Bricks and clicks

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A Sports Direct storefront advertising the web arm of the business. Sports Direct started trading in 1982 with a single brick-and-mortar store[1] but has recently grown rapidly aided by a bricks and clicks business model.[2]

Bricks and clicks (aka clicks and bricks, click and mortar, bricks, clicks and flips, or WAMBAM[3]) is a jargon term for a business model by which a company integrates both offline (bricks) and online (clicks) presences, sometimes with the third extra flips (physical catalogs). Additionally, many will also offer telephone ordering and mobile phone apps,[4] or at least provide telephone sales support. The advent of mobile web has made businesses operating bricks and clicks businesses especially popular, because it means customers can do tasks like shopping when they have spare time and do not have to be at a computer. Many of these users prefer to use mobile shopping sites.[5]

A popular example of the bricks and clicks model is when a chain of stores allows the customer to order products either online or physically in one of their stores, also allowing them to either pick-up their order directly at a local branch of the store or get it delivered to their home. There are many alternative combinations of this model. The success of the model in many sectors has lessened the credibility of some analysts who argued that the Internet would render traditional retailers obsolete through disintermediation.[6]

History[edit]

A Tesco delivery van in Poland advertising online ordering and delivery from a brick-and-mortar store. Tesco started their online presence in 1996.[7]

The first ever purchase from a company arguably operating a bricks and clicks business model was a Pizza Hut pizza, ordered over the internet from a physical store.[8] The online pizza delivery industry is somewhat of a pioneer of the model and has gained a great deal of popularity since, with delivery company Dominos Pizza now reporting that over 69.7% of orders are placed online before being sent to a physical store, gaining the firm £204.7m (approx. $329m) in 2013 in the United Kingdom alone.[9] The great surge in adoption of the bricks and clicks model came around 2000, with large retailers such as Wal Mart starting websites that allow users to browse the same goods they would find in store from the comfort of their homes.[10]

Advantages[edit]

Advantages For Firms[edit]

A Safeway delivery truck illustrates how some traditional supermarkets are now pursuing a bricks and clicks strategy.

The bricks and clicks model has typically been used by traditional retailers who have extensive logistics and supply chains, but are well known and often respected for their traditional physical presence. 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 purely online one, or for an online only retailer to establish a traditional presence, including a strong and well recognised brand, without having a large marketing budget.[11] It can also be said that adoption of a bricks and clicks model where a customer can return items to a brick and mortar store can reduce wasted costs to a business such as shipping for undelivered and returned items that would traditionally be incurred.[12]

Advantages For Consumers[edit]

A bricks and clicks business model can benefit various members of a customer base. For example, supermarkets often have different customer types requiring alternative shopping options; one group may wish to see the goods directly before purchase and like the convenience of quickly shopping on-the-fly, while another group may require a different convenience of shopping online and getting the order delivered when it suits them, having a bricks and clicks model means both customer groups are satisfied. Other previously online-only retailers have stated that they have found benefit in adding a brick-and-mortar presence to their online-only business, as customers can physically see and test products before purchase as well as get advice and support on any purchases they have made.[13] Additionally, consumers are likely to feel safer and have more confidence using a bricks-and-clicks business if they already know the brand from a brick-and-mortar store.[14]

Disadvantages[edit]

Disadvantages for Firms[edit]

A major factor in the success or failure of this business model is in the control of costs, as usually maintaining a physical presence —paying for many physical store premises and their staffing— requires larger capital expenditure which online only businesses do not usually have. Conversely, a business selling more luxurious, often expensive, or only occasionally purchased products —like cars— may find sales are more common with a physical presence, due to the more considered nature of the purchasing decision, though they may still offer online product information. However, some car manufacturers such as Dacia have introduced online configurators that allow a customer to configure and order complete cars online, only going to a dealership to collect the completed car,[15] which has proven popular with customers.[16]

"On the other hand, an online-only service can remain a best-in-class operation because its executives focus on just the online business." It has been argued that a bricks and clicks business model is more difficult to implement than an online only model.[17] In the future, the bricks and clicks model may be more successful, but in 2010 some online only businesses grew at a staggering 30%, while some bricks and clicks businesses grew at a paltry 3%.[18] The key factor for a bricks and clicks business model to be successful "will, to a large extent, be determined by a company’s ability to manage the trade-offs between separation and integration" of their retail and online businesses.[19]

Disadvantages for Consumers[edit]

Some argue that online shopping, which makes price comparison easier for customers, encourages a 'race-to-the-bottom', where retailers only compete on price, with quality and service deteriorating as a result.[20] This is especially prevalent when comparison shopping websites such as mySupermarket allow prices to be compared without even visiting a retailer's website.[21]

Online businesses have lower overheads than a brick-and-mortar business, and therefore if a previously online business begins to open physical locations this may result in an increased price for the consumer to pay.[22]

Legislation[edit]

An advantage to the consumer and a potential disadvantage to businesses is that by adopting a bricks and clicks business model and allowing customers to purchase goods or services remotely, it is legislated in many jurisdictions that consumers are granted more rights to protect them. In the UK, for example, any goods purchased from a bricks and clicks business over a 'click and collect' service would allow the buyer protection under the Consumer Protection (Distance Selling) Regulations 2000, namely the right to return a product or cancel a service within 14 days of purchase for a full refund.[23] Similar rights are afforded to EU Residents, who gain protection under European Directive 97/7/EC. In the USA, the Federal Trade Commission legislate specifically over how a distance sale should be conducted and the rights that a consumer has, namely a '3 day' rule allowing items ordered over the web to be returned within three days. [24]

An example of a retailer falling foul of this legislation is British clothing retailer Next, who were found to be breaking the laws by only allowing a customer to return goods that they had ordered if they paid return postage costs.[25]

Notable Examples[edit]

British retailer John Lewis has found success in adopting a bricks and clicks business model, with the online ordering service outperforming brick and mortar sales for several years running.[26] Online auction website eBay have also launched a scheme in cooperation with catalogue shop Argos that allows goods sold by third parties to be collected in a brick-and-mortar location, which allows the customer to collect goods at their convenience rather than wait at home for a delivery company.[27]

In 2013, music retailer HMV went in to administration despite having operated both brick-and-mortar stores and an online presence.[28] This was put down by many to the high overheads of operating the brick-and-mortar side of the business making HMV unable to compete with pure-clicks retailers such as Amazon.com.[29]

See also[edit]

Notes[edit]

  1. ^ "About Us". Sports Direct. Retrieved 22 October 2014. 
  2. ^ Ruddick, Graham. "Sports Direct and Mike Ashley: the rise of Britain's craziest retailer". The Telegraph. Retrieved 22 October 2014. 
  3. ^ "Web application meets bricks and mortar : A Dictionary of the Internet Oxford Reference". Oxford Reference. Oxford University Press. Retrieved 30 September 2013. )
  4. ^ Bogaisky, Jeremy. "Retail In Crisis: These Are The Changes Brick-And-Mortar Stores Must Make". Forbes. Retrieved 17 October 2014. 
  5. ^ "How Mobile Is Transforming the Shopping Experience in Stores". Think With Google. Retrieved 24 October 2014. 
  6. ^ Sibun, Jonathan. "The internet has made shops obsolete in some towns". The Telegraph. Retrieved 16 October 2014. 
  7. ^ "What is Tesco.com?". Tesco.com. Retrieved 22 October 2014. 
  8. ^ Webley, Kayla. "A Brief History of Online Shopping". TIME Magazine. Retrieved 19 October 2014. 
  9. ^ "Interim Results for the 26 Weeks Ended 29 June 2014". Dominos Pizza. Retrieved 22 October 2014. 
  10. ^ Wal Mart Corporate http://corporate.walmart.com/our-story/history/history-timeline |url= missing title (help). Retrieved 19 October 2014. 
  11. ^ Mahar, Stephen; Wright, P. Daniel; Bretthauer, Kurt M.; Hill, Ronald Paul. "Optimizing marketer costs and consumer benefits across "clicks" and "bricks"". Retrieved 17 October 2014. 
  12. ^ "Mixing bricks with clicks". The Economist. Retrieved 16 October 2014. 
  13. ^ Baker, Lindsay. "Online retailers move into bricks and mortar stores". BBC News. Retrieved 17 October 2014. 
  14. ^ Buckley, Neil. "Internet shopping - the sequel". Financial Times. Retrieved 22 October 2014. 
  15. ^ "Order A Dacia Online". Dacia. Retrieved 17 October 2014. 
  16. ^ Watson, Tim. "Dacia Duster £100 deposit deal". Auto Express. Retrieved 17 October 2014. 
  17. ^ Stross, Randall (18 September 2010). "Netflix Is Beating Blockbuster With Clicks, Not Bricks". The New York Times. 
  18. ^ http://www.rfidjournal.com/article/view/8154/1
  19. ^ Gulati, Ranjay; Jason Garino (May–June 2000). "Get the Right Mix of Bricks and Clicks". Harvard Business Review: 107–114. 
  20. ^ Reilly, Patrick. "Ending Retail’s Race to the Bottom". Pitney Bowes. Retrieved 22 October 2014. 
  21. ^ "About Us". MySupermarket. Retrieved 22 October 2014. 
  22. ^ Stern, Joanna. "Buyer Beware: A Store's Website May Be Much Better Bargain". ABC News. Retrieved 22 October 2014. 
  23. ^ "Online and distance selling for businesses". Gov.UK. Retrieved 20 October 2014. 
  24. ^ "3-Day Cooling Off Rule". USA.Gov. Retrieved 20 October 2014. 
  25. ^ Streeter, Susannah. "Next breaks refund rules for online deliveries". BBC News. Retrieved 22 October 2014. 
  26. ^ Vizard, Sarah. "John Lewis credits ‘bricks and clicks’ success for ‘decisive’ market share gain". Marketing Week. Retrieved 16 October 2014. 
  27. ^ Mellor, Rachel. "eBay to offer a click and collect service using Argos". Move Hut. Retrieved 17 October 2014. 
  28. ^ "HMV music and film chain to appoint administrator". BBC News. Retrieved 26 October 2014. 
  29. ^ Hann, Michael. "HMV: 'Not too bad. But still not as cheap as Amazon'". The Guardian. Retrieved 26 October 2014. 

Further reading[edit]