Classifying E-tailing Business Models by Distribution Channel
E-tailing is the process of selling goods and services directly from the manufacturer to customers by the use of an online channel. This system completely eliminates the traditional intermediaries in the process of distributing goods and services. E-tailing business systems can be classified according to the distribution channel used to sell products to various stakeholders. The models can be classified into three categories: Direct marketing, pure-play e-tailers and click-and-mortar retailers.
Through this system the manufacturer sells directly to the customers through an online channel. There are no intermediaries between the manufacturer and the customer and this helps reduce the cost and time used in transferring products through a series of middlemen. Complete removal of traditional middlemen is a common feature of this e-tailing business model. The customers order goods and services through the mail from the manufacturer. A telephone interaction may be used to link the two parties. In addition, payments for the sold goods and services are made through the internet. Examples of companies using this model are Dell, Nike and others (Turban & King, p.98). This model has the advantage that it helps provide good prices for products by reducing the costs involved in the intermediary level. The manufacturer develops a direct relationship with the customers and this helps solve major problems relating to the products. Delivery of goods and services is done promptly because no intermediary is involved. The manufacturer is able to understand the market changes properly because they have direct link with the customers. Dell, for example sells its computers directly to its customers by the use of the internet channels (Turban & King, p.100).
Companies applying this model have no physical store for selling their products. They use an online sales system only to provide their customers with goods and services. An example of a company using such a system is the Amazon.com. Companies using this model have the advantage that unnecessary costs for intermediaries are eliminated and this helps make the products cheaper. The customers and the manufacturers are linked directly and issues arising between the two parties are easily solved. This model of e-tailing is mostly applied in the service industry where there is no physical goods required in the entire transaction (Turban & King, p.98).
Companies using this model have supplementary websites to sell their products through online channels. A company creates several websites to sell various products. An example is the Walmart.com or Homedepot.com. These websites serve different functions and they help provide the customers with a variety of web links to access the products of the company. Companies with a wide variety of products apply this model to avoid confusion by customers. The companies use different websites to contact their customers and this helps solve the problem of congestion in the websites. Goods and services are easily distributed to the customers by the use of different websites. Payments are also made through these channels or by the use of a different channel (Turban & King, p.98).
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