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fundamentals:business_models:clicks_and_mortar
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Clicks and Mortar

The Clicks and Mortar model stands for multi-channel approach and is used to describe the strategy of a company that integrates physical infrastructure and virtual channels.1) This integration allows firms to exploit synergies and to provide better service to costumers.

The Clicks and Mortar approach combines the strengths of E-Commerce channels and the advantages of physical outlets. Virtual channels make distance irrelevant and thus provide access to wider markets. Furthermore they allow a 24/7 order service as well as unlimited access to information.2) On the other hand in physical stores the costumer is enabled to examine, test and try the product.3) Consulting is another aspect that can only be provided on site.

Opportunities of Clicks and Mortar

By integrating channels a company can rise its sales opportunities because through the integration of channels shopping becomes more simple and convenient for the customer. So customers are able to move flexibly from one channel to another during the purchasing process.4) For example they can research a product on the internet, gather information about the item and order the product on-line. If there are complaints about the product and the customer wants to return it, the after-sales service is provided in the physical outlet.

The Clicks and Mortar model enables companies to build up competitive advantages because of the following aspects5) :

  • Lower costs: By integrating virtual and physical channels internal and external efficiencies can be improved by saving labor, inventory and delivering costs.
  • Improved trust: Because of their physical presence click-and-mortar firms can achieve a competitive advantage over Web-based stores regarding the trust of customers. Because there is a physical location where customers have a direct contact person and a direct address where they can return products, they perceive less risk.
  • Differentiation through value-added services: Value-added services can be offered in terms of content integration, information integration as well as logistic integration without necessarily increasing costs.6) Content integration refers to prepurchase services like offering information about the product. Furthermore integrated information systems allow customers to locate the nearest store and check inventory. Account information as well as loyality programs faciliate the customer the managing of its own activities. Logistic integration of the channels allows the customer to choose the channel through which he picks up and returns the product.
  • Geographic and Product Market Extension: The Clicks and Mortar approach enables companies to extend its market reach as well as its product scope and depth that is in physical stores due to local restrictions more limited than on the internet.

Challenges of Clicks and Mortar

Retailers have to be aware of the challenges the Clicks and Mortar approach poses. There might be channel conflicts like the possible cannibalization of off-line operations by on-line activities. Brand dilution is another point firms have to consider when established brands are transferred from one channel to another. 7)

Conclusion

Through the integration of physical and e-commerce channels firms are enabled to exploit synergies that may not be available to firms that treat these channels independently. Companies with a good physical infrastructure can use the advantages of virtual channels to target new kinds of customers and to offer more value-added services to simplify the purchasing process. The other way round building up a local presence can enhance customer value if the company is selling a product with which customers require to get in contact physically.

External Links

1)
Weller, M. (2002): Delivering Learning on the Net - The Why, What & How of Online Education. London.
2) , 4) , 5)
Steinfield, C., Bouwman, H., Adelaar, T. (2002): The Dynamics of Click-and-Mortar Electronic Commerce - Opportunities and Management Strategies. In: International Journal of Electronic Commerce, 7 (1), S. 93-119.
3) , 6)
Saeed, K., Grover, V., Hwang, Y. (2003): Creating Synergy with a Clicks and Mortar Approach. In: Communications of the ACM, 46 (12), S. 206-211.
7)
Biyalogorsky, E., Naik, P. (2003): Clicks and Mortar - The Effect of On-Line Activities on Off-Line Sales. In: Marketing Letters, 14 (1), S.21-32
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fundamentals/business_models/clicks_and_mortar.txt · Last modified: 2012/05/07 08:47 (external edit)