Bricks and Clicks
Early E-Commerce: internet firms have a cost advantage
In the early years of Web-based commerce, the emphasis was placed on sources of competitive advantage that Internet firms had over traditional ones, primarily using transaction cost logic. Transaction cost economics emphasizes the nature of costs that firms incur in the process of conducting transactions with buyers or sellers.
Transaction cost economics
later e-commerce: More advantages of e-commerce over traditional commerce
In addition to the transaction cost advantages offered by e-commerce, researchers have found numerous other advantages that virtual firms have over physical firms. Web-based businesses are perceived to hold many operational, cost, scale, and scope advantages over firms confined to physical channels. These advantages include:
The Bricks and Clicks business model
The Bricks and Clicks (also: Clicks and Mortar) business model refers to the marriage of traditional ways to conduct a business (often using direct, face-to-face contacts with customers) and Internet ways to interact with customers (often via websites, email, FTP and other internet technologies). Compare also: Multi Channel Marketing. The integration of e-commerce with existing physical channels is a challenging undertaking that can create problems for management. Marketing theorists have long recognized the potential for channel conflicts that can occur when there are alternative paths that products can take to the end consumer.
The Clicks and Mortar business model suggests that traditional sales channels can be operated along or even in an integrated way with internet sales channels.
advantages of Clicks and mortar strategy
Typical advantages of Bricks and Clicks strategies are the leveraging of synergies:
The Clicks and Mortar model offers an advantage in areas of business where it is better to leverage competencies and assets from a physical company. Ideally the integration of physical and online channels enables firms to capitalize on potential synergies between the two, yielding competitive advantages over pure internet firms, or firms that offer e-commerce channels in a more parallel (non-integrated) fashion. Pure dot coms, on the other hand, have an advantage in areas that stress cost efficiency. They are not burdened with Brick and Mortar costs and can offer products at very low marginal cost. However, they sometimes spend substantially more on customer acquisition.
Avoiding Channel Conflicts
Firms with multiple channels may fall prey to channel conflicts. Channel
conflicts can occur when the alternative means of reaching customers competes
with or bypasses existing physical channels. One danger is that these conflicts
result in one channel simply cannibalizing sales from the other. Perceived
threats caused by competition and conflict across channels can have other
harmful effects, including limited cooperation across the channels, confusion
when customers attempt to engage in transactions using the two uncoordinated
channels, and even sabotage of one channel by the other. Management must act
to diffuse conflicts, and ensure the necessary alignment of goals, coordination
and control, and development of capabilities to achieve synergy benefits.
Coordination and control mechanisms include interoperability across channels
so that customers may move freely between channels, the use of each channel
to promote the other, incentives encouraging cross-channel cooperation, and
coordinating customer services to ensure that the unique strengths of each
channel are utilized.
Compare with: 4S Web Marketing Mix | Multi Channel Marketing | Affiliate Marketing | Porter Competitive Forces | Porter Competitive Advantage | Resource-Based View | Parenting Advantage | Prahalad | Just-in-time | TDC Matrix | Outsourcing
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