Notes on Non Store Retailing

Non Store Retailing

INTRODUCTIONRetailers sell in many different formats with some requiring consumers visit a physical location

while others sell to customers in a virtual space. It should be noted that many retailers are not

tied to a single distribution method but operate using multiple methods.

Store-Based Sellers – By far the predominant method consumers use to obtain products

is to acquire these by physically visiting retail outlets (a.k.a. brick-and-mortar). Store

outlets can be further divided into several categories. One key characteristic that

distinguishes categories is whether retail outlets are physically connected to one or

more others stores:

Stand-Alone – These are retail outlets that do not have other retail outlets

connected.

Strip-Shopping Centre – A retail arrangement with two or more outlets

physically connected or that share physical resources (e.g., share parking lot).

Shopping Area – A local center of retail operations containing many retail

outlets that may or may not be physically connected but are in close proximity

to each other such as a city shopping district.

Regional Shopping Mall – Consists of a large self-contained shopping area with

many connected outlets.

Non-Store Sellers – A 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.

Online Sellers – The fastest growing retail distribution method allows consumer

to purchase products via the Internet. In most cases delivery is then handled by

a third-party shipping service.

FDDI – Centre For Retail Management, Fursatganj - 1 -

Non Store Retailing

Direct Marketers – Retailers that are principally selling via direct methods may

have a primary location that receives orders but does not host shopping visits.

Rather, orders are received via mail or phone.

Vending – While purchasing through vending machines does require the

consumer to physically visit a location, this type of retailing is considered as

non-store retailing as the vending operations are not located at the vending

company’s place of business.

Retailing done without conventional store-based locations is non-store based retailing. Nonstore

retailing includes such services as vending machines, direct-to-home selling, telemarketing,

catalog sales, mail order, and television marketing programs.

The non-store retailers are known by medium they use to communicate with their customers,

such as direct marketing, direct selling and vending machines or e-tailing.

Non store retailing is patronized to time conscious consumers and consumers who can't easily

go to stores, or compulsive buyers.

Industries in the Nonstore Retailers subsector retail merchandise using methods, such as the

broadcasting of infomercials, the broadcasting and publishing of direct-response advertising, the

publishing of paper and electronic catalogs, door-to-door solicitation, in-home demonstration,

selling from portable stalls and distribution through vending machines. Establishments in this

subsector include mail-order houses, vending machine operators, home delivery sales, door-to-

door sales, party plan sales, electronic shopping, and sales through portable stalls (e.g., street

vendors, except food). Establishments engaged in the direct sale (i.e., nonstore) of products,

such as home heating oil dealers and newspaper delivery are included in this subsector.

Most non-store retailers offer consumers the convenience of buying 24 hours a day seven days a

week and delivery at location and time of their choice.

Non-store sales are now growing at a higher rate than sales in retail stores. The high growth rate

is primarily due to the growth of electronic retailing. The growth of catalogue retail sales and


Non Store Retailing

sales in other non-store retailing formats such as TV home shopping, direct selling, and vending

machines.

Some Non store Retail companies(Globally):

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.

ADVANTAGES OF NON STORE RETAILING Its 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.

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

acquiring them.

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

DIS-ADVANTAGES OF NON STORE RETAILING: 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.


Non Store Retailing

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

still deal with painfully slow connections.

TRENDS OF THE INDUSTRY

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

an increasing rate. It also signifies that with the time constraint coming in the life-style 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.

CLASSIFICATION OF NON-STORE RETAILINGNon store retailing can be classified into-

1. Direct selling


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2. Direct marketing and

3. Direct response marketing

DIRECT SELLINGThe marketing of products to ultimate consumers through face-to-face sales presentations at

home or in the workplace

Party plans: Hosting groups to view a product demonstration and

encouraging participants to purchase the products.

Example: Eureka Forbes.

Advantages and disadvantages of direct sales

Benefits

Personal attention to customer.

Convenience of time and place of presentation.

Limitations

High costs make it the most expensive form of selling.

Negative consumer view of direct selling.

DIRECT MARKETING

Direct marketing is a sub-discipline and type of marketing. There are two main definitional

characteristics which distinguish it from other types of marketing. The first is that it attempts to


Non Store Retailing

send its messages directly to consumers, without the use of intervening media. This involves

commercial communication (direct mail, e-mail, and telemarketing) with consumers or

businesses, usually unsolicited. The second characteristic is that it is focused on driving a specific

"call-to-action." This aspect of direct marketing involves an emphasis on trackable, measurable

positive (but not negative) responses from consumers (known simply as "response" in the

industry) regardless of medium.

Reasons for the growth in direct marketing:

Advantages and Disadvantages of Direct Marketing

Direct marketing is attractive to many marketers, because in many cases its positive effect (but

not negative results) can be measured directly. For example, if a marketer sends out one million

solicitations by mail, and ten thousand customers can be tracked as having responded to the

promotion, the marketer can say with some confidence that the campaign led directly to the

responses.


Non Store Retailing

Direct marketing is a marketing tool which comprises activities such as direct mail,

telemarketing, mail order, direct response advertising and email marketing.

Direct marketing provides a unique range of benefits because it enables you to engage directly

with your audience - whether they are prospects, leads, end users or existing customers.

Other advantages of direct marketing include:

Flexible Targeting

Direct marketing enables you to talk directly identify, isolate and communicate with well-

defined target markets. This means you get a higher conversion and success rate than if you

tried communicating to everyone in the mass market. And direct marketing is also far cheaper

than mass market communication.

Multiple Uses

Direct marketing doesn't just have to be used to sell - it can be used to test new markets and

trial new products or customers, to reward existing customers to build loyalty, collect

information for future campaigns, or segment a customer base.

Cost-Effectiveness

The cost per acquisition of direct mail can be significantly less than other marketing methods.

Plus once you've acquired a customer, you can also benefit from highly profitable repeat sales,

gained once again through direct marketing methods.

Ease of Management

Direct marketing provides greater control and accountability than other marketing methods. It is

easy to measure results because you know exactly how many people you've contacted in the

first place. Once you've run a direct marketing campaign and know the conversion rates

involved, you can work on refining and improving your success rates. Plus it also makes it easier


Non Store Retailing

to plan, forecast and budget for future direct marketing campaigns.

Rapid Delivery

Direct marketing is both swift and flexible in achieving results. This is especially true for

telemarketing, one of the direct marketing tools, as the results of a conversation can be logged

immediately and scripts adjusted straight away to improve results.

Testing capability

Direct marketing allows you to test, test and test again in order to hit upon the most successful

combination of direct marketing tools. Any of these variables such as timing, list, message,

mailer and offer can be adjusted, tested again, and measured to find the optimum direct

marketing proposition.

Relationship Building

Direct marketing is far more effective at initiating and developing a meaningful dialogue with

new customers. From the outset you have a direct relationship with them, which can also be

used as part of a push pull strategy to stimulate demand for retailers.

Targeting of Messages

Direct marketing can enable you to target different messages to different recipients. Using

technology such as digital printing, it's even possible to display different images, designs and

offers in a direct mailer according to who it's being sent to, as well as personalising the mailer to

the recipient to increase conversion rates.


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Geographic Targeting

Direct marketing can be used for any level of geographic targeting, whether it's the local area

surrounding a shop or restaurant, regional targeting by postcode or county, national targeting

and even international - when direct marketing can prove a far cheaper way of testing the

market than a costly personal sales visit.

Direct marketing exploits the growth in new technology, and can create a completely new

distribution channel direct to the customer or end user. Discover the advantages of direct

marketing for your business.

DIRECT MARKETING TECHNICS


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Direct-response marketing

Direct-response marketing is a form of marketing designed to solicit a direct response which is specific and quantifiable. The delivery of the response is direct between the viewer and the advertiser, that is, the customer responds to the marketer directly. This is in contrast to direct marketing in which the marketer contacts the potential customer directly.

In direct marketing, there is no intermediary broadcast media involved. In direct-response marketing, marketers use broadcast media to get customers to contact them directly. It is direct-response marketing because the communications from the customer to the marketer are direct, this differentiates it from simple direct marketing in which the communications from the marketer to the customer are direct, but do not allow for instant feedback.

Like direct marketing, direct-response marketing seeks to elicit action. It is inherently accountable since results can be tracked and measured. Furthermore, direct-response campaigns perform best if the underlying strategies and tactics are highly competitive.

PRINCIPLES OF DIRECT RESPONSE ADVERTISING:

• The focus should always be on what sells.


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• Not always necessary to reinvent the wheel when designing campaigns.

• Make the ‘offer’ the central theme of the designing campaign.

• Long copy can sell if the reader is engaged.

• Select creativity that sells, not that which just looks good.

• Always test and measure response.

• Select and retain media not on their ratings, but on their ability to sell for you.

• Always ask for the order or for further action.

OTHER TYPES OF NON STORE RETAILING

The non-store retailers are known by medium they use to communicate with their customers,

such as direct marketing, direct selling and vending machines or e-tailing. Non store retailing is

patronised to time conscious consumers and consumers who can't easily go to stores, or

compulsive buyers. Most non-store retailers offer consumers the convenience of buying 24

hours a day seven days a week and delivery at location and time of their choice. Nonstore sales

are now growing at a higher rate than sales in retail stores. Non-store retailing now accounts for

more than 15% of all consumer purchases, and it may account for over 1/3 of all sales by the

end of the century. The high growth rate is primarily due to the growth of electronic retailing.

The growth of catalogue retail sales and sales in other nonstore retailing formats such as TV

home shopping and vending machines are slower.

Vending Machines

E-Retailing

Tele Shopping

Network Marketing


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Information Kiosk

Airport Retailing

Door To Door Leaflet Marketing

Vending machine

is a machine that dispenses merchandise when a customer deposits money, validated by a

currency detector, sufficient to purchase the desired item .

It is a is a machine that dispenses merchandise when a customer deposits money,

validated by a currency detector, sufficient to purchase the desired item .

A vending machine provides snacks, beverages, and other products to consumers

without a cashier. Items sold via these machines vary by country and region.

In some countries, merchants may sell alcoholic beverages such as beer through vending

machines, while other countries do not allow this practice (usually because of dram

shop laws).

E-RetailingInternet Retailing or e-retailing as is usually referred to as covers retailing using a variety of

different technologies or media. It may be broadly be a combination of two elements.

Combining new technologies with elements of traditional stores and direct mail models Using


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new technologies to replace elements of store or direct mail retail. Internet retail also has some

elements in common with direct mail retailing. For eg, e-mail messages can replace mail

messages and the telephone, that are used in the direct mail model as means of providing

information, communication and transactions while on-line catalogues can replace printed

catalogues. As with direct mail businesses, critical success factors include:

Use of customer databases

Easy ordering

Quick Delivery

Operational elements that the Internet retail model shares with both the retail store and direct

mail models include:

Billing of customers

Relationships with suppliers

There are, therefore, many elements that Internet retail and more

traditional retail models have in common. Indeed many of the most successful Internet retailers

have been those that have been able to successfully transfer critical elements from traditional

retailing to the Internet, such as customer service and product displays.


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E-Retailing in India

Bottlenecks Faced By E-Retailing in India

Problems with the Payment System

People in India are not used to the online shopping system and moreover the online

payment system through the credit card is also totally alien to them. Most of them do

not avail of the transaction facilities offered by the credit cards. They are also dubious

regarding the online payment system through the credit cards. Hence different

payment options should be made available to them like the credit card, cash on

delivery and net banking to give them further assurance.

Problems with Shipping

The customers using the online shopping channel should be assured that the products

that they have ordered would reach them in due time. For this the retail companies

have resorted to private guaranteed courier services as compared to postal services.

Offline presence

The customers should be assured that the online retailers are not only available online

but offline as well. This gives them the psychological comfort that these companies can

be relied upon.

Products offered at discounted rates

The online retailers save on the cost of building and employee salaries. Some part of

this benefit should also be enjoyed by the online customers by a reduction in the price

of the product. The customers should be conveyed this message that they are getting

the products at a discounted price.


Non Store Retailing

Language Problem

Most internet retail shops use English as their mode of communication. English may

not be comprehensible to the majority of the Indian population . To increase the

customer base, content in the online retail shops should be provided in local language.

Another reason why the concept of e- retailing or online retailing has not gained

prominence in India is that the Indians prefer to touch the products physically before

buying them. This facility is provided through the multi-brand outlets, not available

online. Studies have revealed the preferences of the customers towards the traditional

shopping methods. Hence the retailer online should first make it a point to spot the

potential customers and accordingly plan out the product. If the customers are more

open to online shopping, then nothing can be more beneficial. They save the time and

effort to visit, departmental stores, shopping malls, etc. products can be delivered by a

click of the mouse.

Some online retailing sites in India

E Bay is heading the race of online retailers. In this race it has become very difficult to

determine the online retail store that makes the products available at convenient and

cheap rates. From this very difficulty has cropped up comparison sites. Comparison is

done on the basis of an index which is constructed from the data available from

different shopping sites. The bechna.com and the ultop.com are such sites though many

more sites are entering this zone.

The comparison sites not only help to choose the online sites that would be providing

the best deal but also offline as well. Sites like Rediffproductsearch, Compare India.com


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have constructed the data that is taken from the conventional local retailers. These sites

help the customer in finding out the local retail store that will best suit his purpose.

Future of E-retailing in India

There are divergent views on the future of e-retailing in India. Some experts are of the

opinion that the giant, big brand retailers would dominate the small ones due to their

wider investment capacities. It would be next to impossible for the small retailers and

the kiranas to prove their existence in the battlefield of online retailing. Another

viewpoint is that there would be an exponential growth in the online retailing business

in India.

TELE SHOPPING

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

buy products or services, either over the phone or Web conferencing appointment scheduled

during the call.

Telemarketing is a method of direct marketing in which a salesperson solicits to prospective

customers to buy products or services, either over the phone or through a subsequent face to

face or Web conferencing appointment scheduled during the call.

NETWORK MARKETING

Network marketing is a general term for a type of marketing that is usually performed by an

individual instead of a company. It refers to the use of interpersonal or social networks to

market products and services for business purposes as opposed to the more traditional and

common practices of wide-range advertising.

The term is technically a type of marketing that can be used as part of an overall marketing

strategy which may or may not encompass multiple tactics. For example, the most common

marketing tactic in a network marketing strategy is word of mouth.


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Model of Network marketing:

Network marketing is a part of the direct selling concept where products or services are offered

on a one-on-one basis and sold directly by the salesperson to the consumer.

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.


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AIRPORT RETAILING

In past, the leading airport retailers were fast food outlets, tiny gift stores, and

newspaper/magazine stands. Today airports are a major Mecca of retailing. At virtually every

large airport, as well as at every medium ones, there are full-blown shopping areas.

DOOR TO DOOR LEAFLET MARKETING

Leaflet Distribution services are used extensively by the fast food industries, and many other

business focussing on a local catchment Business to consumer business model, similar to direct

mail marketing, this method is targeted purely by area, and costs a fraction of the amount of a

mail shot due to not having to purchase stamps, envelopes or having to buy address lists and the

names of home occupants.

CONCLUSIONThe 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 life-style 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 and in India as well.


Notes on Non Store Retailing

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