Question

Mr. Sunil Dholakia (SD), the Branch Head, Mumbai of Tristar Inc, a consumer electronics giant, was in a conversation with Vijay Aggarwal ( who owned a chain of successful consumer electronics retail outlets in the city. They were discussing the advent of e-commerce and the imi it would have on the distribution of consumer electronics and home appliances items in the country.

VA: As you know, the e-commerce guys have started causing problems for us. We see our sales going down. But, I assure you, ultimately shall prevail.
SD: I also think so. But the thinking within our company is different. The top management believes e-commerce is here for the long term. would probably define the future of retailing.
VA: All of them are losing money here. They are buying market share by offering better prices. They provide doorstep delivery at prices, whi the moment is lower than us. They can never be profitable in the long term. They would burn investor's cash for some time, and once th over, they would have no option but to fold back or increase their prices. Once the prices go up, the customer would shift to us.
SD: Well, I hope so.
VA: You appear not convinced. Now let us look at all aspects of retailing and compare the relative advantages of e-commerce and retailers brick-and-mortal shops like us. I shall talk about all such shops and not restrict myself to my firm alone.
VA (continued): We are present everywhere, even in the smallest settlements of the country. E-commerce does not have that penetration. Secondly, with us, you get immediate delivery of the product. The e-commerce companies would take three to four days before they deliver your product. Our quality of transportation would also be better, primarily because of the shorter distance involved. You would not get products with scratches etc. If you are not satisfied, you can immediately take a replacement.
SD: That is true. But on the e-commerce site, you can see more products. All brands would be displayed there with their specification. There would be customer feedback also.
VA: The customer feedback at the e-commerce sites is usually manipulated. Yes, I agree, the specifications are there. But what do you think would a customer understand out of them? They are all in jargon. I still come across customers who believe that a 1.5-ton air conditioner weighs that much (1.5 ton). Over here, we explain to customers what they mean and how they impact their usage. We help the customers to make a better choice. We help him in getting better finance deals also. We install the product in their homes, provide service. If you buy on e-commerce, you have to be dependent on the manufacturer.'s service centers. At my place, I have technicians to provide basic service all the time. We also do our best to manage relationships with our customers. We have people who have been buying from our shops for generations.
(a) What are the various channel functions? Briefly explain them.
(b) Based on the information provided above, make a comparison between e-commerce and brick-and-mortar shops in terms of how they fuliill these functions. (10)

Answer 1

The various channel functions in retailing include distribution, inventory management, promotion, customer service, and relationship management. Brick-and-mortar shops like Vijay Aggarwal's provide immediate delivery, quality control, personalized assistance, and strong relationships with customers. E-commerce platforms offer a wider product range and detailed specifications, but customer feedback may be manipulated, and understanding specifications can be challenging.

Step-by-step explanation:

The various channel functions in retailing include:

Distribution: This refers to the movement of products from the manufacturer or supplier to the end consumer. Brick-and-mortar shops like the one owned by Vijay Aggarwal in the conversation provide immediate delivery through their physical stores, while e-commerce companies like Tristar Inc. may take a few days to deliver.

Inventory Management: This involves managing stock levels and ensuring the availability of products. Both e-commerce and brick-and-mortar shops need to efficiently manage their inventory to meet customer demand.

Promotion: This refers to the marketing activities that create awareness and drive sales. E-commerce platforms can display a wide range of products with detailed specifications and customer feedback. Brick-and-mortar shops, on the other hand, provide personalized assistance, explain product features, and offer additional services like finance deals and installation.

Customer Service: This includes providing assistance, addressing complaints, and ensuring customer satisfaction. Brick-and-mortar shops generally have technicians and service centers to provide immediate support, while e-commerce companies rely on manufacturer's service centers.

Relationship Management: This focuses on building and maintaining strong relationships with customers to encourage repeat purchases and loyalty. Brick-and-mortar shops like Vijay Aggarwal have long-standing relationships with customers, while e-commerce platforms may find it challenging to establish similar connections.

In terms of fulfilling these functions, brick-and-mortar shops have advantages such as physical presence in all settlements, immediate product delivery, better quality control, personalized assistance, and relationship building. On the other hand, e-commerce platforms offer a wider product range, detailed specifications, and customer feedback. However, customer feedback on e-commerce sites may be manipulated, and understanding technical specifications can be challenging for some customers.

Answer 2

The various channel functions in retailing include buying and assorting, transportation and logistics, storage and warehousing, promotion and communication, selling and negotiating, and customer support and service. Brick-and-mortar shops and e-commerce sites fulfill these functions differently, with each channel having its own advantages and disadvantages.

Step-by-step explanation:

a) The various channel functions in retailing include:

Buying and Assorting: This involves selecting and purchasing the products that will be sold in the retail outlet, as well as organizing and categorizing them.

Transportation and Logistics: This entails the movement of products from manufacturers or suppliers to the retail outlet, ensuring timely and efficient delivery.

Storage and Warehousing: This involves the storage and management of inventory in a way that ensures products are readily available for customers.

Promotion and Communication: This includes advertising, marketing, and other promotional activities to attract customers and inform them about the products offered.

Selling and Negotiating: This refers to the actual sales process, where retail staff interact with customers, answer their queries, and complete transactions.

Customer Support and Service: This involves after-sales support, such as handling returns, exchanges, and addressing customer concerns and complaints.

b) In terms of fulfilling these channel functions:

Buying and Assorting: Brick-and-mortar shops like Vijay Aggarwal's outlets have the advantage of physically selecting and organizing products in-store, whereas e-commerce sites have a wider variety of products available for customers.

Transportation and Logistics: Brick-and-mortar shops like Vijay Aggarwal's outlets can provide immediate delivery and superior transportation quality due to their local presence, while e-commerce sites may take longer to deliver and face challenges in ensuring product quality during transportation.

Storage and Warehousing: Both brick-and-mortar shops and e-commerce sites have their respective storage and warehousing systems, with e-commerce sites relying on large warehouses and brick-and-mortar shops having on-site inventory.

Promotion and Communication: Both channels employ various promotional activities, but e-commerce sites may have an advantage with customer reviews and specifications available.

Selling and Negotiating: Brick-and-mortar shops like Vijay Aggarwal's outlets offer personalized assistance, explanation of product specifications, better finance deals, and in-house technicians for support, while e-commerce sites rely on manufacturers' service centers.

Customer Support and Service: Brick-and-mortar shops have the advantage of providing immediate replacements and personalized customer service, while e-commerce sites depend on manufacturers' service centers for support.