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What Is Costco's Business Model Article
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Bricks and clicks business model
from:If a a company operates in way that its presence is felt both via offline (called bricks) and online (called clicks) ,then it is implementing the famous Bricks and clicks business model which has become very popular these days thanks to the advent of internet in every aspect of our lives. Some people also call it click-and-mortar or clicks-and-bricks, clicks and flips, where flips refers to catalogs.
The example of this model are found in everyday life like an electronics retail store allowing the user to place an order online and then the customer can easily pick up his order at the local store immediately, which he can find using locator software
The usage of bricks and clicks model is mostly done by the more traditional retailers having extensive supply chains plus logistics. This is the reason that it is much easier for traditional retailers to incorporate their online presence along with a low profile local presence employing a successful strategy of pure “dot com” or to open a conventional big shop.
Advantages of the model
This business model’s success has silenced those experts who claimed that internet would soon make traditional shops and shopkeepers obsolete. Click and mortar businesses have tremendous advantages with existing products and services. The advantages are advantageous due to strategic amalgamation of physical company and online presence that’s because they are able to use assets and competencies including the following:
Core competencies. It is seen that when a bricks and mortar firm establishes an Internet presence, it uses the core competency intensively and more extensively. The reason being simply that after establishment of a brand value through strong local presence, the internet serves to spread the word around getting more business.
Stability. The existing businesses having a local presence and having been in the marketplace for many years appears more stable and reliable to people. As a result, customers tend to place more trust in them rather than the online only firms. This chiefly applies to the firms dealing with financial services.
Existing or current customer base. The existing firms with a local presence already have healthy customer bases and therefore can obtain economies of scale easier in purchasing, production and promotion.
Disadvantages of this model
Dot com only businesses are not burdened with the costs of their brick and mortar counterparts. They can offer products at a lower marginal cost thereby reducing operational cost further. At the same time it costs them much more to obtain a customer.
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