Types of Large Scale Retail Trade and Operations

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Large Scale Retail Trade

As discussed previously, large scale retail trade involves businesses, that cater to a wider range of consumers, through different store locations, often operating in bulk distribution of goods and services.

We will discuss more types below.

C. Mail Order Business

Mail order business is a retail system in which customers place orders remotely, and goods are delivered via post. This method allows individuals, particularly those living in rural areas, to shop conveniently without visiting physical stores.

Customers select products from well-illustrated catalogues and place orders through agents. Payments can be made by sending cash with the order, using credit cards similar to online retailing or through instalment plans after an initial deposit.

The introduction of the Cash on Delivery (COD) system has further simplified mail order transactions. Under this system, goods are shipped to the buyer via the post office, and payment is made upon delivery.

The post office then transfers the funds to the seller, charging a service fee for the transaction.

Advantages of Mail Order Business

1. Minimal Staffing Needs – Since there is no physical store requiring customer interaction, fewer employees are needed.
2. Steady Workload – Unlike traditional stores with peak shopping hours, orders can be processed evenly over time.
3. Convenience for Customers – Buyers can review product details in catalogues from the comfort of their homes before making a purchase decision.
4. Return and Replacement Option – If a product does not meet the customer’s expectations, it can be returned for a replacement.
5. Lower Operational Costs – Businesses do not need to rent expensive city-center locations; they can operate from more affordable areas.
6. Saves Time and Travel Costs – Customers can shop without the need for physical travel, reducing expenses and saving time.

Disadvantages of Mail Order Business

1. High Advertising Costs – Producing attractive and detailed catalogues requires significant investment.
2. Expensive Postal Charges – Both retailers and customers incur high shipping costs.
3. Delayed Deliveries – Customers often have to wait for their orders, and in regions with unreliable postal services, delays can be frustrating.
4. Lack of Personalised Service – Unlike physical stores, customers do not receive in-person assistance or recommendations.
5. Misleading Product Representation – Photos and descriptions in catalogues may not accurately reflect the actual products, leading to customer dissatisfaction and increased returns.

D. Retail Cooperative Societies

A retail cooperative society is a business organisation where members pool their resources to buy and sell goods or services for their mutual benefit. In addition to serving its members, the cooperative also aims to generate some profit.

The concept of retail cooperatives dates back to 1884, when the first society was founded in Rochdale, England. These societies were initially formed by working-class consumers to:

1. Reduce the cost of goods.
2. Cut out middlemen to ensure fair pricing.
3. Protect inexperienced buyers from misleading sales tactics.

To become a member, individuals must pay a membership fee and purchase at least one share in the society. The organisation is managed by an elected committee, led by a president and a full-time secretary, who is responsible for overseeing daily operations.

While the committee sets policies, all members actively participate in decision-making, with each member having one vote, regardless of their number of shares. Profits are periodically distributed among members based on their purchases rather than their shareholding.

Advantages of Retail Cooperative Societies

1. Democratic Management – All members have equal voting rights, ensuring fair participation in decision-making.
2. Encourages Member Loyalty – Members receive dividends based on their purchases, promoting frequent patronage.
3. No Risk of Bad Debts – Transactions are strictly cash-based, eliminating issues related to unpaid debts.
4. Low Advertising Costs – Most members shop at the cooperative, reducing the need for expensive marketing.
5. Inclusive Membership – Anyone who can afford the membership fee and a share can join.
6. Affordable Pricing – Goods are often sold at lower prices compared to conventional retail stores.
7. Fair Profit Sharing – Any surplus revenue is redistributed to members based on their purchases, preventing exploitation.

Disadvantages of Retail Cooperative Societies

1. Slow Decision-Making – Management is heavily influenced by member votes, which can delay key business decisions.
2. No Credit Sales – Purchases must be made in cash, making it challenging for members who may need credit.
3. Limited Business Expertise – Many members may lack modern business knowledge, which can affect the cooperative’s efficiency.

Read also: Balance Of Trade (BOT) And Balance Of Payment (BOP)