The marketing and logistics efficacy of online sales channels

Abstract

Purpose

The purpose of this study is to investigate key differences between web‐only and multi‐channel retailers in terms of five different measures of web activity and three different forms of outsourcing behavior. Specifically, the research examines the marketing and logistics efficacy between business‐to‐consumer (B2C) retailers who sell exclusively via the web and retailers for whom the web offers one additional channel for sales. Finally, it is suggested that how this study may give rise to future research in this area.

Design/methodology/approach

This empirical study using the lens of transaction cost economics (TCE) to examine hypotheses regarding customer buying behavior and the retailers' proclivity to outsource is conducted. Secondary data sources provide key metrics for the more than 250 companies found in the sample.

Findings

Several key differences exist between the efficacy of web‐only and multi‐channel retailers, which can be explained with the TCE framework. Both web‐only and multi‐channel retailers are found to exhibit respective advantages. Multi‐channel retailers enjoy more web traffic and offer more items for the consumer, yet are disadvantaged in terms of ease of search and conversion rate (percentage of shoppers who actually buy). In addition, web‐only retailers are more likely to outsource the functions of logistics, marketing, and customer support.

Practical implications

This study has value to researchers and practitioners in that it illustrates how two of the most common types of retailing alternatives differ from each other. Multi‐channel retailers are challenged with the broad scope and immense collection of goods they offer and, therefore, struggle to convert shoppers into buyers. Web‐only retailers, on the other hand, enjoy less web traffic, but prove more effective in conversion rates, perhaps related to their more extensive use of outsourced expertise in logistics, marketing, and customer support services.

Originality/value

In the decade since internet retailing (e‐tailing) began to be accepted as a new sales channel, e‐tailing has grown to a market size of over $160 billion within the USA alone. However, empirical examination of the functioning and performance of this sales channel is only now commencing.

Citation

Rao, S., Goldsby, T.J. and Iyengar, D. (2009), "The marketing and logistics efficacy of online sales channels", International Journal of Physical Distribution & Logistics Management, Vol. 39 No. 2, pp. 106-130. https://doi.org/10.1108/09600030910942386