Electronic channels involve using the internet to reach end users and allow consumers to buy online. They are used for both business-to-business and business-to-consumer transactions. While electronic channels provide advantages like convenience of 24/7 purchasing and access to a wide selection of products, they also present challenges like security concerns, difficulties returning products, potential stock outs or delivery delays, and higher shipping costs compared to brick-and-mortar stores. Electronic channels can also cause conflicts with traditional retail channels if not properly coordinated between manufacturers, online retailers, and physical stores.

1. Amity Business School
Electronic Channels
MBA Class of 2013, Semester II
Distribution &Logistics Management
Swati Bhatnagar

2. Electronic channel defined
Amity Business School
Any channel which involves using internet as a means of reaching the end user
or any channel from which the consumer buys online.They are used both for
B2B & B2C formats.
Disintermediation versus reintermediation?
Coordination challenges in electronic channels
• Channel conflicts do arise with the establishment of online channel along with a
traditional channel because of disintermediation.
• Online sales happen in mainly the following three situations
a) The manufacturer itself creates an owned online presence in direct competition to
the standard channel.
b) Manufacturer contracts to sell through third party pure play on line resellers
c) The manufacturers products might get sold online because its retailers itself are into
online operations

3. Contd. Amity Business School
• In case a) the online sales and marketing effort , carries the potential of
goal, domain & perception of reality conflicts.
• Goal conflict arises as the manufacturer wants to maximise its profit over
its totality of sales channel, one of which is the on line channel.
• Domain conflict also arises because the manufacturer who sells on line
may cannibalise directly the consumers of the bricks and mortar channel.
Thus domain conflict occurs over territorial rights.
• The classic opportunity of free riding also is available. Domain conflict
also occurs when the consumer bought the product on line but tries to
return the product to the bricks and mortar outlet.
• Perception of reality conflict also emerges as for the manufacturer its just
a mere expansion of its reach in market whereas the retailer perceives him
of trying to steal its customers.

4. Contd. Amity Business School
• In situation b) the classic dual distribution conflict occurs.
• Here again, the same type of goal, domain & perceptual conflict occurs .
• The two competing resellers generally have very different goals. Again a
possibility of free riding exists.
• However in this case unlike case a), the manufacturer does not have direct
pricing or service control over the on line channel. The same limits its
ability to prevent conflict.
• In case c ) The on line reseller internalises at least partly the negative
effects of aggressive online competition on the bricks & mortar channel.

5. Amity Business School
Demand side gaps in electronic channel
• End users have demand for the same service outputs ( bulk breaking,
spatial convenience, waiting delivery time, customer service, assortment &
variety) in general but the expectation and the context changes in an on
line format
• On line format is viewed is more pleasant than fighting the holiday crowds
at stores
• However, difficulty does crops up on issues like :- returning products, out
of stock issues, delivery time uncertainties, information security & price.
• On the SODs separately ;
Bulk breaking : online resellers should be able to ship few units at a time to
many addresses versus the standard in retailer based channels of shipping
many units at a time to few retailers. E.g amazon.com

6. Contd. Amity Business School
• Spatial convenience : the spatial convenience of shopping at home simply cannot
be beat by any bricks and mortar retailer. However if the product needs to be
returned the same spatial convenience can become quite a pain.
• Waiting & delivery time : the same is not a major strength of on line resellers in
many categories. The waiting time becomes too long when delay happens in terms
of loading & viewing the screens because of poor internet speed. Interestingly,
there is little the online reseller can do to contain it.
• The second dimension of delivery time is the actual lapse that happens in delivery
• Assortment and variety can be vastly increased with online shopping over what is
available at standard bricks and mortar store. E.g Amazon . Com markets itself as
“ Earth’s biggest selection” offering 5 mn book titles
• Customer service A multidimensional offering. It includes both pre sales service
and post sales service.

7. Amity Business School
Supply side gaps in electronic channel
Injecting an on line element to the channel helps in reducing the cost of the
following channel flows.
 Physical possession
 Promotion
 Negotiation
 Risking
 Ordering
 Payment

8. Amity Business School
Advantages of electronic channels
• Purchase possible 24*7
• More convenient than battling holiday crowds
at bricks & mortar outlets
• Enables good value for money most of the
times
• Access to a wide assortment of goods &
services

9. Amity Business School
Disadvantages of electronic channels
• Security concerns of payment
• Issues over product returns
• Stock out of products
• Delivery delays
• Shipping & logistics cost relative to the
margins of certain goods
• Leads to conflict with other channel partners if
not carefully handled.