Retail dilemma
Traditional manufacturers and retailers are caught on the prongs of a sharp fork:
- If they do not sell at lower prices on the web, customers have no reason to buy online and the web infrastructure is a drain on resources.
- If they do sell online at lower prices, then it undercuts traditional retail outlets and shops will stop holding your products
This, at any rate, was the picture in 2000. By 2004 it was beginning to look as though the prongs of the fork are not as sharp as feared. This is because of the retailers mastery of the supply chain. Consider the position of Ikea. Effectively they just have a warehouse with some display space. They do not have to employ staff to:
- select products from shelves
- pack goods for transit
- carry goods from the warehouse to homes
Their customers do it all.
But this is a question of the value:weight ratio of the products in question. See the price of photographic film in Boots and then see what you have to pay for the same items, in fresher, better condition from an e-tailer based in the Channel Islands to avoid VAT.
Multi-channel marketing
Twotailing: It looks as though the Bricks and Clicks marketing strategies go together as well as the words rhyme. Nike is a case in point. They aim is let buyers customise their shoes online, even to the extent of having their name on the tongue of the shoe. Motor car manufacturers do this too. But its a worry for Nike: people might be able to produce ghastly designs - and this matters to a company which is as much about style and lifestyle as it is about functional efficiency. Nike outsources ALL its manufacturing to developing countries (eg Vitenam, India and China). 'Nike' was the Greek Goddess of Victory. Nike is the largest private employer in Vietnam - of unskilled female labour. This led to a lot of criticism. Phil Knight (founder CEO of Nike) has pursued a brilliant multi-media marketing strategy. He likes to sign up famous sportsmen (John Mackenroe, Tiger Woods) as promoters. Those with a strong competitive spirit are preferred. Tiger Woods received $90m in 1999. When you wear Nike, you buy into the lifestyle of money, success, danger and glamorous fame. So they had to be connected to the internet.
Threetailing: In the spring of 2001, the talk changed to 'bricks, clicks and flicks', the latter referring to flicking over the pages of a catalogue. The 3-fold strategy is known as 'threetailing'. Marks and Spencer entered the catalogue market c1990 and have found that the catalogue lets people learn more about their products - and thus buy more from their high-street shops.
Fourtailing. Threetailing neglects the all-important channel of call-centre telephone sales ('pips').
Moretailing: Then there is direct mail, email marketing, TV home-shopping etc.
Multi-channel Marketing is the new buzz-word, with the web occupying a central position in the strategy.