Web, Nonstore Based and

Other Forms of Nontraditional

Retailing

Web, Nonstore Based, and

other Forms of

Nontraditional Retailing

Chapter 06

TC/IS/2011/MS/144

MMT: 3093

Retailing Marketing

Department of Business & Management Studies

Trincomalee Campus

Eastern University - Sri Lanka

Content

1. Retailing

i. Single Channel

ii. Multi-Channel

2. Nonstore Retailing

i. Direct marketing

ii. Direct selling

iii. Vending machine

3. Direct Marketing

i. Direct mail

ii. Direct response advertising

iii. Telemarketing

iv. Catalogue marketing

v. Text messaging

vi. E-mail marketing

4. Database retailing

5. Direct Marketing Trend

6. Direct Selling

7. Role of the web

8. Vending Machine

9. Nontraditional form of retailing

10. Reference

11. Appendix

Retailing

Retailing encompasses the business activities involve in selling goods and services to consumers

for their personal, family, or household use. It includes every sale to the final consumers.

Single Channel Retailing -: It sells to consumers through one retail format. That one format may

be store based or non-store based

Multi-Channel Retailing -: A retailer sells to consumer through multiple retail formats

Non-store Retailing:

The selling of goods and services without establishing a physical store known as Non-Store

Retailing. It includes such services as

Direct marketing

Direct selling

Vending machines

The fast growing method used by retailers to sell products is through methods that do not have

customers physically visiting a retail outlet. In fact, in many cases, customers make their purchase

from within their own homes. A large majority about 69% of retail transactions make in stores.

However, a growing volume of sales is taking place away from stores. Non-store sales account

for almost 28% and mobile retail 4% of total retail trade estimate.

Advantages of Nonstore retailing

It's freedom from a physical retail presence.

The high fixed costs of operating retail outlets are eliminated.

The breadth of customer coverage is considerably wider than is possible with an individual

retail location.

Retailing

Single Channel Retailing Multi-Channel Retailing

Companies do not have to spend large sums or dilute stock building new locations or

acquiring them.

Disadvantages of Non-Store Retailing:

This truly gives the non-store retailer a global market from a cheap, centralized location.

There is also the fear of credit card abuse and mail fraud, both related to the sense of

detachment that not holding a prospective purchase brings.

In addition, since most of us do not have the luxury of a pricey T1 Internet connection, we

must still deal with painfully slow connections.

Direct Marketing

In a direct marketing first, customer exposed to a good or service through a non-personal medium.

(Ex-: Direct mail, TV, Radio, Magazine, Newspaper, or computer) and then order by mail, phone,

or fax an increasingly by computer. Direct marketing popular products are gift item, apparel,

magazines, books and music, sports equipment, home accessories, food, and insurance. Direct

marketing has six tools:

Direct marketing tools

Direct mail

Material distributed via the postal service to a recipient’s home or business to promote a

product/service.

Direct response advertising

Standard broadcast and print media designed to generate a direct response.

Example: an order or personal visit.

Telemarketing

Method of direct marketing in which a salesperson solicits to prospective customers to either buy

products or services, over the phone or web conferencing appointment scheduled during the call

Catalog Marketing

Direct selling method in which merchandise from several vendors, or several items from the

same vendor, are presented to prospective buyers via mail or internet.

Teleshopping

In this form of direct marketing the product is advertised on television, details about the product

features, price and things like guarantee/warranty are explained. Phone numbers are provided for

each city, where the buyer can call in a place the order for the product. The products are then home

delivered.

E-mail Marketing

E-mail marketing is a form of direct marketing, which uses electronic mail as a means of

communicating commercial or fundraising messages to an audience. In its broadest sense, every

e-mail sent to a potential or current customer could be considered e-mail marketing.

Advantages of Direct Marketing:

Direct marketing provides shopping convenience. In addition, direct marketers enjoy comparatively

low operating expenses because they do not have the overhead of physical stores.

Expand trading area

Many costs are reduced

Specific customers segments are pinpoint through target mailing

Huge geographical areas can be covered inexpensively and efficiency

Low price

Disadvantages of Direct Marketing:

Consumers must place orders without seeing or touching the actual merchandise. To offset this,

direct marketers must offer liberal return policies.

Furthermore, catalogs and to some extent, direct mail pieces are costly and must be prepared

long before they are an issue.

Price changes and new products can be announced only through supplementary catalogs or

Brochures.

Direct marketing's future is difficult to forecast, given the rise of the Internet.

The issue is whether firms relying on direct marketing can achieve and sustain a differential

advantage in a growing competition with online enterprises.

Data Based Retailing

Database retailing is a way to collect, store, and use relevant information about customers. It

includes person’s name, address, background data, Shopping interest, and purchase behavior.

Direct Marketing Trend

1. Evolving activities of direct marketing

2. Changing customer lifestyle

3. Increased competitors

4. Greater use of multi-channel retailing

5. Newer role for catalog and TV

6. Technological advances

7. Interns global direct marketing

The Steps in Direct Marketing Strategy

STEP-01 Business Definition

The company make two decisions regarding is definition.

Is firm going to be a pure direct marketer or It is going to be multi-channel

retailing?

The firm going to be a general direct marketer.

STEP-02 Generating Customer

Buy a printed mailing list from the broker.

Downloading mailing list from the website.

Sent out a build mailing to all the residents in a particular area.

STEP-03 Media Selection

Printed catalogs

Direct-mail ads and brochures

Inserts with monthly credit card and other bills (statement stuffers)

Freestanding displays

Ads or programs in mass media

STEP-04 Presenting message

STEP-05 Customer Contact

STEP-03 Customer Response

STEP-03 Order fulfillment

Direct Selling

Direct selling is also defined as personal contact between a salesperson and a consumer away

from a retail store. This type of retailing has also called in home selling. The annual volume of

direct selling in India is growing fast from the beginning of the 21st century.

Like other forms of non-store retailing, direct selling is utilize in most countries. It is particularly

widespread in Japan, which accounts for about 35% of the worldwide volume of direct selling.

The U.S. represents almost 30% of the total and all other countries the rest.

The two kinds of direct selling are

Door to door (contact with customer)

Party plan

Phone solicitation

Advantages of Direct Selling:

Consumers have the opportunity to buy at home or at another convenient Non-Store location

that provides the opportunity for personal contact with a sales person.

For the seller, direct selling offers the boldest method of trying to persuade ultimate

consumers to make a purchase.

The seller takes the product to the shopper’s home or workplace and demonstrates them for

the consumer.

Limitations of Direct Selling:

Sales commissions run as high as 40 to 50%of the retail price; of course, they are paid only

when a sale is made.

Recruiting salespeople most of whom are part-timers are difficult tasks.

Some sales representatives use high-pressure tactics or are fraudulent.

The Role of the Web

Project a retail presence

Enhance image

Generate sales

Reach geographically-dispersed customers

Provide information to customers

Promote new products

Demonstrate new product benefits

Provide customer service (e.g., e-mail)

Be more “personal” with consumers

Conduct a retail business efficiently

Obtain customer feedback

Promote special offers

Describe employment opportunities

Present information to potential investors, franchisees, and the media

Some global Non-store Retail companies are:

• The Home Depot, Inc.

• Dollar Tree, Inc.

• Forever 21, Inc.

• The Bon-Ton Stores, Inc.

• Costco Wholesale Corporation

• J. Crew Group, Inc.

• Army and Air Force Exchange Service

• Bass Pro Shops, Inc.

• Amazon.com, Inc.

• AutoZone, Inc.

Automatic Vending:

The sale of products through a machine with no personal contact between buyer and seller are

called automatic vending.

The appeal of automatic vending is convenient purchase. Products sold by automatic vending are

usually well-known presold brands with a high rate of turnover. The large majority of automatic

vending sales comes from the "4 C's”: cold drinks, coffee, candy, and cigarettes.

Automatic vending is a unique area in non-store merchandising because the variety of

merchandise offered through automatic vending machines continues to grow. Initially, impulse

goods with high convenience value such as cigarettes, soft drinks, candy, newspapers, and hot

beverages were offer. However, a wide array of products such as hosiery, cosmetics, food snacks,

postage stamps, paperback books, record albums, camera film, and even fishing worms are

becoming available through machines.

Advantages and disadvantages:

Vending machines can expand a firm's market by reaching customers where and when they

cannot come to a store. Thus, vending equipment was found almost everywhere, particularly in

schools, workplaces, and public facilities. Automatic vending has high operating costs because

of the need to replenish inventories frequently. The machines also require maintenance and

repairs.

Future Expectations:

The outlook for automatic vending is uncertain. The difficulties mentioned above may hinder

future growth. Further, occasional vending-related frauds may scare some entrepreneurs away

from this business.

Vending innovations give a reason for some optimism. Debit cards can be used at vending

machines are becoming more common. When this card is inserted into the machine, the purchase

amount is deducted from the credit balance. Technological advances also allow operators to

monitor vending machines from a distance, thereby reducing the number of out-of-stock or out-

of-order machines.

Other Nontraditional Forms of Retailing

The Information kiosk

It is the first kiosk platform for a variety of functions offered on many kiosks in the marketplace

today. By the touch of a finger, users can gain access to product information, company services,

forms and printouts for retail stores, schools, churches, city government, tourist locations and more.

Airport Retailing

Future Expectation/Growth of Non-store retailing:

Non-store retailing grew at a much faster rate than store-based retailing during the review period.

While direct seller Amway embarked on an aggressive brand campaign in 2008, it was Internet

retailing, which drove growth, riding on increasing Internet penetration, the reduced cost of

Internet access, and greater familiarity with on-line purchasing.

With some market observers predicting that by the year 2000 non-store retailing will handle 30

percent of all general merchandise sold, non-store channels may become a powerful force in the

retailing industry.

This graph represents that the importance and the share of the retail online sales are increasing at

an increasing rate. It also signifies that with the time constraint coming in the lifestyle of many

buyers the non-store based retailing and e-tailing will be the core of the retailing business around

the world in near future.

Appendix