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Multi-Channel Integration Strategies and Environmental Aspects:
A Conceptual Framework In Retailing
Daniela Andreini
Assistant Professor in Marketing and E-commerce
Università degli Studi di Bergamo
e-mail: daniela.andreini@unibg.it
ABSTRACT
In recent years Internet has had a great impact in value chain upstream activities (B2B) and
downstream activities (B2C) especially in retail markets. In particular, technology has changed the
way consumers interact and transact with retailers, influencing their offline behaviours as well. In
this context, multi-channel (click-and-mortar) strategies are considered essential to grow in the
current competitive environment. Channel marketing literature has underlined the importance and
the advantages of developing a multi-channel integration strategies, but despite these advices,
empirical analyses have verified different levels of multi-channel integration, in which only 7% of
firms in the USA, and rare cases in Europe, has reached a complete channel integration. This
phenomenon has not been completely analysed yet and earlier studies have particularly evaluated
internal elements affecting the decision of channel integration (type of product, firm structure and
resources) and few of them have studied more environmental elements (competitors, consumers, IT
readiness, market characteristics and national environment). This paper responds to the literature
request of a more contribution on the subject, reviewing innovation diffusion literature and retail
channel strategy theories. The aim of this work is the creation of a conceptual framework that
develops hypothesis about the relations between multi-channel integration strategies in retailing and
environmental aspects.
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INTRODUCTION
One stream of marketing literature has studiedthe selection of different retail channels (Moriarty &
Moran, 1990; Dutta et al., 1995; Coelho & Easingwood, 2003), which main objectives are the
satisfaction of customers using the right mix of channel formats and the maximization of profits for
firms (Montoya-Weiss, Voss, & Grewal, 2003). The internet is the most discussed marketing
channel usually considered for selling or for completing off-line purchase experience1. From the
time of its development as a retail channel, the scientific researches have concentrated their studies
on direct channels strategies especially in B2B markets (Majmudar & Ramaswamy, 1995; Earl,
2000; Kshetri et al., 2002; Geyskens, 2002; Kabadayi, 2007; Chu et al. 2007; Sharma & Mehrotra,
2007); but little has been written in retailing industry (Steinfield 1999; 2002; 2005; Otto & Chung
2000; King et al. 2004).
In this paper we define multi-channel retailing as the activity of traditional retailers to mix virtual
(internet) and physical (stores) channels to sell goods and services. This activity has a strong impact
on marketing channel strategy because of its long-term effects on channel power, on customer value
and on market opportunities (Majmudar & Ramaswamy, 1995; Richardson & Swan, 1997; Wren,
2007). Moreover, decisions on retailing channels affect not only corporate profits and customer
preferences, but also the relationships with channel intermediaries and other suppliers in the market.
We also define the level of integration, as the activity of traditional retailers to synergize between
physical infrastructure (stores) and virtual channels (internet), which together should enhance the
customer value, and maximize profits for firms. From customers’ point of view, the integration
between physical and virtual channels imply that traditional stores and their web sites become
interchangeable and complementary in selling, communicating and interacting with them. In the
other side, retailers can benefit of this synergy reducing inventory, post-sales and pre-sales costs,
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and in the same time increasing profits. Moreover, this integration has been considered strategic for
firms because multi-channel customers are said more profitable (Kumar & Venkatesan 2005) than
single-channel ones2.
This paper contributes to the literature on marketing channel in three ways: 1. proposing common
codification of multi-channel integration models for retailing businesses. 2. individualising which
theories can explain the elements affecting different multi-channel integration strategies . 3.
proposing a theoretical framework which includes also environmental factors in previous researches
on subject (Steinfield et al., 2005)
In order to answer to these research goals, in the first part we will review the main researches about
multi-channel integration in retailing industry, in order to find a unique system of codification of
integration models. In the second part, the diffusion of innovation (DOI) and the assimilation of
innovation literature are utilized (Fichman & Kermer, 1999) to explain the strategies of integration
of virtual and physical channels. Finally, in order to identify the factors predicting the optimal level
of multi-channel integration in retailing industry, DOI and marketing channel researches are
unified, in order to create an exhaustive multi-channel framework till now not developed in
literature.
This paper represents the base for further empirical and exploratory researches about multi-channel
integration, while literature is still debating if it is a winning strategy for retailers or not.
MULTI-CHANNEL INTEGRATION
In literature, firms that develop an integration between virtual and physical retail channels are
identified as Clicks and Mortar firms (CAM), and they are represented by traditional retailers with
store chains or outlets, which add internet as additional selling channel. In the counterpart there are
Pure Players firms, which sell products and services exclusively through the internet. Many
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researchers have positioned Pure Players as firms competing mostly on prices and CAM as firms
competing mostly on differentiation in distribution and customer services. This discrimination
cannot be applicable in online markets, where the information transparency and the competitive
proximity induce firms to compete both for price and for offer differentiation. Competitive position
depends mostly on environment, corporate decisions and resources.
The focus of this paper is the study of CAM firms and the elements under their multi-channel
integration decision. In marketing literature, researchers have examined the introduction of the
internet in pre-existed retail channels from different points of view: firm’s market valuation and
performance (e.g., Geyskens et al., 2002; King et al,. 2004), the mix of different types of channels
(Sharma & Mehrotra, 2007), multichannel strategy implementation (Payne & Frow 2004), and the
value-added aspects in using multichannel B2C strategies (Otto & Chung, 2004), but little attention
has been given to a strategic aspect of multi-channel strategy: the level of integration and the factors
affecting this decision (Steinfield et al.1999, Gulati & Garino, 2000).
The importance of this subject is underlined by two streams of literature: the first one emphasises
the benefits from integration of physical presence and e-commerce for firms and customers, (Gulati
& Garino, 2000; Saeed et al., 2003 Min & Wolfinbarger, 2004; Kumar & Venkatesan 2005, Otto
& Chung 2000). The second stream of literature has demonstrated that strategies of multi-channel
integration between physical and virtual channels are not so common in practice because of
customers’ preferences and corporate barriers (Chatterjee et al.2002; Wikströml, 2005; Steinfield et
al. 2005, Kabadayi et al. 2007, Chu et al.2007). These evidences have not been deeply studied yet.
LEVELS OF MULTI-CHANNEL INTEGRATION
The integration strategy can be implemented in different ways, Prasarnphanich & Gillenson (2003)
enumerate a variety of hybrid clicks and bricks implementations which retailers can develop in order
to integrate virtual and physical channels. However, literature lacks of an unique codification of
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levels of integration of click & mortar firms, and few researchers have concentrated on this subject.
The reasons of this deficiency can be seen in the complexity of multi-channel selling activity where
many corporate processes are involved: organisation, strategy, marketing, and information system.
(Zhu et al., 2006).
The multi-channel integration strategies have been studied from three different points of view:
corporate, customer and industry specific context. From the corporate point of view, Saeed et al.
(2003) have measured the level of integration identifying three value added services categorized as
content (products information and virtual catalogues), informational (store locator, inventory check and
ordering online) and logistical integration (ordering, buying, picking and/or changing products in
different channels). From the consumers’ point of view, Steinfield et al. (2005) have coded the level
of integration in three groups: 1) simple information: corporate web sites with basic references to
physical stores; 2) complex online/offline activities: corporate web sites with an explicit
involvement of retail outlets in the transactions; 3) other features: referring to web sites with some
degree of online expertise, but not necessary imply click & mortar strategies. An example of
measurement of multi-channel strategies in a specific industry is in Müller-Lankenau’s et al.(2005)
work, where 25 European multi-channel grocery retailers have been classified according two
dimensions: on-line activity scope on-line (ordering possibilities; on-line ordering possibilities;
organization of web activities) and scope of value-adding features (contextual information;
corporate information; outlet information; contact and assistance possibilities and loyalty scheme).
Reviewing the main literature on the subject (Venkatesh, 2000; Saeed, 2003; King et al.2004;
Steinfield, 2005; Wikströml, 2005), it can be inferred common elements of codification which
compose three different models of multi-channel integration:
1. Informational Supporting Model
The virtual channel is used only for pre and post-sales information, in these web sites customers can
find contact information, catalogues online, store locator systems, news and promotions, but no
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transactions or interactions are allowed. In this cases, the level of multi-channel integration is low,
because no investments in database or logistical integration are needed. The advantage for sellers
and buyers is the decrease in pre-sales and post-sales communication and researching costs.
Nowadays nearly all retail chains and outlets have a website of this type.
2. Independent Channels Model
Retailers create a virtual store independent from the physical ones and customers can buy both
online and offline, but they have to return or change the bought products only via the channel from
which they have purchased. The coordination3 of the two channels (virtual and physical) is minimal
and refers only to marketing and brand communication (King et al.2004; Saeed, 2003). In some
cases retailers create an independent business unit in charge to develop the business online. This
model is mostly applied in financial retailing, for instance www.nowwhat.com is an online branch
of State Farm Insurance or www.firstdirect.com, the online channel of HSBC bank. The
independent model doesn’t satisfy the multi-channel evolved purchase behaviours, but it avoids
additional logistics costs to retailers. In some cases, an integration in store and e-store databases can
be realized, in this way consumers can use coupons, fidelity cards and discount cards indifferently
in the two channels. Also integration in product databases can be implemented, and so costumers
can check inventories, product promotions and/or availability in each store. In this case, even if
investments are limited to database and communication technologies, communication processes have
to be carefully cured because prices, promotions and services have to be coherent in the two channels.
This coherence imply a strong cooperation among different corporate departments. This enhanced
model of independent integration is common in store chains, as for instance Media Markt (the
European consumer electronics retail chain), which in Italy has developed an independent ecommerce channel but integrated in consumers and products databases.
3. Full-Integrated channels model
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In this model, retailers mirror the physical store in the web sites, integrating the two channels with
advanced services, for instance, inventory check, booking online, ordering online and picking
offline, and/or returning products to physical stores. In this cases, retailers need the maximum
coordination investment in communication, operation and logistics activities in order to create a
flexible and agile distribution process (Saeed, 2003). This model enhances at 360° customers’
experience, reducing customers’ time and efforts. On the other side, retailers have to invest in logistics,
communication systems and in channels coordination, gaining in potential synergies with suppliers, in
brand recognition, in more market differentiation, in an integrated customer base and in other
complementary assets (Steinfield et al., 2005). This is a risky investment in terms of ROI parameters,
especially in retailing industry, where consumers’ purchase preferences are often based on habits,
geographic prominence and brand awareness (Sharps & Dawes, 2001). Moreover, the decision to
modify the traditional channel strategy is not as easy for retailers, due to their core investment in
store infrastructures and the complexities of managing a well-coordinated multi-channel structure.
However, the decision of developing one of these three models cannot be focused only on
maximising short-term profits (maximization of the next transaction), but instead, on optimizing
customer lifetime value across the on-line and off-line channels. The continuously enhancing the
customer’s experience through the improved channel coordination enabled by new technological
developments (King et al. 2004) is fundamental for retailers competing on differentiation strategies.
Besides these organizational issues, also environmental factors affect the channel integration
decision, as we will see in the proceeding of this paper, the industry type, the level of competition
and the readiness of consumers can play an important role in integrating virtual and physical
channels. All these elements will be studied through the proceeding literature review.
LITERATURE REVIEW
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In the following paragraph diffusion of innovation (DOI) theory and in particular the assimilation of
innovation technologies are studied in order to create the base for a specific theoretical framework
in multi-channel integration subject. The choice of this stream of literature base on three
fundamental reasons:
-
multi-channel retailing is developed on web technological platforms defined as “type III IS
innovation” by Chatterjee et al. (2002). Type III IS innovation are information technologies
with strategic relevance for organization, as their integration impacts financial and market
performances.
-
DOI has been already used to explain e-commerce and e-business adoption and impact
(Chatterjee et al.2002; Zhu, 2004; Zhu et al., 2005; Hsu et al., 2006) but any specific work
has been conducted on multi-channel strategy.
-
the level of multi-channel integration can fit with the concept of “assimilation” presents in
DOI literature, because both of them regard different implementations of a technology in an
organization.
Even if a sounded theoretical frameworks about e-commerce and e-business have been already
studied (Chatterjee et al. 2002, Kraemer et. al. 2005; Zhu et al. 2004; 2005), a specific framework
for multi-channel retailing integration is needed because its peculiar industry nature. Specifically, ebusiness regards both back-end and front-end functionalities, but in retailing it is not said that a
multi-channel store also develops e-procurement activities. For this reason, in this paper only
marketing, selling, channel relations and coordination processes are taken into account. Moreover,
multi-channel retailing is particularly related to environmental factors: customer preferences,
competition, communication and IT readiness.
According to Fichman (1999), IS literature lacks of a general theory of innovation and he asserts
that recent researches are developing theories limited on specific classes of technologies and/or to
particular adoption context. The approach used in this paper is consistent with the contested
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approaches, for two main causes: multi-channel retailing is a part of e-business and it operates in a
very specific organizational context (marketing and sales) which is more affected by the external
environment.
Diffusion Of Innovation Theory
Much of e-business and e-commerce adoption literature appears to have drawn from Rogers’s
(1995) traditional DOI theory; from Tornatzky & Fleischer’s (1990) work and from Kwon &
Zmud’s (1987) implementation systems model (IS), as the basis for developing research models.
Rogers’ theory explains the factors influencing the adoption decisions of an innovation and it
stresses on the characteristics of innovation (relative advantage, compatibility, complexity,
trialability, and observability) and organizational characteristics as the keys of the framework.
Tornatzky & Fleischer (1990) included external factors in Rogers’ model, as a result their
framework comprises: technology, organization and environment.
An important aspect of diffusion of innovation theory is the concept of “assimilation”, because in
organizational contexts the adoption of technologies is not a good predictor of its implementation. It
has been observed that a technology can be viewed “successful” in terms of its diffusion (for
instance the penetration of internet web sites in retailing industry), but much less so, according to its
deployment (type of activities offered in retailers’ web sites). This phenomenon has been introduced
in literature also with the term of “assimilation gap” by Fichman & Kemerer (1999), who has
defined it as: “the difference between the pattern of cumulative acquisitions and cumulative
deployments of an innovation across a population of potential adopters”4 The levels of multichannel integration are consistent with this concept, Steinfield et al. (2005) have analysed nearly
1.000 retailers’ web sites in the USA and they have founded different strategies to integrate physical
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and virtual channels and they also discovered that only 7% of their sample showed a complete
integration between physical and virtual channels.
On the assimilation subject, Kwon & Zmud (1987) have elaborated a six stage process (initiation,
adoption, adaptation, acceptance, routinization and infusion), influenced by five factors impacting
on the phases of implementation (user community, organizational, technology, tasks and
environmental characteristics).
Fichman & Kemerer (1999) have explained the differences in IT assimilation according to
increasing returns, to IT adoption and to organizational knowledge barriers. Some technologies
acquire their value in their use, thanks to positive network externalities among adopters, learning by
using, economies of scale and “signalling” (Attewell, 1992). The latter refers to media and
commercial communication pressure that induces firms to adopt a technology in despite of their
technological maturity.
Hsu et al. (2006) has studied the determinants of e-business assimilation concentrating on volume
and diversity, and composing a four-constructs framework: perceived benefits, organizational
readiness (firm size, technological resources and globalization level); external pressure (trading
partner pressure and government pressure) and environment (regulatory concern, competition
intensity and interaction effect).
Also in e-commerce studies Kraemer et al. (2006) have identified a three stage diffusion model:
adoption, use, and impact, where the use of e-commerce has been defined as a mediating stage in
the path from initial adoption to performance impact (Zhu et al., 2004, 2005). They assert that the
adoption of e-commerce is not sufficient because it has to be accepted, adapted, routinized and
istitutionalized in an organization before becoming profitable for firms. These authors have
implemented TOE (Thechnology, Organization & Environment) framework Tornatzky & Fleischer
(1990) to explain the different use of e-commerce in firms in different national contexts.
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The present research is based on TOE model with peculiar modifications due to variables more
suitable for retailing industry.
Marketing Channel Theories
Marketing channels theories indicate that firms’ decision to adopt and assimilate internet as a
retailing channel, is based on internal strategies, organization and environment, but a sounded
theoretical framework about this integration has not been developed yet
Geyskens et al. (2002) suggest that the decision of integrate physical and virtual channels differ
according to the performance of the new entry channel and it depends on:
-
firm characteristics (channel power, direct channel experience, and size), on the introduction
strategy (they consider two introduction decisions: the order of entry and the level of
publicity surrounding);
-
the marketplace or environment (the growth in demand for the product sold through the
internet channel and the growth in demand for the new channel per se).
Chatterjee et al. (2002) have studied the organizational assimilation of e-commerce strategies and
activities through institutional enablers and they have developed a framework composed by
organizational factors: top management championship (beliefs and participation), strategic
investment rationale and extent of coordination.
Steinfield et al. (2005) have studied the factors influencing the retailers’ decisions of integrate
online and offline channels, developing a framework which includes: type of product, firm structure
and resources, but no environmental factors has been included in the framework.
In European grocery industry, Müller-Lankenau et al.(2005) have found two strategic vectors which
explaining the diversity of multi-channel strategies: company’s retail format strategy and national
market structure, but in this filed further enquiries are needed.
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Unifying the two streams of theory (assimilation of innovation theory and marketing channel
researches) we propose the following framework for multi-channel retailing industry.
THE FRAMEWORK
The intended framework explains two different levels of integration: the full-integrated and the
independent channels models. We have deliberated excluded the first model: the informational
supporting model because for organizations it is the simplest and the most basic way to be present
online which impacts are very limited, and therefore, it cannot be defined as type III technology as
it doesn’t affect retailers’ strategies .
The proposed framework regards three constructs and 6 factors influencing the decisions of
integration between two strategies: independent channels and full-integrated channel model, which
activities impact retailers’ strategies and profitability (Table 1.).
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Table 1: Framework for multi-channel integration models in retailing industry
1. ENVIRONMENT
- e-readiness
- growth in multi-channel demand
2. INDUSTRY
- level of competition
- market maturity
INTEGRATION MODELS
- Independent Channel
- Full integrated channel
3. ORGANIZATION STRUCTURE
- structure
- retailing strategy
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Environment
In marketing studies, PEST (policial/legal, economics, socio-cultural and technological) analysis is
usually used to analyse the environmental factors influencing long-term marketing decisions as new
channel entrance, structure and composition. (McGoldrick, 2002). In this framework we consider as
environmental factors affecting the level of multi-channel integration decision: the e-readiness and
the growth of multi-channel consumers.
We use “e-readiness”5 as a proxy of PEST analysis for IT related decisions because it is a complete
index6 which includes local IT infrastructure, customers and businesses adoption, legal issues and
cultural aspects. It is defined as the ability of a Nation to use information and communication
technologies to develop the national economy and to foster one's welfare, this is an index published
each year by The Economist. This index has been already used in Koenig & Wigand’s (2004)
research about the diffusion and impacts of the internet and e-commerce in Germany.
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It has been largely demonstrated that the national e-readiness has a positive impact on e-commerce
diffusion (Gibbs 2003 and 2004), therefore, we propose the following hypothesis:
H1. the highest evaluation in e-readiness is positively related to independent channel integration
model
H2. the highest evaluation in e-readiness is positively related to a full-integrated channel model.
Multi-channel consumers’ behaviour is a discussed subject, by some authors (Venkatesan et al.
2004) and by consultancy firms (Double Click, 2005; Nielsen, 2006)7. They assert that multichannel customers are more profitable than single-channel ones, but it has been also studied that
they are not so loyal as store consumers (Geyskens et al., 2002). For many traditional retailers
consumers’ loyalty (purchase frequency) is a vital factor for their business sustainability and this is
one of the reason why many traditional retailers are so reticent in inducing their own customers to
transact in the internet, where competitors are “one click away”. Consequently, if from a point of
view the growth of multi-channel customers increases business opportunities for CAM firms, on the
other side, this factor mitigate the brand advantage of a traditional business going online.
Therefore we offer the following hypothesis:
H3. the growth in multi-channel demand is positively related to independent channel integration
model
H4. the growth in multi-channel demand is neutrally related to full-integrated channel model
Industry Characteristics
For their nature, retailing activities are stretched towards the external environment, therefore they
are affected by industry characteristics (products, customers, competition, institutions, legacy,
etc…). In this study, we haven’t included the “product type” factor (Thirumalai & Sinha, 2004;
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Steinfield et al, 2005), because in recent years also products which have been considered not
adapted to be sold online (e.g. automobiles with their touch or feel quality), they have been sold
online on sites like www.ebay.com, www.autotrader.com, etc… Also in the same category of
product, we can encounter different models of multi-channel integration, as it has been found in
Müller-Lankenau’s (2005) research.
For this framework we have considered two industry characteristics affecting the level of
integration model: competition and market maturity.
Competition is one of the most studied phenomenon in DOI literature (Kwon & Zmud 1987; Meyer
& Goes, 1988; Tornatzky & Fleischer, 1990; Fichman, 2000). It has been discovered that the level
of competition is a strong enticement for IT adoption, but it is not for implementation of innovation
technologies. Also in e-commerce researches, it has been studied that pure player competitors has
pressed traditional retailers to develop their own e-commerce channel, but sometimes the latter
didn’t have the organizational preparation and failed (Zhu, 2004; King et al. 2004). In other cases,
retail chains have developed their e-commerce web site but without any commitment, because thair
integration decision was based on the sustenance of their brand images. Steinfield et al. (2005) have
argued that traditional retailers in PC and electronics industry, presented in their sample, didn’t
develop any integration between online and offline channels because of the price competition
induced by pure players in online market.
These leads to our fifth and sixth hypothesis:
H5: the pressure of competition is positive related to independent channel integration model
H6: the pressure of competition is negative related to full-integrated channel model
Market maturity is usually measured by the product-demand growth and on this issue it has been
already studied that the performance potential of an Internet channel addition is positively related to
product-demand growth (Geyskens, 2002) .
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Therefore we can assert that:
H7: the product-demand growth is positive related to independent channel integration model
In mature markets firms compete more frequently on diversification strategies in order to attract and
to retain more consumers from competitors’ portfolio (Kotler, 1993). We have earlier assert that the
differentiation in multi-channel integration is able to enhance the customer’s experience and
relation between retailers and customers, and therefore it enhances business opportunities.
However, differentiation strategy has to come along with price competition and retailers’
profitability, as multi-channel services cannot be paid as a “premium price” (Sharps & Dawes,
2001). Therefore we can assert that:
H8: the product-demand steadiness is positive related to full-integrated channel model
Organizational Characteristics
The organization and its internal operations have a great influence on the multi-channel level of
integration, because in the case of full-integrated multi-channel model the maximum coordination
and logistics synergy is necessary in order to create a flexible and agile distribution and
communication process (Saeed, 2003). In retailing industry the entrance in new channels is one of the
most important retail growth vectors (McGoldrick, 2002). Retail chains are more probable to adopt
the internet channel to communicate and control stores and consumers because of their presence in
multiple geographical location and their experience in coordinating multiple-location operations
(Steinfield, 2005).
In this construct the levels of multi-channel integration depend on: retailers’ structure and firm
resources.
In DOI theories Tornatzky & Fleischer (1990) have argued that centralized structure are slower in
adopting innovation technologies but centralization is fundamental during the diffusion phase. In
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retailing industry, we can assert that multi-channel integration is easier in retail chains or outlets
than in franchising structures, because the channel power is concentrated in one central
organizational decision centre. Also Geyskens (2002) has demonstrated that the performance
potential of an Internet channel addition is positively related to the firms’ channel power8. In
retailing context, we can say that retail chains are more likely to develop innovative channel
strategies thanks to their vertical organization. On the other side, retailers with single or limited
location is restricted in developing an integrated multi-channel model because they lack in physical
presence on the territory. For this kind of retailers an informative web site or an independent online
store is more realistic.
Finally, in retailing industry the number of stores located in a territory can be considered as a proxy
of the brand awareness of the retail chain.
Consequiently our hypothesis are:
H9: the lowest is the number of stores owned by a retail chain and the highest is the probability of
developing a independent multi-channel model
H10: the highest is the number of stores owned by a retail chain and the highest is the probability
of developing a full-integrated multi-channel model
In retailing industry the strategic competitive position can be summarized by differentiation and
cost leadership strategies (Porter 1980; Kabaday et al. 2007). Differentiation strategies develop their
competitive advantage through innovation, image, products, format and customer services; this
implies marketing capabilities, products selection, strong cooperation among marketing channels
(Miller, 1986). Cost leadership strategies are based on the lower costs of production and distribution
than competitors and the capabilities required are based on efficiency and economies of scale in
production and distribution. Müller-Lankenau et al. (2005) have studied the grocery retailers’
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marketing strategies in Europe through their retail formats, and they discovered that discounters
don’t usually offer extensive service features on their web site. On the other side, hypermarkets
reveal somewhat more differentiation in strategic activities and they reveal a relatively high level
of integration between online and offline activities.
Even though in many industries pure players online compete on prices, retailers which have based
their off-line strategy on cost leadership are less likely to replicate their business online because of
the heavy investment in off-line specific assets that makes it difficult for them to switch completely
to on-line selling (King at al., 2004).
Therefore we have developed the following hypothesis:
H11: retailers based on cost leadership strategies are less likely to develop independent multichannel model
H12: retailers based on cost leadership strategies are less likely to develop full-integrated multichannel model
CONCLUSION
This paper has contributed to the marketing literature giving a common and simple codification of
multi-channel integration models for retailing businesses. We have unified consumers’ and firms’
points of views, considered in earlier studies, in order to give a clear multi-channel taxonomy
supported by empirical evidences. Multi-channel subject is not an easy issue because of the
involvement of different corporate processes and activities, and in this context, a simple and
structured codification can be helpful also for managers approaching the subject.
More over, we have studied multi-channel integration through the lens of DOI literature review
which has permitted to reconsider the optimal level of multi-channel integration. Indeed, previous
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8th Global Conference on Business & Economics
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researches have posed the full-integrated model as a successful model for CAM retailers (Gulati &
Garino, 2000; Saeed et al., 2003 Min & Wolfinbarger, 2004; Kumar & Venkatesan 2005, Otto &
Chung 2000), underling opportunities and barriers, but without considering the organizational and
environmental contexts. In this work we have seen, instead, that the full-integrated model can be
considered optimal only when peculiar internal and external factors arise (maturity of the market,
strong channel power and number of stores in the chain). In presence of demand growth, high
competition and a weak channel power, independent channel model is more desirable for an optimal
relation with costumers and long-lasting profitability for the retailer.
The review of DOI and marketing literature has also enlarged the factors included in previous
frameworks developed in multi-channel retailing (Steinfield et al., 2005; Müller-Lankenau’s et al.,
2005; Zhu & Kraemer, 2005), giving also a new prospective to already known variables.
Finally, hypothesis about the correlation between the multi-channel integration models and
elements of the framework will be used for further empirical analysis.
NOTES
1. “The Multi-Channel Retail Benchmark Report Where Is the True Multi-Channel Retailer?”
AberdeenGroup 2005.
2. DoubleClick’s “Touchpoints III: The Internet’s Role in the Modern Purchase Process”, 2005
3. Coordination of channels would indicate whether buyers who buy the product in one
channel are allowed to return or exchange it in the other channel (King et al. 2004)
4. See Fichman (2000) for a review about IT diffusion, adoption and assimilation
5. Economist Intelligence Unit, “The Economist Intelligence Unit e-readiness rankings”, 2008
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6. E-readiness is composed by the following scoring criteria and weights: connectivity and
technology infrastructure (20%), business environment (15%), social and cultural
environment (15%), legal environment (10%), government policy and vision (15%), and
consumer and business adoption (25%). For a complete description see:
http://www.ebusinessforum.com
7. DoubleClick’s “Touchpoints III: The Internet’s Role in the Modern Purchase Process”, 2005
8. Power refers to the power holder's ability to control or influence another subject to do
something that s/he would not do otherwise (Dahl, 1957; Emerson, 1962; Cartwright, 1965).
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