(a) State six distinguishing features of a mail order business (b) Give four disadvantages of a mail order business

Answer Details

A mail order business is a form of retail trade in which goods are sold and delivered to customers through the post office or courier services, based on orders placed by mail, catalogue, telephone or the internet, without the buyer and seller meeting face to face.

(a) Six distinguishing features of a mail order business

1. No physical shop or showroom: Trading is conducted from a warehouse or office; the trader does not maintain expensive retail premises in the town centre.
2. Use of catalogues and advertisements: The business relies on illustrated catalogues, price lists, newspaper and magazine advertisements to display goods to distant customers.
3. Reliance on the postal and courier system: Orders are received and goods are dispatched mainly through the post office or courier companies, so no direct contact between buyer and seller is needed.
4. Wide geographical coverage: Customers spread over towns, villages and even other countries can be served from a single central location.
5. Cash with order or on delivery: Payment is usually made in advance with the order, on cash on delivery (C.O.D.) terms, or through money orders and bank transfers.
6. Goods are inspected only after delivery: The buyer selects from pictures and descriptions and can inspect the actual goods only when they arrive, often with a right to return unsatisfactory items.

(b) Four disadvantages of a mail order business

1. No prior inspection of goods: The customer buys on the strength of pictures and descriptions and may receive goods that differ from expectations.
2. Delay in delivery: Reliance on the postal or courier system can cause long waiting periods, and goods may be lost or damaged in transit.
3. High cost of advertising and postage: Printing catalogues, advertising and paying postage add heavily to costs, which raise the final price.
4. Unsuitable for perishables and illiterate customers: Perishable goods spoil in transit, and customers who cannot read catalogues or fill order forms are excluded; risk of fraud and bad debts is also high.