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11th Class Business Studies Internal Trade Question Bank Internal Trade (Long)

  • question_answer
    Discuss advantages and disadvantages of Mail Order House.

    Answer:

    Ans.     The retail outlets that sell their goods through mail are referred to as mail order houses. There is no personal contact between the buyers and the sellers in this type of trading. The trader contacts the customer through advertisement in newspaper or magazines, circulars, catalogues and price list is sent to them by post. All the information about product such as price, features, delivery terms, terms of payment etc are described in the advertisement. The customers may be asked to make full payment in advance or goods may be sent by VPP (Value Payable Post), under which goods are delivered to the customer only when he makes full payment for the same.
    The goods may be sent through a bank which delivers them to the customer only when he makes full payment.
    Advantages of Mail Order Houses
    1. They can be started with low amount of capital as no expenditure on building or other infrastructural facilities are required.
    2. They do not require the services of middlemen so they are eliminated.
    3. They do not extend credit facilities to the customers and thus there are no chances of bad debts.
    4. They can serve people wherever postal services are available.
    5. They deliver goods at the doorstep of the customer which result in great convenience to the customers in buying the goods.
    Limitations of Mail Order Houses
    1. There is no personal contact between the buyers and the sellers. The buyers are not in a position to examine the products before buying.
    2. They rely heavily on advertisement and other promotional activities which increases their cost of product.
    3. In mail order selling after sales services are absent.

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