Bricks to Clicks, and Back Again

Smart sellers let consumers decide how, when, and where to shop.


By Merrill Warkentin

Maybe you’ve noticed a new trend in the ever-changing world of business-to-consumer electronic commerce—one that promises to lead to some true e-commerce successes, after a year of mostly excesses.

I benefited from it recently when I bought a DVD player from Circuit City. First, I went online. At Circuitcity.com, I compared the features of different models, selected the best model for me, and bought it online.

Then, I printed out a confirmation-of-purchase notice and drove to the nearest Circuit City store. My new DVD player was waiting for me at the front desk. I produced the confirmation printout and a picture ID, and walked away with my new toy.

Clearly, traditional retailers are figuring out how to combine the benefits of their physical presence (their brick-and-mortar stores) with the benefits of their online presence. Hybrids of the two approaches are known as “brick-and-click” (or “click-and-mortar”) strategies.

Each marketing channel brings its own advantages. Brick-and-mortar stores let consumers interact face to face with salespeople and assure a level of service after the sale. They also let customers evaluate items in person, a benefit that’s important when buying clothing, for example, not so important for CDs or software. Websites, for their part, tend to offer consumers more convenience, better prices, and better selection.

According to research, marketing hybrids work best when retailers and e-tailers:

Speak with one voice. Whether a customer receives information or services through a face-to-face encounter with store personnel, a Touch-Tone telephone menu, a webpage, a customer-service telephone representative, a wireless device, or a kiosk, the information and services provided should be consistent, creating an integrated, seamless experience for the customer.

Empower customers. Innovative companies let customers use online technologies interactively, creating a powerful 24/7 channel for services and information. Store locators on Staples.com and Officemax.com, for instance, help customers find the nearest store or print out driving directions and maps.

Some sites let customers check product selection or inventory levels before driving to the store. Others let customers access account information online, such as the status of bank accounts, cell-phone or long-distance accounts, or retirement-fund accounts.

Leverage the channels. As my Circuit City experience shows, some retailers offer the advantages of each marketing channel to all customers. Whether a purchase is made online or at the store, customers benefit from the advantages of both.

For example, L. L. Bean and Eddie Bauer customers who purchase items from the companies’ websites can return those items, if necessary, to a physical store.

And many physical stores, such as Best Buy, now let customers use in-store terminals to order from the website if items are not available at the store. In these cases, obviously, pricing must be consistent to avoid “channel conflict” between the store and the website.

But the greatest value comes when retailers allow consumers to customize the ways they interact with the company.

Circuit City does this very effectively. First, its website educates customers about product features and capabilities, cutting through jargon to provide solid information buyers can use to make their purchase decisions. Second, a searchable product database lets Circuit City customers find the models that best suit their needs.

Third, Circuitcity.com offers an extensive amount of comparative information, organized in a flexible way, that assists consumers as they gather information before making a purchase. Visitors can select several models and compare them according to various criteria, with the results displayed side by side.

Fourth, if a Circuit City customer chooses to buy online, the purchase process is smooth and secure, an important—but, among e-tailers, not always guaranteed—component. Research indicates only about 17 percent of all purchases initiated online are completed. Customers may abandon the purchase process because of confusion and complexity, surprises (shipping costs, for instance), concerns about security, requests for personal information, system errors, or slow transmission speed, among other problems.

Finally, Circuitcity.com offers a variety of order-fulfillment methods. Customers may choose to receive their purchase via a common shipper, paying a small shipping charge but no sales tax (receiving delivery in about three days); via an express shipper, paying a larger shipping charge (receiving delivery the next day); or by driving to the nearest store to pick up the item immediately, paying no shipping cost.

Another example of leveraging channels was born when two competitors combined their efforts. Amazon.com is known as the premier site for creating customer loyalty and driving sales through its active “customer-relationship management” and efficient order-fulfillment systems.

In 1999, however, Amazon.com failed in the toy business because, some believe, it lacked strong business-to-business supplier relationships with toy manufacturers. Amazon could not get the best toys and did not know how to manage inventory against demand.

On the other hand, Toys’R’Us, backed by forty years of experience, is known for its deep product selection and knowledge of the toy industry, including a thorough understanding of markets, tastes, and suppliers. It has a well-developed inventory system and strong supplier relationships.

But the Toysrus.com site had problems. The company struggled to manage a direct-to-consumer distribution center and balance its retail stores with its online business.
As a result, during the 1999 Christmas season, both Amazon.com and Toysrus.com had trouble delivering toys to families on time and profitably.

Amazon.com, having miscalculated inventory requirements, was left with millions of toys it had to write off. Toysrus.com, with its lack of experience in web design and order-fulfillment processes, badly bungled the task of creating a website that could handle heavy traffic and shipping orders. One in twenty presents ordered from Toysrus.com failed to get to children in time for Christmas.

After bad press, lost business, and fines, the two companies decided to pool their expertise and form a single online toy store, thereby leveraging each other’s core strengths for the 2000 holiday season and beyond.

Under a ten-year agreement, Toys’R’Us identifies, purchases, and manages inventory, using its clout to get the hottest toy lineup. Amazon.com fulfills orders, handles customer service, and uses its expertise in front-end site design to build a powerful customer-support environment. Revenues are split, and risks are shared. (The innovative model is not perfect from the consumer’s perspective, however; toys purchased online cannot be returned to a Toys’R’Us physical store.)

It’s clear the brick-and-click hybrid strategy will give rise to many different variations. Customers will increasingly expect retailers to provide online features that ease the burdens of all phases of the purchase cycle, from comparison shopping, to payment, to delivery, to after-sale service.

So the next time you make a purchase, try visiting the retailer’s website before you drive to the store. Can you print out a map to the closest store? Can you tell if your item is in stock? Can you purchase it online? How about getting online help for setting it up, or for troubleshooting problems? More and more, savvy customers will discover—and insist on—their favorite ways of using the web to add convenience to their lives.

Merrill Warkentin is the Joseph G. Riesman Research Professor and an associate professor of management information systems in the College of Business Administration.