Consumers' Co-operative Stores: Meaning, Characteristics, Merits and Demerits

Meaning of 'Consumers' Co-operative Stores'

The consumers' co-operative stores are the general shops of selling the consumable items, run on the basis of co-operation by the consumers. In other words, it might be said that the consumer’s cooperative store is a voluntary association of the consumers which are set up with the objective of meeting the needs for things and services. These stores have come up for eradicating the intermediaries from among the distribution system, for distributing the profits mutually, and for making available to the consumers the commodities of common use easily and on reasonable prices. Due to the consumers' cooperative stores, the consumers are able to get the non-adulterated goods easily.

Characteristics of Consumers' Co-operative Stores

The following are some of the main characteristics of the consumers' co-operative stores:

(1)   Membership. Any adult person could become the member of these stores. Their membership is open to all. The consumers' co-operative stores are generally set up for the benefit of some specific categories of persons.

(2)   Advertisement. By these stores, the least attention is paid to the advertisements.

(3)   Prices of Commodities. The prices of the commodities sold by the consumers' co-operative stores remain generally lower than those prevailing in the market.

(4)   Voting Rights. In these stores, every member is entitled to cast only one vote. The voting right doesn't depend upon the number of shares held.

(5)   Democratic Management System. The consumers' cooperative stores are' managed on the basis of democratic system.

(6)   Capital. These stores issue the shares for raising the share-capital. Shares are of small denominations.

(7)   Distribution of Dividends. The dividends are distributed to the members in the proportion of the amounts for which they have made the purchases from the stores.

(8)   Right of Withdrawal of Capital. In the consumers' co-operative stores, the members are entitled to withdraw their capital at any time they desire.

(9)   Sale of Commodities. These stores resort to cash sales of the things. Hence, there lies the least possibility of the bad debts.

Merits of Consumers' Co-operative Stores

The following are some of the main merits of these stores

(1)   Least Chance of Bad Debts. Since in these stores the sales are undertaken only on the cash basis, hence there is very less chance of the bad debts. In other words, it might be said that the consumers' co-operative stores deal in cash business.

(2)   Procuring the Un-adulterated Goods. Due to other establishment of the co-operative consumers' stores there has been a total closure of the supply of adulterated goods to the members.

(3)   Protection Against the Exploitation by Middlemen. Due to the setting up of these stores, the consumers are saved of the middlemen's exploitation.

(4)   Creating the Feeling of Co-operation Among Members. On account of the consumers' co-operative stores, there develops the feeling of co-operative among their members.

(5)   Lower Prices of Things. The things are available to the members of the consumers' co-operative stores on a comparatively lower price than those in the open market.

(6)   Lower Costs of Running. As compared to the other retail commercial bodies, the running costs of these stores are much lower.

(7)   Hold of the Members on Profits. On the annual profits of the stores, oily the members have a total hold for their disposal.

(8)   Full Attention to the Members' Interests. Since only one committee undertakes the management of the stores, hence it takes care of the interests of all the members of the organization.

Demerits of Consumers' Co-operative Stores

The following are some of the demerits or abuses of the consumers' cc,-operative stores :

1. In the working committee of the consumers' co-operative stores, there are some selected members only who try to meet only their own personal ends and pay less attention toward the interests of the others.
2. When the number of members very much increases, the problem of control of the stores arises.
3. Since there is no personal interest of any member in the stores, hence he doesn't pay any attention toward its successful running.
4. In ease of the difference of opinion arising among the members, these stores are also required to be closed down.
5. Among the management of the consumers' co-operative stores, there is often the lack of the commercial knowledge and experience. Hence, they fail in successfully running or administering the stores' working.
6. There is also visible the influence of the party-politics among the management of the stores. It-, various evil consequences have to be borne by the members in general.
7. The number of the 'customers of the consumers' co-operative stores is generally very limited.

Meaning, Characteristics, Procedure, Merits and Demerits of the Mail-Order Business

Meaning of 'Mail-Order Business'

In this method of retail trade, the relationship between the consumer and the trader is established through the medium of the post office. In other words, there is no intermediary in the trade or business. The consumers place the orders by means of the postal system and the supply of the products too is met by the traders through the postal method. The price is paid by the V.P.P. system.

The mail-order business originated and developed along with the progress of the transport and communication media. The countries having the rapid development of transport and communication, have met sufficient success in the mail-order business too. In this method, the customer is not required to go to the place of the trader. Rather the trader, through the medium of the advertisements in the newspapers and magazines, establishes and develops the contacts with the customers. In the mail-order business system, the seller doesn't directly know the buyer or the purchaser.

The mail-order business has variously been defined by the scholars. Some of their views are being given hereunder :

In the views of Converse and Huegy, The mail-order business is that business which undertakes the sales wholly through the postal means and which doesn't engage any personal salesmen.

In the opinion of Prof. M.C. Shukla, The mail-order business house is such a retail trade organization which undertakes the business through the catalogues, which are supplied through the postal system. In these catalogues, is contained the detailed description and general publicity matter of the commercial products to be traded. The trade orders of such things are met by the postal system.

Canon and Wickert have or fined that the mail-order business is that trade in which the orders are received through the mail and in which the delivery of the goods is made either by the mail or by the parcel.

The mail-order business has originated in United States of America. Its origin dates back to the year 1872. Along with the improvement in the standard of living, and with the development of the means of communication, this business got the popularity. In the undeveloped countries, this system of trading could be further developed easily.

Characteristics of Mail-Order Business

The following are some of the main characteristics of the mail-order business :

1. In this method of business, the post office plays as an intermediary between the consumer and the trader.
2. In this method, the goods are sold only on the cash payment basis.
3. In the mail-order business, the location of office or shop holds no significance.
4. In this method, the trader is not required to appoint even the salesmen.
5. In the retail business system, there is no commercial or business intermediary required to work.
6. In this system, the trader is also not required to keep the stocks of goods ill big quantities.
7. The payment of price of the commodities purchased, is made by the V.P.P. system of the post office.
8. The mail-order business is possible in case of only those products which are not required to be personally seen or checked, and which bear some specific trade-mark.

Procedure for Mail-Order Business

The mail-order business system is entirely different from that of the other retail-trading bodies. In-this method, trade could be undertaken sitting at home. There is no need of opening the shop in a good market or establishing some office since in it there is no need of attracting the customers personally. There is also no need of any external or internal decoration of the shop or office.

The traders who don't want to disclose the address of their office or residence, carry oil the trade under the Post Box System. The success of the mail-order business depends much upon the effectiveness of the advertisements. The publicity of the products must be so managed that the customer be lured to purchase the product no sooner lie goes through the advertisement. Really, an advertisement expert has to be appointed. If the advertisement is not properly managed, the mail-order business might prove a failure.

For undertaking the mail-order business, the businessman could also appoint some competent managers or employees. Under this system, first of all, a list of the prospective customers is drawn up, for the compilation of which help is sought from the telephone directory, the list of the car-owners, the trade-directory, the lists of the government employees, etc. The mailing list must be very carefully drawn up. At times, changes must be incorporated in it. This list carries a great significance, since on the very basis of Vile same, the price-lists or cataloguer are supplied to the customers. Like the mailing list, a list of the products too must be drawn up,

Before undertaking the mail-order business, the price-lists and catalogues, etc. are required to be prepared. There must not be any false literature or information in the price-lists and the catalogues. For procuring the orders, the price-lists are supplied to the customers through the means of the postal system. The price lists must be well-decorated so that the customers could be well attracted. In the price-lists and catalogues, must be contained the information regarding the prices of the products, their qualities and specialties, the mode of sending the orders, the mode of payment of price, the conditions regarding the commission and the postal expenses to be borne. After dispatching the price-lists, 'the trader develops contacts with the prospective customers through the medium of advertisements. Some people call the `advertisements' as the foundation :x4_this method of business. The more effective the methods of publicity, the greater are the chances of the success to be achieved in the business through the mail-order system. Some of the businessmen also resort to the writing of personal letters and dispatching them to the prospective customers for developing contacts with them.

After establishing the contacts with the customers through the advertisements, the final process of this method begins. On realizing the need of the product, the customers place their orders for such products. Even after the expiry of sufficient time, when no orders are received from the prospective customers, they are sent the reminders. On receipt of the orders, the businessman meets the order by supplying the required goods. Some of the traders manage to supply the products only after the orders have been received. The payment of the price is made by the postal V.P.P. system.

Merits of Mail-Order Business

The main merits or uses of this type of business might be enumerated as under :

1. From the Customers' Point of View

(1)   Availability of Product at Home. Due to this method, the customer receives the product at his very residence. He is not required to visit the different shops separately in search -of the required product.

(2)   Saving in Labor and Time. By seeking the supply of the product through the mail, there is the saving in the time and labor of the customer.

(3)   Cheaper Products Available. Due to the saving of the commission of the intermediaries, the customers are able to get the products at lower prices.

(4)   Standardized Goods Available. Under the mail-order system, the customers are able to get the standardized goods.

(5)   Availability of Goods of All Places. The consumer, by placing order through mail, could procure even the goods from international markets.

(6)   Easy Provision of Money. There is sufficient time-gap between the placing of an order and the receiving of the products. During the course of this period, the customer could easily manage for the money.

(7)   Free From Taxes Like Octroi, Etc. Seeking the supply of the goods by means of the mailing system, the customer becomes free from the octroi and other taxes, etc.

(8)   Placing Orders After Comparing the Prices. The customer could place the orders after comparing the prices of the products of the various traders dealing in that business

2. From the Traders' Point of View

(1)   Economy in the Display Expenses. On undertaking the mail-order business, the trader is not required to incur any expenditure on the internal or external decoration.

(2)   No Possibility of Bad Debts. Since the payment of price is received by the V.P.P. system, there remains no chance of the loss of the amount. There are thus no bad debts.

(3)   Economy in the Personnel Expenses. Since there is also no need of many employees, hence the expenses pertaining to them too are saved.

(4)   No Need of Suitably-Located Offices or Shops. For undertaking the mail-order business, there is no need of any premises of suitable location on exorbitant rents, etc.

(5)   Reduction in Supervision Costs. The Supervision and running expenses of the mail-order business are much lower as compared to those of the other retail business units.

(6)   Less Capital Needed for Business. In this method, not huge stock of the commodities is required to be kept and the price of the goods is immediately received while the V.P.P. is accepted and honored. Hence, less capital is required to be invested in the business.

(7)   Freedom From Intermediaries. There are no middlemen in this system, hence the trader becomes free from the botherations of the middlemen.

(8)   Widespread Business Scope. The sphere of business is quite extensive in the mail-order business.

Demerits of Mail-Order Business

1. From the Customers' Point of View

(1)   Lack of Credit Facilities. By this system, such customers are dissatisfied who need the supply of goods on credit.

(2)   Delayed Receipt of the Goods. Very often the consumer receives the supply of the product after much delay which results into various difficulties to be faced by him.-

(3)   No Utility to Rural Illiterate Customers. There is no utility of this system to the rural illiterate customers.

(4)   Lack of Personalized Services. Like that of the departmental stores, the customers in this system are unable to get the individual or personalized services.

(5)   Lack of the Facilities of Checking the Goods. In this method, the customer is unable to check or examine the commodities directly and physically. In other words, the customers are unable to get the facility of the choice of products.

(6)   No Attention Towards the Customers' Complaints. Under this system, no particular attention is paid towards the complaints from the customers.

(7)   Chances of Monetary Looses. The customers sometimes get entangled in the clutches of the false and cheating persons by means of the fictitious advertisements. It renders the customer to a big monetary  loss.

(8)   Difficulty in Returning the Product. Under this system, the customers feel difficulty in returning the products to the seller.

2. From the Traders' Point of View

(1)   Loss Due to Breakage. If the product' is destroyed or broker. in the transit, the customers don't honor the delivery of the goods and they immediately send it back.

(2)   Impossible to Draft Correct Mailing List. Under this method, it is a tough task to draft up the correct mailing list of the customers.

(3)   Much Amount Spent on Advertisements. In this method of retail trade, the businessman has to spend high amount on the advertisements.

(4)   No Personal Contacts With the Customers. In this method of business the sales are low due to no personal contacts with the customers.

Mail-Order Business in India

In India, the mail-order business has not been specially popular whose some of the main causes are being mentioned here :

(1)   Indian masses are illiterate, hence they could not well realize the significance of the mail-order business.

(2)   The-standard of living of the country's population is of a lower type; hence, due to it, any hope of successful mail-order business is useless.

(3)   There is lack of adequate means of transport and communication in the rural regions. By it, no special popularity has been available to the mail-order business.

(4)   Due to false advertisements, the commit people have lost their confidence in this system of business.

(5)   The masses don't get any credit facilities in the mail-order business, due to which they don't take much interest in asking for the products through the mail-order business.

Difference Between Departmental Stores and Multiple Shops

SNo.	Basis of Difference	Departmental Stores	Multiple Shops
1.	Meeting of Customers' Needs	In these stores, the customers get all their needed items at one and the same place.	In these shops, only one or two items of customers' needs are available.
2.	Nature of Items Sold	In these stores, the luxu­rious items are mostly sold.	In these shops, things of common people's use are sold.
3.	Personalized Service	Besides supplying the things, various kinds of personal services are also provided by these stores to the customers, e.g. reading room, hair-cutting saloons, canteens, etc.	By these shops, no personalized services are provided to their custo­mers.
4.	Credit Facility	Departmental stores ex­tend the facility of credit to their customers.	By these shops, only cash sale is performed and no sort of any credit facility is granted to the custo­mers.
5.	Prices of Products	Things sold here, are available at higher prices.	Things sold in these shops are available on lower prices.
6.	Scope for Advertise­ments	The scope for advertisements, in departmental stores, is restricted since their customers are only local.	The scope of advertise­ments of these shops is quite extensive and wid­espread, so they seek the help of the national level media for publicity of their products.
7.	Transfer of Products	In these stores, the items of one department are not transferred to the other.	In these shops, if some product is not sold at one place or shop, it could be transferred to the other shop.
8.	Jurisdiction of Business	In these stores, the sphere of business is quite limited since these are confined to a particular city.	Since the network of such shops is spread through­out the whole country, hence the sphere of their business is quite exten­sive.
9.	Capital	For setting up the depart­mental stores, much capital is required.	For establishing such shops relatively less capital is needed.
10.	Location	These stores are set-up in such parts of the city where the rich people could easily come and go.	These shops are set up on such places where the common masses could easily approach.
11.	Right of Making Purchases	In these stores, the mana­ger of every sub-department has the right to make the purchases for the stores.	In these shops, the right of purchasing the products is available only to the central office