Electronic Retailing

Nowadays more and more people shop online, therefore, the prospect of higher future profits has pushed manufacturers into selling their products through the Internet.

Another advantage of the e-tailing (retailing conducted over the Internet) is that it makes easier for a company to sell directly to the customer, cutting out the intermediaries and saving on costs.

Thanks to this new way of doing business, consumers or potential ones can easily switch between three different channels:

• physical store
  
• catalogue in hard copy


• online catalogue/purchasing online
  

Argos, the well known English bricks-and-mortar retailer, which sells office supplies, furniture, consumer electronics, sporting goods (products that sell well on the Internet), offers to its consumers the possibility to browse its online catalogue, find the desired object and buy it. However, the company is well aware of the facts that lots of people do not like online shopping and for this reason it carries on printing its own catalogue in hard copy.

All the three channels mentioned above target the same customer, therefore a conflict between them may arise.

The channel conflict matrix analyses how different types of channel conflicts should be resolved. Regarding the physical catalogue, in the long run it is likely that it will disappear, mainly due to the high publishing cost and, therefore, it can be positioned on the second quadrant of channel conflic matrix: accept the decline of the threatened channel.
On this quadrant the relative importance of the threatened cahannel is low, while the risk of conflict between different channels is high.

However, another hypotesis is that the online catalogue and the one in hard copy may coesist without impact on the business.
It will fall in the fourth quadrant: ignore; here both the relative importance of the threatened channel and the risk of conflict between channels are low. In this case the online catalogue may become more specialized on technological items, while the one in hard copy may be more focused on furniture. This can be a fair option for the coexitence of both catalogues.

In conclusion, even if the online shopping creates new customers, the retailers should not forget about the already existing ones.