INMA_A01.QXD

Decision 5: Multi-channel distribution strategy

Decisions 5 and 6 relate to multi-channel prioritisationwhich assesses the strategic signif-

icance of the Internet relative to other communications channels. In making this

prioritisation it is helpful to distinguish between customer communications channelsand

distribution channels. Customer communications channels, which we review as decision

6, refer to how an organisation influences its customers to select products and suppliers

through the different stages of the buying process through inbound and outbound com-

munications. For a retailer, it refers to selection of the mix of channels such as in-store,

inbound contact-centre, web and outbound direct messaging used to communicate with

prospects and customers.

‘Distribution channels’ refers to flow of products from a manufacturer or service

provider to the end customer. These may be direct to consumer channels or, more often,

intermediaries such as retailers are involved. Internet distribution channel priorities have

been summarised by Gulati and Garino (2000) as ‘getting the right mix of bricks and

clicks’. This expression has been used to refer to traditional ‘bricks and mortar‘ enter-

prises with a physical presence, but limited Internet presence. In the UK, an example of a

‘bricks and mortar’ store would be the bookseller Waterstones (www.waterstones.co.uk),

which when it ventured online became ‘clicks and mortar’. It initially followed a strategy

of creating its own online presence, but now delivers its online channel through a part-

nering arrangement based on the Amazon.com infrastructure which is an example of the

partnering strategy suggested by Gulati and Garino (2000). Internet pureplaysor ‘e-busi-

nesses’ such as dabs.com which operate solely through their online representation are

relatively rare. Dabs.com, which is featured in Case Study 7, uses its web site and e-mail

marketing as the primary interactions with the customers. Other e-retailers such as Virgin

Wines.com make more use of phone contact and physical mail with customers. Even

dabs.com uses these channels where appropriate – for large-volume business customers.

STRATEGY FORMULATION

Multi-channel
prioritisation
Assesses the strategic
significance of the
Internet relative to
other communications
channels and then
deploys resources to
integrate with
marketing channels.

Customer
communications
channels
The range of media
used to communicate
directly with a
customer.

Distribution
channels
The mechanism by
which products are
directed to customers
either through
intermediaries or
directly.

Bricks and mortar
A traditional
organisation with
limited online
presence.

Clicks and mortar
A business combining
an online and offline
presence.

Clicks-only or
Internet pureplay
An organisation with
principally an online
presence. It does not
operate a mail-order
operation or promote
inbound phone orders.

Figure 4.19Strategic options for a company in relation to the importance of the Internet

as a channel

Limited

Radical

Change required

Low Medium High

% Online revenue contribution

 

  





Information only

Digital channels

complementary

Digital

channels

replace



 

  

Mix of on- and offline

transactions and

customer service





All transactions and

customer service online