The Omni-Channel eCOsysTem
5
The Internet and e-commerce, smartphones and mobile technologies, and social
media all have altered how consumers and end-users buy,
with far-reaching impli-
cations across the channel landscape. Social media and online review sites present
opportunities for brand advocacy but are also taking over information functions
traditionally provided by channel partners, leaving
them with less control over
what information gets spread.
11
Department stores such as Macy’s, JCPenney, and
Sears are struggling to find their bearings,
12,13
while various specialty stores such as
Sports Authority have closed shop.
14
Managers are vexed by such altered channel landscapes for several reasons.
First, building or modifying a channel system involves costly,
hard-to-reverse
investments. Taking the effort to do it right the first time has great value; making
a mistake may put the company at a long-term disadvantage. Second, modifying
channels means confronting entrenched interests and the way things have always
been done. Channel conflicts intensify and require attention. Third,
managers
face challenging decisions when devising an optimal channel strategy, including
where to devote the considerable financial investments required and how to adjust
the roles and compensation of different channel members.
The latest frontiers of
e-commerce, including automatic replenishment, virtual and augmented reality,
and shorter delivery time frames, will continue to vex marketers.
Integrating across channels also remains a challenge. For example, the prolifera-
tion of mobile devices makes price
and product comparisons easier, so consumers
demand greater pricing transparency but also learn about various features available
from competitive brands. Price differences across channels can exacerbate chan-
nel conflict, but online stores accrue much lower operating costs, because they do
not need locations in high-rent districts or expensive salespeople. Thus, whereas
in 2015, only 8 percent of consumers
bought groceries online, that percentage
doubled just one year later.
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Showrooming also has grown into a difficult challenge, such that consumers use
one retail outlet to touch, feel, and try on products but then buy from a different,
e-commerce outlet.
In the practice of
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