Using the multi-channel retailing by online shop - determinants of the development and barriers of the implementation

With the boom in online business benefit entrepreneurs who commence their online stores or sell at various auction sites. In accordance with the theory of M.E. Porter when barriers to entry (and exit) are small, and the sector is characterized by a relatively high profitability, it attracts more and more interested in doing business. Table 2 presents the number of online stores operating in the Polish virtual space.

Table 2. The number of online shops in Poland, in the following years

The basic driving factors of Polish e-commerce is the growing number of Internet users who make a purchase; as well as increasing purchase amount per user (in the jargon - the value of the basket). According to the recent market surveys in Poland online shopping made more than 13 million people [5]. These people were attracted with great selection of goods, competitive prices, easiness of searching of demanded item, possibility of the purchase around the clock, etc. But with the emergence of more companies selling online increases the intensity of the competition. In some segments of the e-commerce a relatively small number of companies (up to 5) may cause a saturation point. Therefore so important are the actions taken to meet the greater demands of online buyers, and thus uzusy a kite (or consolidate) competitive advantage. Therefore so important are the actions taken to meet more requirements of the customer and thereby obtain (or consolidate) competitive advantage.

One of instrument to get competitive edge is offer a choice of making a purchase. Multi-channel Retailing (MCR) is selling through at least two or more mutually coordinated channels (points of touch). Multi channel sales in its founding aims to increase the comfort of the purchase by the client: allows him to select a channel to purchase adapted to its current, momentary preferences. In the present conditions, we can name four typical channels (point of touch):

- online (online shops or the e-auction);

- offline (traditional shop);

- call center (via telephone);

- mobile (mobile apps).

The MCR, however, does not apply to one element of the process of purchasing. The spending process includes classically 5 stages: feeling the lack of meeting the given need, seeking information about the product, comparing alternatives, making a decision (and payment) and the after-sales service. The implementation of multi channel retailing idea relates to the possibility of implementing the various stages of the client through various points of contact. For example the customer can seek information about the given TV set on the Internet, but purchase it in brick-and-mortar. He can report the possible defect through mobile apps or call center. Next the return of product can take place through the online shop. In such circumstances, the customer plays an important role in the opportunity to choose a point of contact and bargain power is being given to the customer. According to studies from the US and the UK, customers appreciate the choice of sales channel and flexibility associated with it. At the same time the sales channel selection is affected by a number of factors, among which may be mentioned:

1. Perceived, subjective usefulness of the given point of touch.

2. Switching costs of the change of channel.

3. Aversion to the risk of the customer (unknown new channels).

4. Technological proficiency of the service of another channels.

5. Willingness of interaction with other persons.

6. Nature of the product.

Preparing the applying system of multichannel retailing is involving taking action about technological, legal and organizational aspects. As practice shows this is not an easy for the company, and the main difficulty lies in the integration (coordination) activities in different areas of the business.

Analysis of recent research and publications. Previous studies have focused on its two aspects of multichannel sales by existing online stores in Poland: keep traditional channel (real store, on the ground) and the question of the effect of ROPO (Research online, purchase offline) and possibly reverse ROPO.

The physical point of sale is the first issue relating to the MCR of online shops in Poland. According to the report “eHandel Poland 2012” 46 % of Polish e-shops is keeping offline mode of sales. Interestingly, in comparison to the previous edition of this survey, which took place in 2009, this percentage fell by 5.5 percentage points. In other words, the MCR in Poland is very popular (almost half of those), though its prevalence is decreasing.

According to the author's one should be very careful in the face of presented results. The author is not found support the thesis of such broad dissemination of multi channel retailing among polish e-shops in the literature, market research or own observations. available studies indicate rather the opposite state. The use of mobile applications by online sellers didn't not exceeded a few percent in 2013. Exactly speaking 5 % Polish online stores has a mobile application that enables sales. It should be planted the mentioned percentage is at a higher level at the end of 2014, but not half the population. The author shares the view that, at present, the sale of multi-channel leads in no more than 10 % of turnover of polish online stores.

The second question occurring in the research is the ROPO effect. This acronym stands for "Research online, purchase offline". In other words, it is a search for information on a given product on the Internet and purchase it in brick-and-mortar. With the development of e-business, the so-called effect of reverse ROPO effect appeared. It relies on the fact that customers are trying out products in the physical shop, and after positive a positive result of the test, decide to buy in the online store.

According to the study “The ROPO effect in the segments of polish e-commerce - Q3 2014” information about products collected on the Internet is having an influence on a process of the purchasing in real shops. On average over 60 % customers before the purchase offline are collecting information on the web. However it is worthwhile taking note that differences exist on account of industries - for example before the purchase of trips offline, online checks them over 90 % of buyers.

In another study concerning online customers, the ROPO effect affects more than 40 % of them. Also in this study, the results vary depending on the industry and gender. On the ROPO effect more vulnerable are women. In turn, the effect of reverse ROPO (information from the real shops, purchase online) uses 35 % buyers. The data confirm that customers use these channels that more closely meet their needs.

The abovementioned review of secondary sources clearly indicates the selective treatment of the issues of multichannel sales by online stores. Market reports address only two issues raised above (The ROPO effect and mobile apps), aside from a much wider spectrum of activities that may take place within the framework of the MCR. So it seems indispensable to be incorporated into the e-commerce research programme in Poland, the issue of multichannel sales. This postulate is all the more legitimate that already carried out a study of multi channel retailing on the polish ground. However, these studies as a starting point adopted retail chains. In opinion of the author, combined perspective of the online and offline store, can only give a more complete picture of multi channel retail in polish e-commerce.

Goals of the article. The primary objective of this paper is to show the comparative advantages and challenges of launching a multi channel retailing system through online stores.

The main material of research. The research methodology is based on a critical analysis of the literature (secondary sources) and the case study. The first method was used for the analysis and evaluation of available market reports relating to the state-of-the-art of Polish e-commerce, as well as to the evaluation of the benefits and challenges resulting from implementation of the multi-channel sales by e- shops. A case study is helpful in confirming (or denying) theoretically described pros and cons of MCR.

Multi channel retailing for its essence involves many elements of the organization. Requires a process management, customer relations and logistics. Based on intangible flows (information) and material flows (products). It is not surprising, therefore, that the entrepreneur running online stores carry a kind of analysis before implementation, as to the necessity of the implementation of the MCR in their company. This analysis may take the form of ABC analysis, that is juxtaposing benefits and widely understood the challenges of the implementation of the multi channel retailing.

On the basis of the scientific literature, market surveys and author's own observations of 2 online businesses - the benefits of multi touch with the customer can be represented as:

1. Increasing customer satisfaction.

2. Acquiring / strengthening of the new market segment.

3. Obtaining more information on customer buying behavior.

Re 1)

Putting into the hands of the customer decision about which elements of the purchase process to perform through the available channel increases the flexibility of the purchase. The opportunity to purchase during the journey before the exhibition items, the option to return the product by courier, search for information online - all this builds a positive image of the company, as well as integrates customer into the process previously reserved for the enterprise.. As a consequence, builds a higher comfort of MCR in relation to sales through single channel. Therefore, the client is more satisfied, which may lead to its higher loyalty.

Re 2)

Generation Y customers, so people born in the era of the Internet, they can not imagine acting without virtual space. At the same time they are characterized by high demands on the fulfilment of their needs and preferences, especially in relation to the aspect of time. Therefore, the launch of multi channel retailing is partly meets their requirements.: handle me anytime and anywhere according to my preferences. MCR allows company to take advantage of consumer segments that would otherwise remain beyond the reach of the company.

Re 3)

Touching each other with customers in many points/channels the enterprise can build the more complete image of the consumer. Linking information from online space (value of the basket, time spending on site of the shop, product categories arousing the interest, preferred methods of the payment, etc.) with information from the offline world (the area, the frequency and visiting hours, sought categories, etc.), it is possible in the more fitted way to react for the purposes of the customer. In this way, e-shop cart abandonment rate can decrease, thus increasing the basic measure of the effectiveness - degree of the conversion.

Build an efficient system for multi channel retailing brings many benefits. However, the launch of MCR poses many challenges, especially in the areas of organization, logistic and finance.

Organisational challenges relate primarily to issues of ensuring coordination across multiple channels, but also business processes. It is about building a system that will allow the exchange of information at all points of touch. In fact, the key is suitable information system, which for example. provide the employee call-centre data about the order, which was advertised on the client. In practice, the construction and arrangement of the corresponding algorithm is not easy. The integration of the channels must be dressed in finely tuned procedures that allow for multiple sales channels. Integration procedures around the selected sales channels and stages of the purchasing process is difficult because of the many exceptions. Channels integration must take into account the appropriateness of the instruments of the marketing mix. Whether managers do want to have the same price in all channels? And perhaps they are awarding a bonus to buyers using the mobile application? These and other responses must be entered into the procedure and algorithm in information system.

An important issue in the context of organizational challenges is the processing and use of customer data. As stated earlier, a deep knowledge of the client can be one of the main advantages of MCR. However, integration of data and the way of used them could be inappropriate. For example the customer can be too often "bombed" with advertising in comparison to the single channel of contact.

The second group of challenges are logistical ones. In this respect, it comes to the design of physical flow streams of products not in a linear fashion, as in the case of one channel, but taking into account the possibility of receipts and payments at the various stages of the logistics process. So that in brick-and- mortar they are both of product conventionally intended for this delivery channel, as well as ordered by the Internet or the mobile application. Similarly the thing is with the policy of returns. One should develop allowing appropriate procedures returnable goods through different channels (e.g. arrival of the courier home for return of the product, independent taking back the product to the real shop, sending back by post) and what's more irrespective of the channel in which they purchased.

Logistical issues linked to the issue of reporting and maintaining order in the tax documentation. Here they are displaying peculiar entitlements of consumers making purchases from a distance. In such case the customer has 14 days for the return of the product without stating causes. In turn, such a right does not work in the case of a real store.

The third set of challenges are the costs arising as a consequence of multi channel system launch. These costs consist of:

- the purchase or creation of software (or its upgrading), which take into account the procedure of supporting multi channel retailing. This type of software must integrate multiple databases, be programmed with algorithms and accurate gradation control and the extent of access.

- the establishment of appropriate procedures - multidimensional arrays work: the number of channels and the stages of the purchasing process assigned to the service of the channel(s).

- commissioning and maintenance of a new point of contact, such as a physical point of sale and mobile application development. Rental and staff costs can be relatively high as well.

- internal logistics costs associated with repackaging and transport of smaller or larger batches of goods.

- legal costs associated with the development of regulations allowing for any possible legal risk across all sales channels and the stages of the purchasing process. market online retailing

- multi-channel sales promotion costs.

- the cost of training managers and staff to increase their degree of literacy and flexibility in skills and working methods and up-to-dating of their knowledge on the customer order.

The presented catalogue of costs isn't exhausting a topic and in practice more position can occur when it comes to launch of MCR. Nevertheless, the review of the aforesaid costs, as well as the difficulties in the area of organization and logistics provides the answer, why so relatively few online shops decides to implement a multi-channel sales.

Conclusions and recommendations for further research. Multi Channel Retailing is without a doubt one of the measure undertaken by the internet business as a strategy to stand out from the competitors. As indicated in this study, MCR can be bring certain advantages, of which the primary is to increase the degree of customer satisfaction. However, on the other hand, there are the challenges that for many online shops may put into question the will of running a multichannel sales. The above statement should be particularly related to small online stores, operated autonomously, with a monthly turnover not exceeding 10 000 PLN. This type of business is a relatively large on the Polish market. Depending on the surveys taken into account it consists of 20 - 40 % of stores. The costs associated with the integration of channels, creating the procedures, and upgrade the software most often exceed the benefits from the implementation of MCR. Especially running a physical point of sale may be inefficient and unprofitable. For small online stores worth recommending is the interest in mobile applications. Their creation and integration with the online channel, is also associated with incurring certain inputs, however, these are not costs as high as in the case of a real store. The rate of increase in the number of owners of smartphones, tablets, and other mobile devices (phablet, smarwatch, etc.) leads to the conclusion that these expenses are reasonable. This conclusion is confirmed in the processes taking place in the more developed Western e-business markets.

For larger stores, characterized by a significant volume of sales and the number of customers served, multi channel retailing is an important weapon in the competitive struggle. An example of brick-and- mortar retailers such as EuroAGD, Saturn, Liroy Merlin, indicates clearly that MCR is a step towards the development of modern trade. Thus, as a multi-channel sales may have a different starting point. It will not always be the Internet business, but also large retail chains. The implementation of MCR by well-known retail chains makes multi-way customer service will become the market standard.

Conducted study are inducing to conclusions about generalizing character. Implementation of multi channel retailing sales seems particularly recommended for those online stores that:

- trade standard product (so product with fixed parameters, independent sales channel),

- have a specified sales volume and the number of clients served (which on the one hand, forces you to improve the quality of service, on the other hand allows you to set aside funds for the implementation of MCR),

- has a long apprenticeship in the market (and therefore knowledge of the client and the tendency to increase the degree of customer satisfaction and loyalty.

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