Get the right mix of bricks & clicks

Area of Science:

• Business Strategy
• E-commerce Integration
• Organizational Management

Background:

• The distinction between traditional (dot-com) and established businesses is blurring.
• Success in the modern economy hinges on effective clicks-and-mortar strategies that integrate physical and virtual operations.
• There is ongoing debate regarding the optimal approach for forging these integrated strategies.

Purpose of the Study:

• To challenge the notion that Internet businesses must be separate to succeed.
• To propose a framework for determining the appropriate degree of integration for clicks-and-mortar strategies.
• To guide executives in making informed decisions about integrating their e-business initiatives.

Main Methods:

• Analysis of the benefits of integration, such as cross-promotion and distribution economies.
• Examination of common concerns regarding integration, including customer protection and fear of cannibalization.
• Case study analysis of three retailers (Office Depot, KB Toys, Rite Aid) to illustrate available strategies and trade-offs.

Main Results:

• Executives do not face an "either-or" choice between in-house development or spin-offs for Internet channels.
• A company's optimal integration level depends on four key dimensions: brand, management, operations, and equity.
• A spectrum of available strategies exists, each with specific trade-offs.

Conclusions:

• Companies can tailor their clicks-and-mortar strategy by carefully selecting which business aspects to integrate and which to keep distinct.
• A tailored approach significantly increases the likelihood of e-business success.
• Strategic integration, rather than complete separation, is key for established businesses navigating the new economy.