Discuss advantages and disadvantages of Mail Oraer House.
Answers
Advantages or Merits of mail order business
Mail order system offers the following advantages. They are
Less capital Requirement
A wide market
Unusual buying power
No risks of bad debts
Efficient use of capital
Managerial specialization; and
Consumer convenience.
Disadvantages or Limitations of mail order business
Mail order business suffers from the following limitations:
1. There is lack of personal contact between the seller and the buyer. It cannot meet the unexpected objections raised by customers. It cannot give personal advice and assurance that the goods sold by mail will satisfy the requirements of customers.
2. There is scope for fraud, inconvenience due to delay, misunderstanding of customers, etc.
3. Mail order houses are confronted with the problems of numerous correspondence, customer complaints, damage in transit, return of articles, excessive operating cost, credit policies, etc.
4. In mail order business, wide distribution of catalogues is essential. Colorful catalogues are expensive and are to be printed in advance. Supplementary catalogues will have to be issued to announce price changes and new offers.
5. Buyers have to rely wholly upon catalogues to know about the goods. They cannot inspect the goods before buying them.
6. After sale service is not extended to customers.
7. Sometimes, the mail order houses charge high prices for the articles sold.
8. Articles requiring demonstration cannot be sold by mail.
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Answer:
1. No Personal Contact
Mail order business lacks personal contact between buyer and seller. So, customers cannot get proper instruction and advice before purchasing the good.
2.
Not Suitable For All Products
Mail order business is not suitable products that require demonstration. It is also unsuitable for those products which requires after sales services.
No Credit Facility
It does not provide credit facility the the customers. So, customers may not be attracted in this business.
Suitability
Mail order business is not suitable for illiterate customers.
5. Risky
There is a high chance of fraud in mail order business. Sellers may provide low quality products at high price. So, it is risky to buy through mail.
6. High Price
Price of the products high because of high advertising costs and mailing costs.
