-debts.

As a mechanical device, it renders a standardized service to one and all not making any difference. Such an accurate service one would not get from highly trained salesman. The service rendered is one of untiring and continuous.

(d) Source of amusement

Mechanical vending is profitable source of amusement to children. It is really enchanting for the children to insert the coin and get the article.

(e) Economical selling

The selling expenses are the least as the costs are of machine feeding and maintenance. Only thing is that it should run regularly.

Demerits:

(a) No credit

Mechanical vending is designed on the principle of “terms cash”. Consumers, therefore, are deprived of credit sales.

(b) Heavy investment

The manufacturers are forced to invest in these vending machines to be installed in different parts of the city and in different parts of the region or the area of operation. Thus, it is going to be venture of heavy initial investment. Further, there are maintenance expenses.

However a standardized machine may be. There can not be personal touch like a natural salesman.

(d) Feeder services are essential

A mechanical vending machine has a definite capacity. Therefore, it is to be fed with the stock regularly, the money collected is to be cleared. Mechanical defects are to be corrected right in time; else customers will run away from machines .it is usual experience of a person phoning on public paid telephone booths.