Bricks and clicks model
|Bricks and clicks model|
The bricks and clicks (aka click and mortar) model is a multichannel distribution model. This specific business model involves the integration of two kinds of service (trading): online (via the Internet, clicks) and offline (traditional, bricks).
Application of the bricks and clicks model
Nowadays the best solution is to use the multichannel distribution model when starting a business. It connects non physical channels, such as the Internet, mobile phone apps or call centers with a network of stationary stores. This way, non physical channels complement the existing stationary network. The combination of traditional and online distribution is an innovative combination, due to efficient cooperation between online banking divisions and sales companies by means of complicated information systems. This model allows customers to make purchases in spare time (even without access to a computer), which increases accessibility to shopping and brings tangible results to companies.
For example, a consumer electronics store may offer sales of its products online, while they also have all their goods in stock at a local store. Similarly, a furniture store may offer its products in the showroom, so the customer can observe it first and then make an order online with a Door to Door delivery.
Advantages of a model
The bricks and clicks model is primarily used by traditional retailers who have a well-developed and organized logistics networks. One of the reasons why this model is successful when used by traditional retailers is the fact that they already built a strong brand and such "combined" strategy benefits them more than just either online or offline sales.
This type of model has many advantages, including:
- Well developed supply network and other useful business relations enables quick and simple delivery,
- Convenient distribution channels allow price discounts and preferential treatment,
- A strong branding. Recognizable logos which customers trust are the key to successful online sales.
- Customers tend to trust more brands with longer presence on the market and physical presentation rather than “online only” companies. On the other hand, "online only” companies have a huge advantage in terms of cost-effectiveness relation, since they have only minimal necessary expenses.
Internet as a distribution channel
The Internet has become an important distribution channel in the last couple of decades. In 2004 online sales consisted of 5.5% of retail sales (excluding travel). Nowadays in many market segments, the "bricks and clicks" model became the dominant form of internet commerce. Big traditional retailers like Walmart, Best Buy or Staples have websites that sell products in huge quantities. At the same time, some online businesses are opening regular retail stores and showrooms. (A. S. Huang 2011, p. 1243)
Competitiveness of online banks
Several studies have explored the technological aspects of the client regarding the implementation of an online bank. What's more, several studies assess the financial results of internet banks, but unfortunately none of them assess the profit itself. Studies measuring the results of an online bank using financial indicators often focus on ROA and ROE.
The bottom line is that analysis shows that banks that use the "bricks and clicks" model are less successful than traditional banks even considering company's age, status size and other operational efficiency variables. (D. H. Cho 2012, p. 54-55)
- Cho D. H. (2012). Examining the Performance of Internet-Based Business Models: Evidence from the Internet Banks, "International Journal of u- and e- Service, Science and Technology", Vol. 5, Issue 1, Pages 54-55
- Doong H. Wang H. Foxall G. R. (2011) An investigation of consumers’ webstore shopping: A view of click-and-mortar company, “International Journal of Information Management”, Vol. 31, Issue 3, Pages 210-216
- Huang S. (2011). Inventory management in A (Q, r) inventory model with two demand classes and flexible delivery, "International Journal of Innovation Computing, Information and Control", Vol. 7, Issue 3, Page 1243
- Kacen, J. J., Hess, J. D., & Chiang, W. Y. K. (2013). Bricks or clicks? Consumer attitudes toward traditional stores and online stores. Global Economics and Management Review, 18(1), 12-21.
- Rubino J. (20140. Bricks and Clicks The e-Commerce Revolution is Just Getting Started, “CFA Institute Magazine”, Vol. 25, Issue 4