Bricks and Clicks Model
Bricks-and-clicks is a business
model by which a company integrates both offline (bricks) and online (clicks)
presences. It is also known as click-and-mortar or clicks-and-bricks, as well as
bricks, clicks and flips, flips referring to catalogs.
For example, an electronics
store may allow the user to order online, but pick up their order immediately at
a local store, which the user finds using locator software. Conversely, a
furniture store may have displays at a local store from which a customer can
order an item electronically for delivery.
The bricks and clicks model has
typically been used by traditional retailers who have extensive logistics and
supply chains. Part of the reason for its success is that it is far easier for a
traditional retailer to establish an online presence than it is for a start-up
company to employ a successful pure "dot com" strategy, or for an online
retailer to establish a traditional presence (including a strong brand).
The success of the model in
many sectors has destroyed the credibility of analysts who argued that the
Internet would render traditional retailers obsolete through disintermediation.
Advantages of the Bricks and
Clicks model
Click and mortar firms have the
advantage in areas of existing products and services. In these cases there are
major advantages in retaining ties to a physical company. This is because they
are able to use their competencies and assets, which include:
-
Core competency. Successful
firms tend to have one or two core competencies that they can do better than
their competitors. It may be anything from new product development to
customer service. When a bricks and mortar firm goes online it is able to
use this core competency more intensively and extensively.
-
Existing supplier networks.
Existing firms have established relationships of trust with suppliers. This
usually ensures problem free delivery and an assured supply. It can also
entail price discounts and other preferential treatment.
-
Existing distribution
channels. As with supplier networks, existing distribution channels can
ensure problem free delivery, price discounts, and preferential treatments.
-
Brand equity. Often
existing firms have invested large sums of money in brand advertising over
the years. This equity can be leveraged on-line by using recognized brand
names. An example is Disney.
-
Stability. Existing firms
that have been in business for many years appear more stable. People trust
them more than pure on-line firms. This is particularly true in financial
services.
-
Existing customer base.
Because existing firms already have a base of sales, they can more easily
obtain economies of scale in promotion, purchasing and production; economies
of scope in distribution and promotion; reduced overhead allocation per
unit; and shorter break even times.
-
A lower cost of capital.
Established firms will have a lower cost of capital. Bond issues may be
available to existing firms that are not available to dot coms. The
underwriting cost of a dot com IPO is higher than an equivalent brick and
click equity offering.
-
Learning curve advantages.
Every industry has a set of best practices that are more or less known to
established firms. New dot coms will be at a disadvantage unless they can
redefine the industry's best practices and leap frog existing firms.
Pure dot coms, on the other
hand, have the advantage in areas of new e-business models that stress cost
efficiency. They are not burdened with brick and mortar costs and can offer
products at very low marginal cost. However, they tend to spend substantially
more on customer acquisition.
Bricks and Clicks Model
References
http://en.wikipedia.org/wiki/Bricks_and_clicks
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