Does multi channel retailing have more impact Essay Example

24/7, whether it's ordering pizza (Domino's Pizza) or conducting fund transfers (phone-banking).

Retailing:

Retailing encompasses the sale of goods or services directly to end consumers for personal use. A retailer or retail store is any business whose sales primarily come from retailing. Whether a manufacturer,
wholesaler,
or retailer,
any organization that sells products directly to consumers is engaged in retailing. The method of selling,
whether through telephone,
mail,
vending machine,
internet ,
or in person,is not relevant.

Traditional Retailing:

Traditional Retailing refers to the street stores and neighbourhood grocery shops that sell products directly from their physical stores. These stores specialize in specific types of products like garments, shoes, watches, liquor, and books. Traditional retailers have certain advantages including the ability for shoppers to see and physically interact with the products, receive in-person customer service, enjoy immediate purchases without delivery delays for small or medium-sized items, and experience the traditional shopping environment. In the early days of retailing, stores were mainly located on the streets and operated as small independent establishments. This limited the variety of merchandise that retailers could offer, and customers had to endure weather conditions while browsing along the street.

Although there are no elevators, escalators, or travelators to make shopping easier and limited street parking available, Jeff Bezos, CEO of Amazon.com, recognizes that "the physical world is still the best medium ever invented." Despite the current increase in e-commerce, most shoppers currently prefer to buy

from traditional brick-and-mortar stores. Even with optimistic predictions, online retail sales in the US are estimated to make up less than 5% of total retail sales. If stores come up with new ways to attract customers, this percentage could potentially decrease even more.

Multi Channel Retailing:

Multi Channel Retailing refers to selling products through multiple channels, a strategy that has caused bankruptcies and closures in the retail sector. Dominant players like Safe Way and Coles Myer are supermarkets, whereas companies such as Amazon.com and ebay.com sell directly to customers without intermediaries.

Surviving as a small store used to be very challenging when businesses relied on just one channel, such as in-store sales or catalog or door-to-door marketing by companies like Eureka Forbs. However, retailers must now adapt and diversify their selling methods to cater to customers who prefer online, telemarketing, or catalog shopping. By offering multiple retailing options, they can strengthen their sales, reduce risk, and maximize resource utilization.

There are various methods of selling a product, such as telemarketing, online sales, door-to-door marketing, in-store selling, and catalogue marketing. In today's world, consumers seek convenient options for purchasing and often switch their preferred buying method. They no longer want to be limited by the location of the product; instead, they desire the flexibility to choose how they make their purchase. Many customers now choose to buy products online from stores they typically visit physically or simply make a phone call to complete their purchase. For example, sometimes you may go to a shop to buy pizza but other times when you have guests at home, you can simply call and request delivery.

The key to achieving profitability is providing accessibility

and convenience. It can often seem impossible, but nowadays customers are frustrated when they find products online only to discover a higher price in the physical store. However, as multi-tiered retailers better understand consumer attitudes and the overall online-offline shopping experience, we can expect less of this discrepancy. Multi-channel retailing combines customer activity on a website with brick-and-mortar stores and call centers, making it a promising concept. This integration has the potential to greatly enhance customer satisfaction because shoppers have the choice to shop remotely or in-store based on their convenience.

If customer satisfaction increases, revenue will also increase. In the past, sellers relied heavily on a single selling source. However, the failure of many pure-dot companies in the last decade indicates a change in customer preferences and increased competition. Therefore, sellers can no longer rely solely on physical stores or online sites.

Types of Channels:

Online Channel: The internet serves as a source of information, entertainment, communication, transactions, and distribution.

Now any company or retailer can open their website and offer their best deals to customers. They can display product details, prices, and other information. Customers can purchase products online only. Many companies are exclusively selling their products online, such as Dell. Dell manufactures computers specifically after receiving online orders from customers who design their desired computer on Dell's configuration board and pay in advance using their credit card number. Telemarketing involves using the telephone and call centers to attract potential customers, sell to existing customers, and provide service by taking orders and answering inquiries.

Call centers have a positive impact on the retail industry as they contribute to increased revenue, decreased selling costs, and enhanced customer satisfaction. These

centers handle both inbound telemarketing (receiving calls from customers) and outbound telemarketing (making calls to prospects and customers). In 1998, telemarketers achieved sales worth $482 billion from consumers and businesses. On average, households receive 19 telemarketing calls annually and make 16 calls for placing orders.

Catalogue Marketing is another effective strategy that involves directly sending offers, announcements, reminders, or other items to individuals. Direct marketers utilize targeted mailing lists to distribute millions of mail pieces each year such as letters, flyers, foldouts, CDs, etc.

Both upselling to current customers and generating inquiries from new customers are benefits of mail order catalogs. The catalog industry experienced a growth rate of 8% annually from 1993 to 1998, reaching $87 billion in sales (Kotler, MM). According to the direct marketing association, there are currently around 10,000 mail order catalogs available. Effective use of this marketing channel requires careful management of customer lists to minimize duplication and returns. Door-to-door marketing is another traditional channel that involves individuals visiting people's homes to sell products or services.

Sales can be done at the customer's location, allowing them to make purchases from their own home. One way to sell is through a vending machine that offers a variety of items like cigarettes, soft drinks, coffee, candy, newspapers, magazines, hosiery, cosmetics, hot food, mobile recharge kits, and paperbacks. Another method involves TV direct response marketing where dedicated channels are used for advertising and selling products and services. For instance, the Home Shopping Network operates 24/7 with hosts presenting discounted prices on various items including jewelry, lamps, dolls, and power tools. Customers can order by calling a toll-free number and expect delivery within 48 hours.

The Benefits of

Multi-Channel Retailing

1. Increase in Sales Volume: The integration of new channels into our business boosts sales, as each channel contributes to overall revenue. For example, including mail sales attracts more customers and generates a higher number of orders, resulting in greater sales.
2. Profit Increase: Adding new channels leads to higher sales volume, which in turn increases profits. By taking advantage of bulk purchases and benefiting from increased sales volume, businesses can frequently enhance their profits.
3. Growth in Customer Inflow: Expanding our channels also expands the influx of customers. These additional channels attract more customers, thereby increasing sales and raising awareness about our shop or business.
4. Optimal Resource Utilization: Incorporating new channels allows us to efficiently utilize our resources. With an increase in sales, inquiries, and customer inflow, we can maximize the utilization of manpower and capital. Ultimately, this reduces the rate per customer inflow.

• Outperforming Competitors: Introducing a channel that our competitors are not utilizing gives us an extra advantage. This new channel enables us to sell our products and attract a new customer base, ultimately leading to increased sales.

Nike and Adidas both dominate the shoe market. However, Nike has an advantage over Adidas as customers can personalize and order shoes online, resulting in higher sales for Nike. Moreover, if customers cannot find nearby stores selling their desired shoes, they have the option to purchase them online.

Increasing distribution channels can expand market share. For instance, Compaq not only sells its computers through dealers but also offers online purchasing. This allows Compaq to reach new market segments. In contrast, Dell, their main competitor, solely focuses on online sales. Hence, Compaq possesses a larger

customer segment that includes those who prefer buying products online.

Compaq's market share increased due to their ability to sell through dealers, while Dell could only sell online. Customers who preferred not to purchase online were forced to turn to Compaq or other brands that sold through dealers.

Cyber Dialogue estimated that in 1998, online retail sales reached $11 billion, which includes sales ordered and paid for online. Sales ordered online but paid for offline amounted to $15 billion, while sales researched on the internet but ordered and paid for offline were about $51 billion. This shows that customers are using multiple sales channels. In the case mentioned above, $15 billion in sales were made online but paid for offline. This demonstrates that more customers are using the internet to research their needs and are then choosing to buy either online or offline. Conventional retailers who offer an online channel are attracting more customers who are both already familiar with the physical store and those who learn about it through the internet.

Due to the fast-paced nature of today's world, many customers are unable to physically visit Queen Street and compare prices and products by browsing through shops. Instead, they depend on the Internet to quickly gather information about different companies and their offerings. Once a product is chosen and the shop with the best deal is identified, customers can choose to either make a purchase at the

store or place an order online or by phone. The Internet's prevalence has led to an increase in customers visiting physical stores. Research on retail shop openings and closures reveals that businesses that solely rely on one distribution channel have a higher likelihood of shutting down compared to those that have multiple channels, including an online presence.

The statistics from 1999 regarding store openings and closings are highlighted in the text. It shows that 60.2% of stores opened with an online channel, while 39.8% opened without one. In the same year, 60.3% of closed stores were without an online channel, compared to 39.7% with one. These statistics suggest that multi-channel stores have a higher likelihood of success than single-channel ones, supporting the belief in the superiority of multi-channel retailing over traditional retailing in terms of effectiveness. The industry is transitioning towards multi-channel retailing because it offers greater sales and customer inflow compared to traditional retail counters. Thus, it can be assumed that multi-channel retailing holds more power than traditional retailing.

Challenges of Multi-Channel Retailing

Integrating with multiple channels is a complex task. The primary issue with this approach is finding a way to seamlessly connect with various channels. Having consistent pricing and information across all channels is not sufficient. Online shoppers expect detailed product information, while also demanding accurate pricing from all sellers. This necessitates careful planning, sufficient funds, robust inventory management, and competent leadership.

Retailers must effectively manage all channels to ensure they do not compete with each other or create conflicts over resources. Hill street retailers should carefully consider the value of investing in an Internet launch. Robin Terrell, the managing director

of Amazon.co.uk, warns against the challenges of fulfilling small orders on a large scale. Additionally, setting up the necessary technology is expensive, and selling online requires a distinct skill set compared to traditional retailing.

One particular issue relates to product categories, where most retail outlets do not fall into a specific category. This makes it extremely challenging to calculate with a particular channel. Often, orders are received for such small quantities that it becomes exceedingly difficult to cover the expenses. This situation requires additional capital, which is often hard to acquire for these retailers who operate on a small scale. It is quite difficult to gather such a significant amount of capital. Furthermore, if they manage to obtain it, their costs increase and their products become more expensive, creating another predicament.

It requires a significant amount of technical and financial expertise, which these individuals do not possess, and it is expensive to hire professionals. Additionally, with the increase in channels, more inventory will be needed to meet the higher demand, resulting in increased inventory investment.

Conclusion

In order to gain a competitive advantage in a multi-channel environment, it is important to carefully consider how customer interactions will be managed across multiple channels. Before adopting a new channel, businesses should assess their infrastructure, capacity, and target market segment. It is crucial to have a clear understanding of the most effective way to engage potential customers.

The rise of online retailers, catalog companies, and home shopping television channels has led to an increase in direct selling. The impact of technology on retailing has also been growing. Due to increased competition and the strong selling potential of the Web, retailers will need to

expand their channels in order to gain market share and stay profitable. This will likely result in an increased investment in data warehousing and data-mining tools, as customer retention becomes more important with the addition of new channels.

Adding channels to a business can lead to increased sales, customer inflow, profit, market share, and a competitive advantage. However, this should not be overlooked as it requires careful planning, research, sufficient capital, strong management, manpower, resources, and determination. When considering adding a new channel, it is important to assess the business environment, market trends, and the nature of the business. Adding a channel should not be done haphazardly; all possibilities, pros, and cons must be considered before making a decision. Currently, there is a growing trend towards multi-channel retailing. Not only are new stores opening with multiple channels, but existing retail outlets are also expanding their business by adding new channels. This is because they understand the benefits of having multiple channels in increasing customer inflow and ultimately boosting sales.