Bricks V/s Clicks

The term ‘Bricks and Mortar’ was first used in 1992 and was evolved in contrast to the business model of selling goods and services online i.e. Clicks and Clicks. Bricks and Mortar refers to the physical presence of a company such as buildings, stores and warehouses. This is a place where the customer comes face to face with his seller before making the purchase. We all are aware of this traditional model and have made purchases from such stores almost every now and then leaving us with numerous examples including retail outlets, mom and pops stores and  showrooms.

Let’s shift our focus to the Bricks and Clicks model. The Bricks and Clicks model is simple. These companies sell their products in both ways i.e. online (referred as Clicks) and offline (referred as Bricks). This is a lethal combination. Usually, not adopted by many companies and prefer sticking to either of the one channels of distribution. Talking about Clicks and Clicks, you will come across many websites which adopt this model and operate only online. For instance, commenced as an online book store but entered various other segments like retail goods, electronics, games, digital content etcetera.

We see a lateral shift from Bricks and Mortar model to Bricks and Clicks model to cover the market and make their presence felt on the whole. However, this shift has still not gained any attention from their consumers who favour shopping through the bricks more than the clicks. Many of the online stores of such companies are poorly managed which ride the potential customers away. Also, many companies are comfortable with the bricks model and fear the cannibalization of their current distribution channel which drives their profitability. Backed by many other benefits provided to the customers by the Bricks model, the need to eliminate the bricks model and practice the clicks is unfavourable.

Firstly, the touch and feel. Consumers want to touch and feel the product before buying it. If it is an electronic product, consumers wish to receive a demonstration to know how the product works, its size and shape.However, the businesses following the clicks model have started giving a ‘try and buy’ offer to their customers. For instance, you wish to buy shoes online you ask for a trial, if may try the shoes, know whether it fits right and go ahead with the purchase decision.

Secondly, consumers wish to negotiate the price with the seller by asking for discounts or reduction in price. This is possible when the transaction is over the counter (OTC). But Ebay has been able to provide its customers with the bidding option where the customers will bid to pay for the particular product depending upon their understanding of prices. Following price negotiation is the instant order fulfillment. You pay cash and the product is standing ready to be taken home, immediately. But, in case of the clicks model, order fulfillment takes time as first, the order is processed, second, the transaction validity is checked and lastly the product is couriered to the respective address. This conventional model might also come to halt if Amazon’s prime air project proves feasible to deliver products under five pounds in 60 minutes.

Next is the returns and exchange option. It is feasible for the customers to return and exchange faulty, defective goods in a bricks model rather than clicks. But the online selling players have also come to a solution for this by giving buyers the flexibility of 30 days to return a product with a no question asked policy. When we look at the clicks model, the reach of technology plays the crucial role. When we look at rural areas where the mobile technology is flourished but internet is yet to be penetrated, the clicks model fails giving way to the Bricks model. The model also fails when we talk about the fresh products market. But we do see Amazon coming up with the delivery of organic food and with the delivery of fresh fruits and vegetables. The feasibility of the clicks model is shortened when the number of the products to be bought is large. Also, the clicks websites are not the one stop solution for all the goods. This point can be reiterated when we see a number of households still opting to buy their monthly groceries from super/hyper markets rather than The best part of the mom and pops store is that they provide free home delivery and credit system as opposed to that of clicks model.

There are certain advantages of the Clicks model which cannot go unseen. The operating expenses for this model are very low. No store maintenance costs, no rent, no additional staff; only warehousing. It also saves conveyance expense on the customer front. The clicks stores provide their buyers with numerous sellers helping them to make the purchase decision depending on the number of units required, price, quality and warranty. The buyer can now acquire the product at lower price than from a Bricks store. Also, the buyer can compare the prices and the additional benefits received across different Bricks stores. The payment options are also debatable since the clicks stores provide COD (Cash on Delivery) option and EMI (Equated Monthly Instalments) schemes for credit card holders.

There are certain areas where only the Bricks model can be operated. For instance, if we look at selling insurance policies online, yes, you can select a policy by entering your age, habits, occupation and so on, but underwriting will be a problem. For underwriting purpose, you will have to visit the company’s office to get tested by the medical officers. Thus, it is not feasible to complete insurance transactions online from start to end. This is not applicable to all the services. If we look at making transactions through your Demat account, you need not meet the company managers or the agency you have your account with.

There are companies who sail with one leg in one both and another leg in other both. It is challenging to handle both the channels effectively. Like mentioned previously, there is a fear of cannibalizing the already existing physical distribution channel. Adapting to clicks will also create unrest among the distributors and will oppose this step. Hewlett-Packard is one of the very few companies who have been able sail in both the boats efficiently by protecting their existing physical distribution channels and step by step implementing the clicks model.

Article by Divyanka Gangurde

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