Master Thesis
Keys to Multi-channel Success
Cross-channel (R)Evolution
Master Thesis
Abstract
Nowadays, many retailers use additional channels in order to sell their products. Multi-channelling, in this case a combination of bricks-and-mortar store(s) plus a webshop, is starting to revolutionize the retail landscape. In order to successfully exploit this new
opportunity, the literature describes several keys to multi-channel success. This master thesis will describe four keys to success namely: a consistent brand image across channels,
becoming familiarized with your customers across channels, an integrated fulfilment strategy, and collaboration with third parties. These four factors are tested in practice by use of a survey distributed under retailers operating from The Netherlands. Nevertheless, it seems that respondents overall only comply with a consistent brand image across channels.
Acknowledgements
After several months of writing, my thesis is finished! I would like to thank a few persons and institutions in particular.
First of all, I would like to thank my two supervisors from the University of Groningen, Mr. Ritsema and Mr. Stek. As my first supervisor, I received a lot of constructive feedback from Mr. Stek and during meetings he always took the time for me.
Table of Contents
Abstract 3
Acknowledgements 4
Table of Contents 5
Table of Tables & Figures 7
1. Introduction 9 2. Literature Review 12 2.1 Multi-channelling Defined 12 Multi-Channelling 12 Channel 13 Success 14
2.2 Building a Successful Multi-Channel Business 14 2.2.1 A Consistent Brand Image across Channels 14
Product 14
Price 15
Promotion 15
2.2.2 Becoming Familiarized with your Customers across Channels 17
Utilitarian Values 17
Hedonic Values 18
2.2.3 An Integrated Fulfilment Strategy 19
Purchasing 20
Warehousing 21
Delivery 21
Sales 22
2.2.4 Collaboration with Third Parties 23
Horizontal Cooperation 24
Vertical Collaboration 25
3. Methodology 28
Research Method 28
Sample size 30
Procedure 30
Data analysis 31
4. Results 32
4.1 A Consistent Brand Image across Channels 32
4.2 Becoming Familiarized with your Customers across Channels 34
4.3 An Integrated Fulfilment Strategy 35
4.4 Collaboration with Third Parties 37
5. Discussion 39
6. Conclusion 42
7. Limitations & Areas for Future Research 44
Table of Tables & Figures
Table 1 – % Respondents / % Total Turnover Retail 32
Figure 1a – Store Retail Model 12
Figure 1b – Internet Retail Model 12
Figure 2 - Manufacturer – Retailer Multi-channel Distribution System 13
Figure 3 – Multi-channelling E-fulfilment Strategy 20
Figure 4 – Cross-channel Cooperation 24
Figure 5 – Survey Question: ‘Do you offer the same products online as in 33 your bricks- and-mortar store?’
Figure 6 – Survey Question: ‘Are the prices across the different channels 33 comparable?’
Figure 7 – Survey Question: ‘Are the same advertisements/promotions 33 used across the different channels?’
Figure 8 – Survey Question: ‘Do you measure the level of customer 34 satisfaction in the bricks-and-mortar store?’
Figure 9 – Survey Question: ‘Do you measure the level of customer 34 satisfaction on the webshop?’
Figure 10 – Survey Question: ‘Are you able to connect customer 35 information across the different channels?’
Figure 11 – Survey Question: ‘For what purpose does your company use 35 the collected information (multiple answers possible)?’
Figure 12 – Survey Question: ‘If a product has been purchased from 36 the webshop, consumers are able to?’
Figure 14 – Survey Question: ‘How long does it take for a customer to receive 36 the product at home, after ordering the product through the webshop?’
Figure 15 – Survey Question: ‘Does the way your supply chain is organized 36 facilitate that all channels can be served efficiently?’
Figure 16 – Survey Question: ‘If you cooperate with third parties 37 (including competitors) on the internet, in which way do you do this?’
Figure 17 – Survey Question: ‘In which way do you outsource the 37 delivery of your products?’
1. Introduction
Multi-channel retailing enables consumers to shop conveniently in a number of modes (Berman & Thelen, 2004). These modes can include: call centers, catalogs, kiosks, brick-and-mortar stores, and the internet (Neslin et al. 2006). It seems that, especially the growth of the internet is revolutionizing the retail landscape (Meuter et al., 2003). The World Wide Web has provided new means by which traditional retailers can serve customers (Bernstein et al. 2008). Many bricks-and-mortar firms currently have transformed themselves into clicks-and-mortar firms by incorporating the internet.
Nonetheless, before making the decision of going online, several aspects need to be considered (Bernstein et al. 2008). First, does it pay off to go online? Second, which is the equilibrium industry structure? Third, what is the implication of this business model for consumers?
When multi-channel retailers employ the internet effectively, it can be a powerful tool to increase revenues, profits, and market capitalization (Vishwanath & Mulvin, 2001). Moreover, selling through multiple channels provides retailers the opportunity to serve different customer segments. Bernstein et al. (2008) are of opinion that this new business model is also favourable for consumers. Consumers value the fact that they can shop 24/7 and appreciate the pace, lower price, and easiness of the webshop (Thuiswinkel.org).
Nevertheless, in order to successfully exploit these opportunities, several challenges need to be mastered (Agatz et al., 2008). The design of a multi-channel system requires a constant trade-off between the integration and separation of the diverse channels. Next to sales and operational decisions, delivery and after-sales processes are also becoming much more important (Agatz et al., 2008).
becoming familiar with the shoppers across channels. Only in this way, a customer database can be created, services be personalized and advertisements be targeted. Moreover, Teltzrow & Berendt (2003); Berman & Thelen (2004); Schoenbachler & Gordon (2002); and Chen & Leteney (2002) stress the importance of an integrated fulfilment strategy whereby online purchased products can be picked up and returned in store. At last, Berman & Thelen (2004) stress the value of collaboration to achieve multi-channel opportunities which otherwise could not have been achieved. These opportunities can facilitate capabilities including a quick delivery and a simple and secure transaction procedure for example (Chen & Leteney, 2000).
Easingwood & Storey (1996) measure success across the diverse channels in terms of sales performance and profitability while Teltzrow & Berendt (2003) define success in terms of traffic (amount of visitors) and conversion (the conversion of a visitor to a customer).
There are also authors (Molla & Licker, 2001; Raish, 2002; Chen & Chen, 2003; Patrício et al., 2003; Baron et al., 2000) who identify other reasons for success. These include for example: internal training, managerial leadership, business-IT alignment, and website’s design (appearance, complexity, flexibility). Since these authors only focus on the firm’s strategy towards e-commerce, these keys to success are not taken into account.
Previously agreed upon multi-channel success factors (a consistent brand image across channels, becoming familiarized with your customers across channels, an integrated fulfilment strategy and collaboration with third parties in order to achieve multi-channel opportunities) will be elaborated in this master thesis. Parts of these aspects are purely based on literature reviews while others have been determined after doing case studies or
distributing surveys. Nevertheless, these studies have all been done in countries other than The Netherlands. Since the Dutch have a very good bricks-and-mortar composition and a dense infrastructure (NFIA, 2010), it could be possible that the multi-channel success factors might be different.
second quarter of 2010. The Netherlands rank fifth with a connection speed of 6.5 Mbps. Chen & Chang (2003) relate internet connection to the amount of flow shoppers experience. The authors state that when interactivity (internet connection, manoeuvrability, waiting time) is inadequate, one’s flow is interrupted which may lead to lost sales. Nevertheless, when the infrastructure is dense, it could be easier to shop at bricks-and-mortar stores since these are more accessible. Mobile commerce might also become important. An accurate wireless infrastructure makes new applications possible. These include location specific mobile advertising, mobile financial services and location based services (Varshney, 2003; Malloy et al., 2002). Without a secure infrastructure connected to the device, a secure mobile commerce may not be possible (Ghosh & Swaminatha, 2001).
This master thesis would like to find out: What are the keys to multi-channel success and how
do retailers operating from The Netherlands cope with these so-called success factors? (Evidence from theory and practice)
This thesis will add to the existing literature since most of the investigations have been done in countries other than The Netherlands. Moreover, theory and practice will be combined. This thesis might be useful for retailers in a way that they can compare themselves towards peers regarding their multi-channel strategy.
Figure 1a - Store Retail Model
Source: Chen & Leteny, 2000
Figure 1b – Internet Retail Model
Source: Chen & Leteny, 2000
2. Literature Review
As mentioned in the introduction, a lot of articles (Schoenbachler & Gordon, 2002; Berman & Thelen, 2004; Chen & Leteney, 2000; Teltzrow & Berendt, 2003; Montoya-Weiss et al., 2003), discuss the critical issues in order to make a multi-channel business successful. In this section an answer to the first part of the research question: ‘What are the keys to
multi-channel success?’ will be given. Moreover, the operation of the success factors will be discussed. In order to do so, one needs to have a full understanding of the concepts ‘multi-channelling’, ‘channel’ and ‘success’.
2.1 Multi-channelling Defined
Multi-channelling
A fresh look at today’s retailing environment is needed due to global markets and innovative forms of retailing (Kaufman-Scarborough et al.,
2009). Before making a purchase, customers frequently use different channels at different stages. Rangaswamy & van Bruggen (2005) state that multi-channel customers employ more than one channel to interact with firms. Neslin et al.
(2006) mention that for the retail sector, call
centers, catalogs, the internet, kiosks and bricks-and-mortar store(s) are common day means by which consumers shop. It seems that especially the growth of internet is revolutionizing the retail landscape (Meuter et al., 2003). Chen & Leteney (2000) present two models (see figure 1+2) in order to provide a clear understanding of how internet retailing is different from traditional
Figure 2
Manufacturer – Retailer Multi-channel Distribution System Source: Boyaci (2005)
channel option makes sure that every firm must include the internet as a channel to reach for its customers. Moreover, firms are faced with the task of blending the online channels with the conventional channels. Porter (2003) puts it like this: the question is not whether one should use the internet or traditional models to compete; it is how you use both in order to gain the greatest strategic value.
Channel
In order to obtain a clear idea about the definition of the word ‘channel’, one should consider figure 2. The ‘M’ in figure 2 stands for manufacturer. The manufacturer fabricates the product at a unit cost for itself and at a wholesale price for the retailer (Boyaci, 2005). The
manufacturer distributes the product at ‘Pm’ through a wholly-owned channel, in this case directly through the internet. A retailer on
the other hand communicates or sells the
item for ‘Pr’, in this context through either the bricks-and-mortar store and/or through the webshop. ‘Sm’ and ‘Sr’ denote the basic stock levels. The substitutability of the products is portrayed by ‘αm’ and ‘αr’. Once the product is out of stock at the retailer’s channel, a fraction of the consumers will search for an item at the manufacturer’s channel and the other way round.
Success
Multi-channel success has been defined in several ways. Like said in the introduction, Easingwood & Storey (1996) define success across diverse channels in terms of sales performance and profitability while Teltzrow & Berendt (2003) measure success in terms of traffic (amount of visitors) and conversion ratios (the conversion of a visitor to a customer). In this master thesis, success will mainly be defined as turnover and revenue.
2.2 Building a Successful Multi-channel Business 2.2.1. A Consistent Brand Image across Channels
One of the first criteria for a successful multi-channel business is to offer a consistent brand image across channels (Schoenbachler & Gordon, 2002; Berman & Thelen, 2004). Brand image is not inherent within the technical, physical, or functional concerns of the product; it rather is affected and moulded by marketing activities, context variables, and by
characteristics of the perceiver (Dobni & Zinkhan, 1990). Image considerations including shoppers’ perceptions and preferences seem to guide purchase choices and customers’ channel choice (Dobni & Zinkhan, 1990; Neslin et al., 2006). The importance of a consistent brand image by looking at the product line, price and promotional strategy across channels will be discussed next. These three aspects are taken into account while Neslin et al. (2006), Shoenbachler & Gordon (2002) and Berman & Thelen (2004) regard them as important concerning multi-channel marketing and branding across channels.
Product
Consumers’ channel choice is largely determined by the type of product being offered (Neslin et al., 2006). Berman and Thelen (2004) state that the multi-channel retailer should be
Goersch (2002) also mentions that retailers need to make sure they offer the major product categories as well on- as offline. When consumers are able to utilize multiple channels to acquire their products, control and convenience can be increased while risks can be reduced.
According to Whan Park et al. (1991) the notion of product similarity is certainly an
important basis for determining the perceived fit between a brand and its extensions. Hence, the most favourable reactions occur when extensions are made with products which are similar in nature.
Price
To capture the first-mover advantage, many start-ups have offered excessively low prices online while a lot of incumbents on the other hand, just transferred their offline prices to the internet (Baker, et al. 2001). A study executed under North American shoppers, revealed that only less than 10% of the internet users are bargain hunters. It even seems that price changes which appear arbitrarily and carelessly can damage firms’ dignity (Baker, et al. 2001).
Huang & Swaminathan (2009) refer in their article to a research of a professional services company who found out that two-third of the firms’ price their product similarly off- and online. Goersch (2002) agree with this while he states that products should be priced consistently across channels. According to him, when consistency is absent, customer’s association of channels is destroyed and shopper’s channel choices are limited. This might confuse and eventually irritate customers.
Consumers most vulnerable to brand confusion seem to have lower levels of brand awareness and are less loyal to the brand (Brengman et al., 2001).
Promotion
Aldridge et al. (1997) stress that the company’s website is the most important online promotional strategy while unique websites enjoy more traffic, greater word of mouth
Berman & Thelen (2004) state the importance of an integrated promotional strategy. One way to incorporate promotional strategies is to enable consumers to check in-stock status at
specific stores through a web-based inquiry. In this way a uniform message will be created that can be distributed across channels. Goersch (2002) also mentions the impact of cross-channel promotions. Through cross-promotions, information on other cross-channels can be
provided plus the financial reasons for using them. In this way consumers may be encouraged to shop across multiple channels.
Stone et al. (2002) stress that when companies fail to integrate promotions across channels, the balance of business will shift elsewhere as customers’ expectations are not met. When consumers’ desires are matched with the brand’s perceived performance, the more satisfied the shoppers are likely to be with the brand (Spreng et al., 1996).
According to Berman & Thelen (2004) consumers view each channel of a multi-channel retailer as a complementary experience. In order to realize this, retailers should make sure channels have familiar characteristics. Goersch (2002) suggest that retailers could use the same brand name, slogans, colours and images in order to strengthen the perceived
association between channels. The company needs to make sure shoppers have a consistent experience regardless of the channels they use to shop.
Kwon & Lennon (2009) found that offline brand image exerts significant influences on online brand image which in turn explains online perceived risk and customer loyalty. A state of dissonance can be created once individuals are exposed to new pieces of information which are inconsistent with his or her existing cognitions about the object. Hence, if an inconsistent picture is constructed, the brand image can become fragmented and confusing to the customer (Schoenbachler & Gordon, 2002).
Schoenbachler & Gordon (2002) stress that multi-channel marketers should not be worried about cannibalisation which is the reduction of sales in one channel due to the introduction of another channel. Although some authors state that cannibalisation is most likely to occur when the internet channel too closely mimics the already existing channel(s) (Deleersnyder et al., 2002; Neslin et al., 2006) others mention that close alignment between e-commerce activities and the existing infrastructure infers performance and sales improvements (Teltzrow et al., 2003). This while the integration of the on- and offline business may support the
acquisition of new customers.
2.2.2. Becoming Familiarized with your Customers across Channels
There are also articles (Chen & Leteney, 2000; Montoya -Weiss et al., 2003; Schoenbachler & Gordon, 2002; Berman & Thelen, 2004) that underpin the significance of becoming familiar with consumers across channels. Data about shoppers’ actions is needed for companies in order to define an accurate (online) retail strategy (Lohse et al. 2000). Retailers should be aware of the best customers and all channels need to recognize the best customer concept (Schoenbachler & Gordon, 2002). Consumers’ lifestyle values including functional and non-functional motives can influence the motivation to buy. Functional motives can be defined as utilitarian and encompasses convenience, variety, quality and price for example. While non-functional motives on the other hand, can be defined as hedonic and relate to social and emotional needs. Being aware of these motives can help retailers understand why customers prefer one channel over the other.
Utilitarian Values
Noble et al. (2005) investigated the impact of utilitarian values including information attainment, price comparison, immediate possession, assortment seeking, and channel information search on channel purchase frequency. First, information attainment enhances consumers’ knowledge about a product/service and thereby the possibility to evaluate the product/service. In this way, perceived risk can be reduced (Noble et al., 2005). The advantages of information attainment can be obtained from each channel. However, the benefits in relation to costs differ across channels. Second, price comparison increases
the authors it has been argued that consumer costs (like time) for obtaining price comparison is lower online than in the bricks-and-mortar store(s). Third, possession measures the amount of time it takes before a customer derives its purchased product/service. The timing of
securing an item will differ substantially across channels (Noble et al., 2005). Consumers will choose the channel that maximizes their value. Fourth, assortment attainment describes the exposure of consumers to a variety of products/services. As a variety of complementary and substitutable products/services can be examined, shoppers can optimize their time, place, and possession needs (Noble et al., 2005). At last, Noble et al. (2005) state the influence of channel information search on the frequency of channel purchases. This relationship is due to switching costs. As customers invest more resources in searching for information within a specific channel, it seems that the cost of switching from an existing channel to a new one is enhanced. Exploring the value shoppers derive across channels can enhance significant understanding in multi-channel retailing (Noble et al., 2005).
Hedonic Values
In addition to utilitarian values, consumers seek other benefits that induce enjoyment and fun (Dholakia & Uusitalo, 2002). Hedonic values are personal and subjective and can include captivation, escapism, and spontaneity. Consequently, hedonic values would increase once off- and online environments provide stimuli which feed customer’s imagination. Next to enjoyment/entertainment, Broekhuizen & Jager (2003) view hedonic values in terms of social interaction and personal security. Black et al. (2002) state that when consumers highly value social interactions, they are more likely to shop at physical stores. Additionally, once
shoppers view the internet as less secure, they are most likely to use the channel of which they believe is more secure.
shoppers. However, this study did not find any differences in terms of ages and sex between online and non-online consumers.
Today’s customers are more sensitive and demanding to be treated as individuals.
Additionally, they would like to engage in transactions at any place, anytime and from any location (Peppard, 2000). When the perceptions of the alternative channel’s service quality are higher, the online channel will be less used (Montoya – Weiss et al., 2003). When multi-channel retailers are familiar with the motives and behavioural patterns of the shoppers, customer- and channel specific measures can be introduced (Schröder & Zaharia, 2008). In this way, firms are better able to offer products addressing shopper’s needs.
Next to product tailoring, information can also be used to establish an integrated multi-channel capability (Peppard, 2000). The customer should be known anywhere. Hence, Berman and Thelen (2004) state that retailers require an information system that shares customer, pricing and inventory-based data across channels. In this way, shoppers who purchase a mountainbike in store can also be contracted by e-mail with an offer of a discount on a helmet or other bicycle either applied on- or offline. When consumer’s order information can be collected, a retailer is able to assess for example the profitability on the basis of sales and the degree of cross-selling (Berman & Thelen, 2004).
Overall, multi-channel shoppers seem to spend more than single channel shoppers (Wallace et al., 2004) so retailers must make sure they retain customers. Shoppers who return to a given site, seem to spend 80% more on their tenth visit than first-time consumers (Vishwanath & Mulvin, 2001). In this way sales and performance can be enhanced.
Many firms have invested in customer relationship management, one-to-one marketing programs, and personalization in the hope of increasing shopper’s loyalty and customer retention rates (Burke, 2002).
2.2.3. An Integrated Fulfilment Strategy
3). The upper part presents the supply chain in the bricks-and-mortar store while the lower part presents the supply chain of the online channel. The fulfilment strategy is said to be integrated once the four stages interact (Agatz et al., 2008). Bendoly (2004) states that the potential integration of the on- and offline fulfilment processes has given many retailers the opportunity to increase market share and enhance services.
In this section, the four parts of the supply chain and the possible integration will be discussed.
Purchasing
People who shop at the
bricks-and-mortar store are required to pay in a different way than people who shop online. In the physical store, the cashier scans the products, puts them in a bag, accepts the payment (either cash, credit card, check and debit card) and prints the receipt (Burke,
2002). Online purchasing consumers on the other hand, are able to provide a credit card number on a secure web page or pay through IDEAL and internet banking for example. After the transaction has been accepted, the items will be shipped to either people’s homes, offices, or to the company’s bricks-and-mortar store (Burke, 2002).
Online transaction systems must assure unprecedented levels of security, speed, privacy, and internationalization for consumers and businesses to be accepted worldwide (Panurach, 1996). Nevertheless, the transnationality of payment methods also encourages problems of taxation and money laundering (Tanaka, 1996). Nevertheless, transaction security on the internet has received a lot of attention over the last ten years. Fraud free electronic shopping has been promoted since 1995 in the U.K. and in 1997 secured electronic transaction systems were introduced in Europe (Liao & Cheung, 2001).
Figure 3
Liao & Cheung (2001) discovered that there is a positive relation between transaction security and the willingness to shop online. Nonetheless, Kacen et al. (2002) found for all product categories in their research that consumers are less willing to buy online compared to the bricks-and-mortar store(s).
Dahlberg & Mallat (2006) state that more research is needed in order to determine the type of payment services required in the future and to measure the amount of integration necessary between the traditional and new payment services to facilitate a seamless overall financial infrastructure for consumers.
Warehousing
An effective infrastructure also requires a place where the products can be stored and from where the retailer is able to distribute them. According to Agatz et al. (2008)
multi-channelling offers the opportunity to integrate inventory at a single location which can be either a warehouse or a store.
Nevertheless, the company’s inventory strategy is determined by several factors (Metters & Walton, 2007). Firms that aim at minimizing inventory costs and avoid stocking out would prefer an integrated inventory system. Bendoly (2004) states the usefulness of a combined warehouse in case of an uncertain demand. When the on- and offline supply is pooled, the system-wide holdings necessary for maintaining a target service level could be reduced. In this way investments related to inventory and warehousing can be reduced. When retailers offer different items across channels and when they operate the internet as a separate business unit, a more segregated inventory system would be preferred (Metters & Walton, 2007).
Delivery
online purchased items up in store. These can include: low capital investments and possible carry-over effects on in-store sales (Agatz et al., 2008).
Reverse logistics is the return of the purchased good from a consumer to the merchant or vendor (Peters, 2000). The process can involve returns authorization, restocking, returning credits, returning packaging and transportation. This process is fairly complicated and becomes even more complicated when items are returned which have been purchased on the internet.
Consumers would like to see that they could bring their online purchased items back in store when they are not satisfied with the products received (Peters, 2000). Furthermore, when the returned items should be sent by post, consumers would like to see no costs incurred. Multi-channel retailers feel the pressure to come up with alternative Multi-channels for returning
merchandise beyond sending the package through mail (Peters, 2000). When online shoppers are able to bring their items back in store once they are not satisfied, retailers’ return handling costs can be reduced (Agatz et al., 2008). Next, consumers greatly value this service.
Simatupang & Sridharan (2002) say that severe competition in the market place has forced companies to quickly respond to consumer needs by faster product development and shorter delivery times. Tarn et al. (2003) put it like this: a consumer who orders quickly, expect delivery in the same way.
Sales
Under sales Agatz et al. (2008) denote all the processes that directly interface with customer demand. These processes include pricing, order promising, and forecasting for example.
Next to prices for the physical product, multi-channel companies also have to set prices for the delivery service (Agatz et al., 2008). According to Müller-Lankenau et al. (2004)
customer segments exhibit different attitudes towards the willingness to pay a price premium for the delivery. Ward (2001) states that online products with high delivery costs are generally associated with high transaction costs and are therefore poor substitutes for items in the traditional store.
available but also the capacity for delivery (Agatz et al., 2008). Flexibility in the delivery time and location can help increase e-fulfilment efficiency. Nevertheless, on- and offline
consumers expect real time inventory (Schoenbachler & Gordon, 2002). Therefore retailers must make sure they always have enough items in stock.
When being aware of historical trading data, as well on- as offline, planning and forecasting can be improved. Next to this, trading data allows targeted communication with the customer (Agatz et al., 2008).
Bendoly (2004) mentions that the potential integration of the on- and offline fulfilment processes has given many retailers the opportunity to increase market share and enhance services. Market share can be enhanced by managing both types of demand. Failure in order fulfilment is one of the primary reasons why shoppers have abandoned a website and/or the internet (Boyer et al., 2002). Therefore, firms should be motivated to emphasize channel interchangeability as a means of retaining customers when there is the risk of unavoidable availability features (Bendoly et al., 2005). When shoppers are aware of a pursuable back up option, they put less meaning on the risk that any one channel may fail to fulfil their needs.
Agatz et al. (2008) state that most retailers provide online consumers with the option to return products in the bricks-and-mortar store(s). This service not only decreases return handlings costs but is as well greatly valued by the customers. Consumers also favour store pick-up for items purchased online in order to avoid shipping and handling costs (Berman & Thelen, 2004). Moreover, in this way they can reduce the need to navigate through large box stores and they avoid wasting time looking for items that may be out-of-stock. Through store pick-up, shoppers are also able to acquire an item on the same day it is purchased. Berman & Thelen (2004) state that some of the customers who pick up a product in store, purchase other items on the same shopping trip. This can lead to an increase in sales and performance.
2.2.4. Collaboration with Third Parties
Figure 4
Cross-channel Cooperation Source: Kollman & Häsel (2008)
channel strategy (Berman & Thelen, 2004). Traditional bricks-and-mortar store(s) may not automatically have the capabilities required to set up an efficient internet channel in the first place. In those cases, they need to align with successful click-and-mortar companies or with pure e-tailers (Bernstein et al., 2008). Additionally, multi-channel retailers can cooperate with suppliers. This collaboration can facilitate a quick delivery and a simple and secure
transaction procedure for example (Chen & Leteney, 2000). Additionally, coordination can be improved and unnecessary costs incurred in the supply chain be reduced (Porter, 2008).
In this part, the motives behind horizontal and vertical collaboration will be explained.
Horizontal Cooperation
Kollman & Häsel (2008) talk about the rationale behind cross-channel cooperation. Kollman & Häsel (2006) state that due to the ongoing integration of the ‘real’
and ‘net’ economy, organizations operating at the electronic and physical level need to approach each other. Through cross-channel cooperation, which is defined as the
collaborative integration of on- and offline business models (see figure 4), the on- and offline business can be combined in an ideal manner which has positive effects for the parties involved. These positive effects can be shown by a complementation of parties’ competencies.
Firms cooperate due to exogenous and endogenous factors (Kollman & Häsel, 2008). The exogenous factors relate to the market based view which state that company’s uniqueness and success is determined by its position in the market. Porter (2001) defines five factors that drive competition within a specific market. These include: rivalry among existing
the webshop as an additional channel next to the traditional bricks-and-mortar store(s) reduces switching costs and shifts bargaining power to end users. Hence, understanding the market composes a definition of a successful competitive and collaborative strategy.
Endogenous factors are associated with the resource based view (Kollman & Häsel, 2008). This view states that firms cooperate when they would like to have access to valuable resources and capabilities of the partner which they cannot obtain efficiently through market exchanges. When companies have access to these valuable resources and capabilities, they are likely to gain a competitive advantage through strategies that cannot be easily duplicated by rivals.
Cross-channel cooperation can take many different forms. First, partners can collaborate by means of cross-media communication which is described as the strategic combination of online and print methods so to optimize advertising efforts. According to Kollman & Häsel (2008) e-entrepreneurs can profit from advertisement spaces of the offline partners for example in mailings, buildings and vehicles while offline partners can advertise on the e-entrepreneurs’ internet platforms. Moreover, partners can bundle their virtual and physical products and place their brands together in prospective advertisements in order to enhance image and publicity. At last, the partners can collaborate in the area of customer relationship management (CRM) (Kollman & Häsel, 2008). In this way parties can combine their
information and knowledge resources, solve the overall ‘customer puzzle’, and so support many operative and strategic decisions.
Vertical Collaboration
Retailers can also cooperate with manufacturers. Sheu et al. (2006) state that supply chain collaboration can deliver substantial benefits for the parties involved. The collaboration process can facilitate coordination efforts and investments and so enhance profits and eventually realize a competitive advantage.
Ovalle & Marquez (2003) stress that e-commerce requires excessive cooperation and
information sharing across firms. The authors distinguish three types of data sharing namely: product information, customer demand and transaction information, and inventory
2003). Ganesan et al. (2009) mention that the characteristics of relational ties determine the acquisition of knowledge content provided by information suppliers.
Outsourcing is often seen as an arm’s length agreement whereby activities are deployed to an external supplier (Narula, 2004; Rao et al., 2009). Business functions that are commonly outsourced today include the logistics, marketing and customer support (Rao et al., 2009). According to the authors, multi-channel retailers outsource these business functions to a lesser extent than web-only retailers. This might be due to a lack of knowledge; the authors refer to Pisano’s (1990) premise who states that when firms have limited experience, it is wise in certain areas to outsource functions to specialized service providers. Another reason why web-only firms outsource more is because they do not possess the economies of scale to efficiently do some of the business activities in-house.
Ovalle & Marquez (2003) stress that strong ties between manufacturers and retailers enhance radical innovations in a way that valuable and important information is transmitted.
According to Stone et al. (2002) retailer-manufacturer relationships are based on shared data, technology, and investments in order to create coordinated efforts so to better meet
customer’s wishes. Sales can be enhanced through referrals while information sharing can improve the performance of the supply chain (Stone et al., 2002; Ovalle & Marquez, 2003).
As well horizontal as vertical collaboration seems to be beneficial to the parties involved. Effective cooperation can result in an increase in parties competencies. Resources and
capabilities can be enhanced and the position in the market be improved. Moreover, costs can be reduced by outsourcing specific business functions to specialist providers.
will always be areas on which the partners do not trust each other. Specialized investments into the relationships can facilitate commitment (Hogarth-Scott, 1999).
3. Methodology
In the previous chapter the keys to multi-channel success have been discussed. These factors come from academic literature. In order to figure out how multi-channel retailers operating from The Netherlands cope with these pre-defined success factors, a survey is constructed.
Once we know how multi-channel retailers operating from The Netherlands deal with the pre-defined success factors we can check whether these firms cope with the aspects in a similar way. In this manner, we can see whether respondents notice the importance of the pre-defined keys and/or implicitly suggest others. Finally, the aim is to discover the success factors applicable for multi-channel retailers operating from The Netherlands.
Research Method
The ability of a survey is to find out opinions, attitudes, and behaviours of participants and to obtain other factual information about members of this population (Lavrakas, 2008). Since this master thesis is interested in the beliefs and conduct of multi-channel retailers operating out of The Netherlands, this method is chosen to do research.
Surveys have been used for a long time. Its advantages are that it is flexible, easy to implement, and able to offer a nearly limited range of data with reliable results (Parnaby, 2007). By questioning others, abstract information of all types can be gathered (Cooper & Schindler, 2006). By asking a few well-chosen questions, information can be acquired that would take much more time and effort to yield by observation. Furthermore, by use of technologies geographic coverage can easily be expanded as a fraction of the time and costs required by observation.
Nevertheless, questionnaires may not always be understood in a similar way across
Survey
The survey comprises different sections each containing a range of questions. The first section collects data about the name of the company, the respondents’ function within the company, etcetera just to become familiar with the respondent. The second, third, fourth, and fifth section cope with the pre-defined success factors. Respondents have to answer questions about their product, price and promotional strategy in the assortment section. Moreover, they are inquired about customer information and communication. Additionally, they are asked how they deal with the fulfilment strategy, especially concerning the delivery. And finally, they are questioned about whether, how and for what reasons they collaborate with third parties.
The survey mainly consists of closed questions ranging from multiple-choice, checklist to ranking response strategies. Nevertheless, retailers are always given the opportunity to tick ‘other’, ‘not applicable’, ‘do not know’. The rating questions consist of the following possibilities: Don’t Know; No, not at all (1); No, not quite (2); Yes, partially (3); and Yes, completely (4). In addition, with the rating questions retailers have the opportunity to provide an answer for as well the current situation as their ambition for the future. This to see whether respondents would like to change their strategy in the future. The 5-point scale is chosen because the data is easy to construct, administer and score. In this way, the current situation and ambition can easily be compared. Pre-coded questions are mainly used because of the objective of the research (benchmark study) and because many retailers seem to be reluctant to disclose information about their multi-channel practices.
However, when using an answer set instead of open questions, respondents might seek a feasible answer which may not be the one the questioner had in mind when formulating the question (Thomas, 2004). To minimize this bias, open questions are asked as well. The aim of these questions is to present alternatives and/or to allow the respondent to explain their
meaning. All open questions provide a frame of reference for the answers of participants.
A range of draft questions was taken to three multi-channel retailers. All three test interviews took place in an informal setting of two hours. During this time the questionnaire was
Sample Size
Retailers from industries as fashion, sports, shoes, living, consumer electronics, personal care, food, telecom, do it yourself stores, and office equipment were asked to participate. Next to operating in the retail industry, participants should also sell through at least a bricks-and-mortar store and a webshop.
Two third of the big Dutch retailers use the internet to sell their products (RetailNews). Thuiswinkel.org states that Holland currently counts more than 20,000 webshops. However, specific numbers of multi-channel retailers operating from The Netherlands have not been mentioned. Therefore the population size is hard to estimate.
The average combined response rate for all online survey types seems to be 26.45%. In order to receive 60 respondents, the sample size should entail at least 227 multi-channel retailers. When 60 retailers participate, I would expect to acquire a significant amount of data.
Eventually 228 retail companies were invited to contribute of which the majority joined the Elsevier Retail Summit on the first of June 2010. These retailers, often high within the organization, already indicated to be interested in a study about multi-channelling and personal data about these participants was easy to require. Moreover, others were invited by the use of the book ‘10 Retail Paradoxes’ (Quix, 2006). A lot of retail organizations
contributed to this work. The companies were Googled and called by phone in order to obtain an e-mail address from the person within the organization with knowledge about multi-channelling.
Procedure
An online data collection method was chosen because retailers’ e-mail addresses were easy to acquire and because in this way costs could be reduced (Parnaby, 2007).
In order to increase the response rate as well as the validity of the returned surveys, the questionnaire has been stated in Dutch and English. Moreover, retailers are going to be reminded about the questionnaire after the first and second week by e-mail. After the third week companies will be called by phone once they have not given any reaction by that time.
Data Analysis
Analysis of survey data can either be descriptive or explanatory (Weisberg et al., 1996). Polls can be used, for example, to provide a description. The answers provided by respondents, are portrayed by means of proportions. In addition to describing, polls can also be used as an explanation. This to understand people’s attitudes, beliefs and behaviours. Most of the time the results are generalized. Nevertheless, one must take into account that generalization is hard when non-probability sampling has been used (Thomas, 2004).
Eventually, 29 retailers responded which is 12.7%. This is less than the expected response rate of 26.45%. Non-response can suggest bias in the data and influences the validity of the study (Leslie, 1972; Cummings et al., 2001). If non-respondents are similar to respondents in every way, generalization to the surveyed population will not be affected. So, even questionnaires with low response and with no systematic differences between respondents and
non-respondents can be considered valid (Cummings et al., 2001). Nevertheless, similarities between these groups are difficult to assess. Therefore, many researchers try to address this problem by doing a follow up to increase the response rate and in that way decrease the non-response rate.
Since the non-response of this research was higher than expected and since one does not know whether non-respondents are similar to respondents, we should question the generalizability to the surveyed population.
4. Results
Data collection took place between the first of April and the 10th of May 2010. The results are based on 29 respondents. This is less than the 60 required in order to be able to generalize the results to the total surveyed population. The 29 retailers who responded are from different industries, see table 2. Some industries are over- (like the fashion sector) while others are underrepresented (like food). It is important to take this into account when analyzing the results.
Industry % of respondents % of total turnover retail
Food 0 45
Non-Food: 100 55
Fashion (Clothes) 38 9
Shoes 23 2
Living 10 9
DIY (do it yourself) 5 3
Electronics 8 6
Personal Care 8 4
Other 8 22
The literature review gives an answer to the first part of the research question: ‘What are the
keys to multi-channel success?’. These keys are seen to exist of four factors namely: a consistent brand image across channels, becoming familiarized with your customers across channels, an integrated fulfilment strategy, and collaboration with third parties. In order to provide an answer to the second part of the research question: ‘How do retailers operating
from The Netherlands cope with these so-called success factors?’, the response of a survey will be analyzed. This will be done in the upcoming section.
4.1 A Consistent Brand Image across Channels
As mentioned in the literature review, a brand image is seen to be consistent once retailers offer the same type of products across channels, require similar prices across channels, and when they use the same kind of promotions across channels. To figure out whether retailers operating out of The Netherlands portray a consistent brand image across channels, they are inquired about their mix of products, prices, and promotions. The questions raised consist of
Table 1 – Respondents / Total Turnover Retail
0 1 2 3 4
Current Situation Ambition Figure 5
Do you offer the same products online as in your
bricks-and-mortar store(s)? 0 1 2 3 4
Current Situation Ambition Figure 6
Are the prices across the different channels comparable? 0 1 2 3 4
Current Situation Ambition
Figure 7
Are the same promotions used across the different channels?
the following: ‘Do you offer the same products online as in your bricks-and-mortar
store(s)?’, ‘Are the prices across the different channels comparable?’ and ‘Are the same
advertisements/promotions used across the different channels?’. All three rating questions concerned as well the current situation as respondents’ ambitions. This to see whether
retailers would like to change their strategy in the future. Next to these, respondents were also able to specify their strategy by means of an open question.
As can be seen in figures 5, 6 & 7 the majority of the participants indicated ‘Yes, partially’ (3) to the questions whether they offer the same kind of products on- as offline, whether they require similar prices on- as offline, and whether they use the same
promotions/advertisements on- as offline. Additionally, respondents do not have the ambition to change this in the future. For those who offer the same assortment on-and offline, the most frequently cited reason for doing so is that retailers would like to create a one-sided image to the customer. Moreover, they regard the internet as just an additional channel with the same objectives as the bricks-and-mortar store(s). Those who do not offer the same product, prices, and promotions across channels regard the channels as distinctive.
2 = No 37%
Figure 8
Do you measure the level of customer satisfaction in the bricks-and-mortar store?
1 = Yes; 30%
Figure 9
Do you measure the level of customer satisfaction on the webshop?
4.2 Becoming Familiarized with your Customers across Channels
The literature review stress the importance for multi-channel retailers to become familiar with their consumers. Collecting customer data and understanding shoppers’ behaviour is
necessary in order to be able to increase customer loyalty and retention rates. In order to figure out to whether respondents are familiarized with their consumers, the following questions have been asked: ‘Do you measure the level of customer satisfaction?’, ‘For what
purpose does your company use the collected customer information?’ and ‘Are you able to
connect customer information across the different channels?’.
When retailers measure the level of customer satisfaction, they acquire information about the value received. According to Woodruff & Gardial (1996) value portrays the relationship between the product, the user, and his or her goals and purposes in a specific use situation. So, in order to get to know the customer, it could be important to require feedback. Moreover, since personalization is becoming more important, it is interesting to investigate whether respondents use the collected information for this purpose. Personalization would also be made easier once retailers connect customer information across channels. A scanner in a retail store, for example, can obtain detailed information about the products purchased and the price paid by a customer on one shopping trip (Hagel & Rayport, 1997). But what if the customer acquires something on the next day at the webshop? When retailers are able to integrate information, a clear customer profile can be established.
0 1 2 3 4
Current Situation Ambition
Figure 10 Are you able to connect customer information across
the different channels?
1 = 24% 2 = 36% 3 = 21% 4 = 6% 5 = 11% 6 = 2% Figure 11
For what purpose does your company use collected customer information (multiple answers possible)?
1 = For making special offers 2 = For sending out newsletters 3 = For communicating new product information 4 = To remind consumers about repeat/replacement purchases) 5 = To respond to specific customer wishes 6 = Other (please specify)
Whether the respondents are familiarized with their customers is hard to say. This since not enough questions has been raised about the customer base. Measuring customer satisfaction alone is not sufficient, customer loyalty and customer valuation & performance are also important to consider (Mehta, 2010). In today’s business environment retailers can use Business Intelligence (BI) to analyze complex customer data. Through this data they can check what type of customer is most profitable, what type of customer seeks for discount, what type of customer has the highest number of returns, etcetera.
Nevertheless, considering the percentages stated above, it seems that respondents need to put more effort in getting to know their consumers and in responding to specific customer wishes.
4.3 An Integrated Fulfilment Strategy
Like mentioned in the literature review, Agatz et al. (2008) regard a multi-channel fulfilment strategy to be integrated once the four phases (purchasing, warehousing, delivery and sales) interact between the on- and offline channel. According to the authors, the delivery is the most notably service the online channel provides. Metters & Walton (2007) even regard multi-channel integration and delivery plus fulfilment as one of the top priorities for e-retailing success. Therefore, this part mainly concerns the integration of the delivery stage. The following questions have been raised: ‘If a product has been purchased from the
36 1 = 55% 2 = 17% 3 = 5% 4 = 9% 5 = 14% Figure 12
If a product has been purchased from the webshop, consumers are able to:
1 = Receive it at home by mail
2 = Take it from the bricks-and-mortar store
3 = Take it from a Kiala point (convenient collection point) 4 = Take it from a TNT service point 5 = Other 1 = 23% 2 = 38% 3 = 23% 4 = 4% 5 = 12% Figure 13
If the customer is not satisfied with the received product, he/she is able to:
1 = Return the product through the bricks-and-mortar store
2 = Return the product by post
3 = Receive his/her money back
4 = Receive a gift coupon 5 = Other (please specify)
1 = 0% 2 = 17% 3 = 34% 4 = 14% 5 = 7% 6 = 28% Figure 14
How long does it take for a customer to receive the product at home, after ordering the product through the
webshop? 1 = Within 12 hours 2 = Within 1 working day 3 = Within 2 working days 4 = Within 3 working days 5 = Longer than 3 working days 1 2 3 4 Figure 15
Does the way your supply chain is organized facilitate that all
channels can be served efficiently?
product at home, after ordering the product through the webshop?’, If the customer is not satisfied with the received product, he/she is able to?’ and ‘Does the way your supply chain is organized facilitate that all channels can be served efficiently?’.
Agatz et al. (2008) state that retailers can experience several advantages when customers are able to pick their online purchased items up in store. These advantages may include: low capital investments and possible carry-over effects on in-store sales. When shoppers are not satisfied with the received product and able to bring their online purchased item back in store, return handling costs can be reduced and the level of service, as valued by the customer, be enhanced (Agatz et al., 2008). Moreover a quick delivery is appreciated (Tarn et al., 2003).
1 = 7% 2 =
6% 4 = 19%
Figure 16
If you cooperate with third parties (including competitors) on the internet, in which way do you do this?
1 = Combined portal
2 = Shop-in-shop 1 = 45% 3 = 21%
4 = 14%
Figure 17
In which way do you outsource the delivery of your products?
1 = Only the Delivery
2 = Total Fulfilment (Delivery & Stocking) 3 = Nothing is Since questions in this part have mainly been raised about the delivery, it is hard to say whether respondents have integrated their supply chain. Nevertheless, the mainstream of the respondents does not let customers cross channels easily. So, when looking at the delivery stage, participants do not seem to sufficiently integrate on- and offline. Online purchased products in America are delivered within 4 to 5 days on average. Compared to this, retailers operating from The Netherlands do transport their products quickly. However, one must take into account that the U.S.A. is a much bigger country than the Netherlands so a fast delivery could be easier. Although respondents do not seem to have integrated their delivery, they partially agree that their supply chain is organized in a way that all channels can be served efficiently.
4.4 Cooperation with Third Parties
According to the literature review do retailers benefit in several ways when they collaborate with partners. Cooperation can be either vertically and/or horizontally. To discover whether, how and for what reasons retailers collaborate, the following questions have been asked: ‘If
you cooperate with third parties (including competitors) on the internet in which way do you do this?, ‘In which way do you outsource the delivery of your products?’ and ‘If you
cooperate with third parties, what would you like to accomplish with that?’
45% outsources only the delivery, while 20% outsources as well the delivery as the stocking. Only 21% of the retailers seem to do everything by themselves.
The mainstream of the respondents does not cooperate with third parties. However, the majority contracted out at least something. So, in one way respondents are collaborating. It could be that multi-channel retailers do cooperate vertically but do not cooperate horizontally. However, based on the collected information one cannot state this with certainty. If we do want to say so we should rephrase the questions in for example: ‘Do you cooperate horizontally?’ and ‘Do you cooperate vertically?’ with room for specification.
At last respondents were inquired about their measurement of success. Criteria as sales, earnings before interest and taxes (EBIT), conversion ratio, market share and traffic were predefined while participants added some others. They mentioned the average spending amount, amount of transactions, customer retention rates, amount of returns, gross margin, turnover per square meter, and stock position as other indicators for success.
5. Discussion
In the literature section four keys to multi-channel success have been discussed. These keys have also been used as input for the theory testing phase. By use of surveys distributed under retailers operating out of The Netherlands, the importance of the so-called success factors have been questioned. In this section, the main results will be discussed and compared to what has been said in the literature.
Overall respondents do portray a consistent brand image across channels. This while they offer the same products on- and offline, require similar prices on- and offline, and use the same promotions on- and offline. One can expect that they are currently satisfied with this strategy since they do not have the ambition to change it in the future.When respondents are asked to specify their strategy they most often say that the internet is just an additional
channel with the same objectives as the bricks-and-mortar store(s) and that they would like to create a one-sided image to the customer.
The literature also mentions the importance of portraying a uniform message across channels. While many authors talk about the advantages of consistent brand image across channels, some discuss the issue of cannibalisation. Cannibalisation can be defined as the reduction of sales in one channel due to the introduction of another channel. Deleersnyder et al. (2002) state that cannibalisation is most likely to occur once the internet channel too closely mimics the already existing channel(s). In order to avoid cannibalisation, Neslin et al. (2006)
recommend that retailers should offer different product lines across the separate channels. These findings are contradictory of what has been suggested in this master thesis. While respondents do not have the ambition to change their strategy in the future, one can expect that they do not experience cannibalisation at the moment. Nevertheless, this is an important area for future research. Especially, while some respondents indicate to regard the internet and bricks-and-mortar store(s) as distinctive.
The second success factor discussed the importance of multi-channel retailers to become
familiar with their consumers. Familiarization can be defined as customer satisfaction,
Figure 18
What year did you start using the w ebshop to sell your products? 0% 0% 3 = 9% 4 = 14% 5 = 9% 7 = 45% 6 = 23% 1 = < '90 2 = '90 - '94 3 = '95 - '99 4 = '00 - '04 5 = '05 -'06 6 = '07 - '08 7 = '09 -'10
participants were only questioned about the satisfaction part. Respondents do not require customer feedback online, are not able to connect customer information across channels and do not respond to specific customer wishes. However, the majority does seem to require customer feedback in store. Nevertheless, based on these results one can say that respondents in general are not aware of the amount of satisfaction customers have across channels and thus indirectly are not familiar with their shoppers.
The findings are inconsistent with what has been said in previous literature. Knowing your customer across channels has several advantages. While respondents are not aware if
consumers are satisfied, they probably overlooked the advantages gained from familiarization. A reason for this could be that participants started their webshop quite late, namely between 2007 - 2008 and 2009 - 2010 (figure 18).
Adding the internet as a second channel requires huge investments also in terms of time. In the beginning retailers might be more busy focusing on the core business and running the two channels next to each other instead of concentrating on customer familiarization. Additionally, it is possible that respondents lack the capability and
resources necessary in order to create a single view of the shopper across channels. This could be due to a diverse data base (Deloitte). In order to become familiar with customers, retailers must track consumers consistently at all points of contact. Nonetheless, a study about the essential steps so as to help multi-channel retailers to become familiar with their consumers might be a substantial area for future research.
The third success factors stressed the importance of an integrated supply chain across
channels. According to Agatz et al. (2008) the multi-channel supply chain consists of four
phase, they partially agree that their supply chain is organized in a way that all channels can be served efficiently.
The results do not correspond to what has been found in the literature. Academic articles mention the importance of an integrated fulfilment strategy across channels. Respondents could be aware of the importance but can find the process more difficult than it sounds. A firm can have a complex supply chain with variable availability across channels (Deloitte). Moreover, end-to-end systems support may be lacking and data, inventory and order
management not sufficiently mastered. Before multi-channel retailers would like to integrate their fulfilment strategy, they should make sure to have visibility in past and current
transactions and in inventory levels across channels. A key area for further research is to identify the critical steps needed in order to integrate retailer’s fulfilment strategy.
The fourth and final success factor indicated the value of collaboration with third parties. Nonetheless, the mainstream of the participants does not seem cooperate with third parties. However, a significant part contracted out at least something. This means that in one way respondents are collaborating. As a consequence, one could suspect that participants do not cooperate horizontally but do cooperate vertically. However, based on the given information this is hard to conclude. When collaborators are asked why they do so: knowledge, customer convenience, cost reduction, traffic, and an increase in sales are the most often mentioned reasons.
Part of the findings are matched with what has been said in previous literature. Some of the advantages gained from cooperation which are stated in the literature have also been noticed by participants. Nevertheless, it could be that respondents are reluctant to disclose any
6. Conclusion
The conclusions related to the main findings will be stated. This part will thereby reflect back to the primary purpose of this thesis portrayed by the main research question.
This master thesis investigated the following: What are the keys to multi-channel success and
how do retailers operating from The Netherlands cope with these so-called success factors? (Evidence from theory and practice)
This study shows that there are several keys to multi-channel success. The literature review discusses four success factors.
The first key to success examines the value of a consistent brand image across channels. When retailers offer the same products, against the same prices and promotions across channels, a uniform message can be created. Consumers see the internet as just an additional channel with the same objectives as the bricks-and-mortar store(s). So, when an inconsistent picture is constructed, the brand image can become fragmented and confusing to the
customer. This can lead to a decrease of customer awareness and loyalty intensions. A more positive offline and thus online brand image works the other way round and may infer performance and sales improvements.
The second key to success stress the importance of becoming familiar with your customers across channels. Once retailers are aware of the shoppers in the different channels, they are better able to offer products addressing shoppers’ needs. The focus should be on retaining the customer. This while online shoppers seem to spend much more on their tenth visit than on their first, and multi-channel shoppers purchase more than single channel shoppers. In this way sales and performance can be enhanced.
The third key to success highly values an integrated fulfilment strategy. When the fulfilment is integrated, the purchasing, warehousing, delivery and sales phases interact among channels. Integration is so important while consumers greatly value service. This service can be
enhanced by interchangeability of the channels. The risk related to out of stock can be
The fourth key to success defines the importance of collaboration with third parties. Retailers can cooperate as well horizontally with pure online players and/or with other multi-channel retailers as vertically with manufacturers and/or suppliers. When trust and commitment are present, both types of cooperation can result in enhanced resources and capabilities,
knowledge transfer, a better position in the market, and reduced costs. In this way sales and performance can be improved.
7. Limitations & Areas for Future Research
While this research gives a lot of new insights by combining theoretical and practical knowledge about the keys to multi-channel success, it also has some limitations. The most important will be discussed in the following section.
One of the main limitations of this research is the amount of respondents. Since this is about less than expected, it is hard to generalize results across the surveyed population. A reason for the low response could be the quantity of questions. The whole survey existed of 78 questions and took about 30 minutes to complete. People high in the organization were invited.
However, these people are often not able to dedicate 30 minutes of their time to answer a questionnaire. This because they are busy with their daily businesses and costs a lot of money.
Generalization is not the only thing which can be questioned with less respondents, classification might also be difficult. If more people responded, one could check whether differences exist between the diverse retail industries. Furthermore, one could cluster according to respondent’s answers. If some participants seemed to comply to a specific success factor, one could check whether they define other measures for success than those who did not comply.
Another substantial implication is that the initial survey was based on how multi-channel retailers deal with the combination bricks-and-mortar store(s) and the webshop in general instead of how they cope with the pre-defined success factors. As a consequence, some important questions in the survey and so information in this master thesis is missing. Hence, conclusions cannot be stated with certainty.
In order to provide valid conclusions about the way retailers operating from The Netherlands cope with the pre-defined multi-channel success factors, one needs more respondents and more precise questions. An area for further research may therefore be a new shorter questionnaire with more specific questions. These questions should then provide a more detailed answer to whether retailers portray a consistent brand image across channels, are familiar with their customers across channels, integrate their fulfilment strategy, and
An additional area for further research could be to investigate how retailers operating from countries other than The Netherlands cope with the pre-defined multi-channel success factors. Countries can have different bricks-and-mortar compositions and/or infrastructures which could influence the keys to multi-channel success.
Finally, the current keys to multi-channel success could be re-examined. It might be that the keys to success stated in the literature became outdated, still exist, or neglect some other important ones.
