Chapter 3

Multi-Channel Retailing .
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The Multi-Channel Retailer

Retailer Steve Cole/Getty Images

The McGraw-Hill Companies,

Inc./Andrew Resek, photographer

Digital Vision / Getty Images

A retailer that sells merchandise or service through more than one

channel. By using a combination of channels, retailers can exploit
the unique benefits provided by each channel.

3-3
Why are Retailers Using Multiple Channels
to Interact with Customers?

■ Customer wants to interact in different ways

■ Each channel offers a unique set of benefits for

Customers

2)Why 1/4
Why are Retailers Using Multiple Channels

to Interact with Customers?

Consumers buy what they want,
When they want,
customer Wherever they want

store kiosk catalog Call center Web/E-mail mobile

2)Why 2/4
 More Reasons for Becoming
a Multi-Channel Retailer

- Increase Share of Wallet

Example: Eddie Bauer (US Cloth Retailer):

single-channel customers spend $100-$200 / year
, dual-channel customers spend $300-$500 / year,
tri-channel customers spend $800-$1000 / year

- Overcome Limitations of Existing Format

- Expand Market
- Provide services more cost-efficiently
- Leverage Existing Assets
- Brand Name, Inventory, Customer Database
- Develop Insights in Customer Shopping Behavior

2)Why 3/4
Relative Benefits Provided by Different
Channels

3-7
Physical Products Flow Over the Internet

 Five Flows in Marketing Channels

 1. Product flow
 2. Negotiation flow
 3. Ownership flow
 4. Information flow
 5. Promotion flow

■ Internet superb at handling 2,3,4, and 5 because these can be

digitized and moved at speed of light.
■ Product flow cannot be digitized and is processed (often by
humans) and moves at best at speed of sound.
■ Product flow is the Achilles' Heel of E-commerce.
■ PS:
 3D Print & Digital Content
 Disintermediation

Elimination of middlemen in distribution channels

Intermediaries become superfluous because producers

gain exposure to vast numbers of customers in
Cyberspace

All that’s needed is a Web site.

Millions of customers have access to thousands of
producers via the Internet. So, who needs middlemen.

 Dell Computer $40 million per day

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3-11
3-12
Internet Channel

■ Broader Selection
■ More and Better Information to Evaluate Merchandise
 Drill Down as Much as You Want
 Full motion Video
■ Personalization
 Information is tailored to Individual consumers to help them
make quicker and better purchase decisions
 Customized Information -- Side By Side Comparisons, Full
Motion Video
 Try It On Virtually
■ Information for Solving Problems, Not Just Merchandise
Characteristics
 Virtual Communities

3-13
More and better information to evaluate
merchandise

3-14
Side-by-Side Comparison

3-15
Personalized Customer Service

3-16
Problem Solution Benefits
Offered By Internet Channel

■ Bundling
Information,
Services, and
Products

3-17
Virtual Communities

People who seek information, products and services

communicate with each other regarding specific issues
Social shoppers: seek not just information but also an
enhanced emotional connection to others participants in
the shopping experience

Royalty-Free/CORBIS
3-18
What Merchandise Will Be Sold Successfully
Through Electronic Channel?

■ “Look and See” attributes vs. “Touch and Feel” attributes (?)
■ Degree to which information can be used to predict
satisfaction prior to purchase
 Gifts
 Services
■ Might not need to “Touch and Feel”
 “Touch and Feel” not useful - Gifts
 Superior presentation of “Touch and Feel”
 Branding

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Touch and Feel
3-20
3-21
How Can the Electronic Channel
Overcome Limitations?

How to Sell Over the Internet

Branding:
…and eliminate returns
Reputed brands provide a consistent experience for
customers to overcome not being able to touch and
feel.

The McGraw-Hill Companies, Inc./Jill Braaten, photographer 3-22

How Can the Electronic Channel
Overcome Limitations?

Use technology to convert “touch and feel” information into

“look and see” information

■ 3-D Imaging
■ Zoom Technology
■ Live Chat Technology increases
■ 360 Degree Viewing
conversion rates
■ Virtual Models

conversion rates: % of consumers who buy the product after

viewing it

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My Virtual Model: Try It On

Link to My Virtual Model H & M

3-25
www.fits.me
Perceived Risks of Electronic Shopping

Don Farrall/Getty Images

Security of credit card transaction – security problems

have not arisen in actual usage

Potential privacy violations – consumers are concerned

about retailers collecting their personal information

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■  ‘Surprisingly, as Bangladesh is a CoD
dominated market at 99%, logistics here also
has to serve as a financial platform to collect the
cash from the consumers and transfer the
amount to the merchants.

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 Cross-browser
■ Cross-browser refers to the ability of a website, web
application, HTML construct or client-side script to
function in environments that provide its required
features and to bow out or degrade gracefully when
features are absent or lacking.

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Cobrowsing / CoSurfing

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 https://shopup.com.bd/
Support provider fo E-retailer

3-34
Why did Electronic-only Retailers Fail?

They had skills in web design

They had skills in systems to manage transactions

■ They did not have skills in brand

recognition
■ They did not have skills necessary to
build consumer trust
■ They did not have skills to build
assortments, manage inventory and
fulfill small orders to homes
■ They did not posses sufficient
Digital Vision/Getty Images

resources to evolve into multichannel

retailers
3-35
Why are store-based retailers evolving into
multi-channel retailers?

■ Sales through an electronic channel

are growing at over 20% per year
■ Adding an electronic channel creates
immediate possession utility
■ Multi-channel retailers can attract
more customers and satisfy existing
customers better
■ The growth of sales in stores is
declining

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Ecommerce Myths

■ Low Cost of Entry

■ Overestimate Importance of Technology,
■ Under Estimated Need for Traditional Resources
■ First Mover Wins
■ Gets Rid of the Middleman

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Today’s empowered consumers live in a multi-channel world –
research products online, buy offline, and demand service everywhere

Web & Email

Consumers buy : • 24x7
• Visual
what they want,
Call Center
when they want,
• Convenient
wherever they want • Immediate
Brick & Mortar
• Touch/Feel
• Experience driven

Kiosks
• Visual
• Convenient
Customer
Handheld Devices
• Immediate
• 24x7
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Retailing becoming “Threetailing”

Store Come in/Drop in/Step in

Catalog Call in
Website Log on

seamless integration of S+C+W

Threetailing Requires
Integrated Channel Strategy

■ “Left channel” has to know what the “right

channel is doing

■ Channel confluence instead of channel conflict

■ Cross channel synergies should be the goal

Integrated Multiple Channels will be
needed to meet the demands of the
new breed of “shopper”

“channel surfers”
 Retailer Brand Equity = f(s,c,o)
Brand equity is the value consumers assign to
a brand above and beyond the functional
characteristics of the product
Where:
s = customer satisfaction with store channel
c = customer satisfaction with catalog
o = customer satisfaction with online
Apple Inc.

■ Up to 2019, Apple has 507 retail stores in 22 countries

■ with 236 of those outside the U.S.
■ The company reported 21,000 visitors per store per
week and an average revenue per store of $16.7 million.