| Bricks and clicks is a business strategy or business model in
e-commerce by which a company attempts to integrate both online and physical
presences. It is also known as Click-and-mortar or clicks-and-bricks.
For example, an electronics store may allow the user to order online, but pick up their order immediately at a local store.
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 strategy has typically been used by traditional retailers who have extensive logistical 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 an online retailer to establish a traditional
presence. This strategy has contradicted analysts who believed that the internet would render traditional retailers obsolete
through disintermediation.
Advantages of the model
Click and mortar firms have the advantage in areas of existing business models and products. In these
cases it is better to retain ties to your physical company. This is because they are able to leverage their competencies and
assets, including:
- Leveraging their 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.
- Leveraging 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.
- Leveraging existing distribution channels. As
with supplier networks, existing distribution channels can ensure problem free delivery, price discounts, and preferential treatments.
- Leveraging 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.
- Leveraging 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.
- Leveraging 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.
- Leveraging 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.
- Leveraging 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 industries 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 do tend to spend substantially more on customer acquisition.
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