Brick And Mortar Analysis

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E-Commerce and Brick & Mortar format comparison Asymmetric Information Both demand and supply side of the markets are affected by the E-commerce technology. On the demand side, customers cannot inspect goods prior to purchase. Also most of the online sellers are newer firms and they may have less reputation capital as compared to the existing traditional retailers. All these factors led to asymmetries in terms of information between buyers and sellers which are generally not present in brick and mortar format. Sellers have taken different steps in order to reduce market inefficiencies which are caused due to the information asymmetries. Free shipping on purchases and returns were offered by firms like Zappos. Another approach adopted was to…show more content…
The following observation was obtained from the market where retailers adopted drop-shipping model:  Greater product variety  Higher ratio of retailers to wholesalers  Products those are large or heavy relative to their value Product variety creates a rationale for drop shipping because in case of variety specific demand, it is very costly to maintain the appropriate inventory mix at the retail store. Also savings can be realized if large products are delivered via drop-ship model as physically bringing the heavy products from wholesaler to retailer would involve high distribution cost. Bricks and mortar operations cannot afford to offer a large number of varieties as contribution margin from low-volume varieties are not enough that it can cover the fixed costs of storing such products before sale. On the other hand, online marketplace aggregate demand of these low volume varieties over a large geographical market. Also fixed cost is not so high in online model. Consumer Brand…show more content…
Danaher, Isaac W. Wilson and Robert A. Davis (2003) studied the consumer behaviour for over 100 brands in 19 grocery categories. Data of a grocery retailer was collected who operates in both online and offline channels. Different methods were employed to measure the brand loyalty. One was to compare the purchases of same people over time in both offline and online channels. Other method was to compare loyalty from a baseline model. The outcome shows that in case of online medium, observed brand loyalty for high market share brands was significantly greater than expected value and reverse result for small share brands. On the other hand in case of traditional shopping environment, observed and predicted brand loyalty is not related to brand share. Consumer Complaint Channel With the advent of internet, it becomes easier for the user to publish their thoughts, feelings and viewpoints about the different products and services. Actually it provides a platform where user can express their negative experiences at extremely low cost and that too independent of time and distance. Seul Lee and Brenda J.Cude (2012) studied the influence of the purchase medium on the selection of complaint channel. According to the report, both the purchase medium and level of dissatisfaction determines the selection of corresponding complaint channel. Specifically, ecommerce customers were more likely to resort to online channels as compared to offline channels and this was amplified as the
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