Brief Summary
This video provides an overview of industrial retailing, focusing on non-store retailers. It discusses the classification of retailers, benefits and disadvantages of non-store retailing, and different types of non-store retailing such as direct selling, catalog retailing, vending machines, home shopping, and internet retailing. The video also covers direct selling techniques like multi-level networks, highlighting their advantages, disadvantages, and potential issues with illegal operations.
- Non-store retailers offer time-saving and personalized services.
- Direct selling involves face-to-face interactions but faces challenges like negative perceptions and high turnover.
- Multi-level networks can be problematic due to potential illegal activities.
Introduction to Industrial Retailing
The video introduces the topic of industrial retailing, specifically focusing on chapter 3, which covers the classification of retailers based on their assortment, service, and package breaking. Retailers are categorized into store retailers and non-store retailers, depending on whether they need a physical store to conduct their activities.
Classification of Non-Store Retailers
Non-store retailers are classified into direct selling, catalog retailing, vending machines, home shopping, and internet retailing. This classification is based on how retailers contact their customers. Direct selling involves face-to-face interactions, while catalog retailing uses catalogs. Vending machines sell products automatically, and home shopping uses TV channels. Internet retailing uses the internet to communicate with customers and is experiencing high growth in Korea.
Benefits of Non-Store Retailers
Non-store retailers offer several benefits, primarily time-saving utility for consumers who lack time to shop due to traffic or double incomes. Customers can order products via phone or internet from home or work. They also provide highly personalized service by using marketing databases to collect consumer information, enabling tailored services. Additionally, non-store retailers can access target consumers regardless of store costs and location, allowing for cross-border sales and lower prices due to reduced store rent.
Disadvantages of Non-Store Retailers
Non-store retailers have limitations, including the inability for consumers to physically interact with products before purchase, leading to hesitation and lower purchase confidence. This results in higher return rates compared to store-type retail, increasing handling costs for retailers. Inconvenient return processes for consumers, including repackaging and shipping, further serve as a disadvantage.
Types of Non-Store Retailing: Direct Selling
Direct selling involves sellers visiting customers' homes or offices to provide goods and services, offering personalized explanations and building relationships. Salespeople are often trained and contracted exclusively, receiving allowances for their sales. This method is prevalent in sectors like cosmetics, home appliances, health foods, and education. Companies like Avon and Tupperware are known for direct selling, with Tupperware using parties to display and sell products.
Advantages of Direct Selling in Developing Countries
Direct selling is active in developing countries due to the lack of distribution infrastructure. Visiting sales are developed due to the lack of basic social overhead capital for the development of the modern distribution industry. Even with the rise of online shopping, direct selling continues to grow because it offers one-on-one interaction and personalized service, which is especially beneficial for consumers overwhelmed with information or older consumers needing assistance.
Disadvantages of Direct Selling
Direct selling faces challenges, including a negative image due to the use of personal relationships for commercial gain. Increasing social activities among women limit the opportunities for home visits and phone calls. The difficulty of hiring and retaining salespeople also poses a limitation, as many act as independent distributors with high turnover rates. This can lead to higher perceived risk for consumers due to potential lack of after-sales service.
Direct Selling Techniques: Multi-Level Networks
Multi-level networks use salespeople at various stages to sell products, leveraging the trust consumers have in the sellers. These networks consist of master distributors and self-distributors who recruit salespeople. Higher-level distributors are responsible for hiring and training lower-level distributors, performing functions such as facilitation, legal ownership, and practical ownership. The facilitation function is particularly important.
Income Sources and Problems with Multi-Level Networks
Income in multi-level networks comes from fees for including lower distributors, fees for selling products to distributors, and margins from sales to end-users. However, illegal multi-level networks often emerge, requiring large subscription fees or illogical purchases. Refusal to accept returns and excessive fees for higher distributors are red flags. The primary revenue source should be product sales, not recruitment. Due to these issues, multi-level networks have more disadvantages than benefits, requiring consumers to be cautious.
