Multi-Channel Retailing

Multi-channel retailing is performed when a retailer operates in more than one retail channel.  Generally this involves a brick and mortar store based retailer expanding into e-tailing or internet retailing, or catalog sales.  Companies attempt to leverage the benefits offered by these three key channels as well as additional channels like kiosks, cable shopping networks, and more in order to maximize opportunities to appeal to as many market segments as possible.

The advantage brick and mortar retailers have when venturing into the online channel is that they already have inherent strengths and capabilities required for online retailing.  These typically included adequate distribution mechanisms, reasonable customer service knowledge, and a good backbone for selling products and services through an online medium. 

Each of the three major retail channels offers unique benefits.  This is the main draw for successful retail chains.  Otherwise, there would be no reason for them to invest resources in other areas beyond their current channel.  While many products are still sold most successfully through brick and mortar stores, customers seek information and convenience from the online buying opportunity.  Others desire portability and convenience that can be found through catalog retailers.

In the early stages of widespread internet develop and growth, some ambitious business people suggested that retail would soon be predicated online.  Stores would eventually become obsolete, or play a lesser role.  This has not been the case.  In fact, only about 2-3% of product purchases actually take place through online retailers.  This does not mean the internet plays no role in the retailing picture.  Many customers use the internet as a research medium prior to make important product purchases at stores.  While the internet does offer the convenience of 24/7 ordering from the privacy of home, it is missing some key advantages, found only in stores.

Catalogs are similar to the internet in that their greatest retail advantage is convenience.  They can be used day or night and are extremely portable.  People can use a catalog on vacation, at home or word, or anywhere that is convenient.  Catalogs have also developed a stronger visual appeal in recent years as publishing technology and color capabilities have grown.

Still, the benefits of the traditional retail store have big appeal for mass markets.  Many people enjoy the opportunity to see, touch, and feel products before making purchase decisions, especially with certain items like clothing, perishables, or fabrics.  Some customers simply enjoy the social experience and interaction with people offered by the retail store.  Shopping centers have incorporated fun by developing theme parks, arcades, and various other types of entertainment to make shopping a fun experience rather than a chore, for some people.

For a company to benefit from multi-channel retailing, it must understand its strengths relative to the different channels.  It must also understand the unique attributes of each, and be able to successfully leverage those strengths without cannibalizing business from other channels.  Many companies have been able to expand their product variety and assortment through successful internet expansion, because they simply cannot inventory as much product in stores as they can in warehouses and storage facilities.