Quiz 3: Multichannel Retailing

Business

Store based retailer refers to a type a retailer who sells goods and conducts business from a fixed location. It is the most common form of retailing. Stores offer a number of benefits to customers that they cannot get when shopping through catalogs and the Internet including getting to touch and feel goods, personalized service, cash payments, etc. Stores have found that there are several benefits of an electrical channel. The store is able to expand nationally and across the globe at low cost because of an electronic channel. They are able to service customers in other parts of the region with an electronic channel, which is a benefit for the company. The store can also gather information about their customers such as what they shop for most or particular items they prefer. They are able to find this information through the electronic channel. When they are able to see what the customer prefers they are able to have more supply of that product which is beneficial for the customer.

Multichannel retailer refers to the retailer who uses different retailing channels to sell its goods. The multichannel use a mix of traditional stores, catalogs, internet stores, telephone etc. to sell their products. Multichannel retailing allows the retailer to service their customers more efficiently through multiple modes. Following are the capabilities that are needed to be an effective multichannel retailer: • developing assortments and managing inventory • managing employees in distant locations • distributing merchandise efficiently from distribution centers to stores • presenting merchandise effectively in catalogs and web sites • processing orders electronically • efficiently distributing individual orders to homes • operating communications and information systems that provide a seamless interface with customers throughout all the channels.

Stores allow customers the benefits of a high sensory experience when browsing and shopping.  Customers can touch and feel products and seek information from qualified sales associates before purchase.  Moreover, they can pay in cash and thus avoid both the need to give out personal information and the high interest rates charged by credit card companies.  Customers can obtain immediate gratification in that they can take home the product immediately after purchase.  Customers feel comfortable with the quality and service (including the possibility of post-sales returns) when they are buying from known and reputed stores.  Returning a product is easier to a store compared to other formats. However, customers are constrained by the limited choices among the merchandise assortment available at the store.  Customers also have to spend considerable time and effort in comparative shopping to ensure that they have obtained the best quality, price and/or value.  Also, customers often go through the added inconvenience of picking the merchandise themselves and waiting at long checkout lines. Catalogs allow customers the convenience of anytime, any place shopping.  Consumer and credit information is better protected when shopping through a catalog.  Also, many catalogs provide items that are not available in stores. Catalogs are particularly convenient when the product category selection is limited in local stores.  For example, customers living in more rural areas may find catalog shopping to be a very convenient alternative.  Since the customer does not have to travel to unknown and unsafe areas to make a purchase, catalogs provide a safer alternative as compared to physical stores. However, catalogs provide very little pre-sales information that the customer may desire about the product.  While some of this information may be obtained over the phone, in most cases, the customer may only encounter an order taker with limited knowledge at the other end of the phone line.  Customers can see better pictures than over the computer screen, but sometimes critical information may not be available.  Returns are cumbersome, since the customer would have to repackage the product and may have to drop it off at the post or UPS delivery location.  Moreover, catalogs provide limited assortment. The Internet offers the convenience of always open retailing.  Customers can order anytime and can more efficiently comparison shop for products, brands, and prices.  Customers are exposed to a very wide assortment of products and brands and can make choices not only across products and brands but also across the retailers who stock them.  There is greater personalization which benefits customers in selecting products and making purchase decisions.  Detailed information,  even on new product categories, can be obtained more easily. However, the consumer may be wary of unknown retailers over the Internet, fearing that the order may not be fulfilled or that the delivery promises may not be kept or the product quality may not be as advertised.  Also, customers find their risks to be high, especially when they have to provide personal and credit card information over the Internet.  Consumers may find that less pre-sales information is available for products that require touching-and-feeling before purchase.  Also, the costs of making a bad decision are high, especially since Internet retailers vary in terms of their return policies (some charging a hefty restocking fee).