COEXISTENCE OF TRADITIONAL SALES CHANNEL AND E-COMMERCE FROM THE POINT OF VIEW OF LOGISTICS COSTS - CALCULATION MODEL

Authors

  • Michał Adamczak
  • Roman Domański
  • Piotr Cyplik

Abstract

Nowadays competition on the market takes place not only by offering products better tailored to the customer's needs at the lowest possible price, but also by the way in which the product goes the customer. The direction of development of the distribution network organized in the form of omnichannel is clearly perceptible. From the point of view of sales, such solutions allow retail companies to reach customers more easily and offer them sales without risk (easy and free return of purchased goods). This affects the widening of the potential customers and increased sales. On the other hand, omnichannel solutions cause that sales in each channel is not as large as it would be if this channel would function as the only possible one (the phenomenon of cannibalization of sales). Omnichannel solutions also increase logistic costs caused by increased complexity of logistics processes.

The authors in their article describe the developed by them cost model coexistence of traditional sales channel and e-commerce from the point of view of logistics costs. The aim of the publication is to show that the implementation of the e-commerce in a situation where the traditional sales channel already exists is possible from the point of view of logistic costs only when the phenomenon of cannibalization of sales between channels is took into consideration. cannibalization of sales between channels in omnichannel retail is a crucial factor in decision making process about developing distribution channels in way of cross-channel integration. Due to author's model there is possible to assess an influence of introducing online channel on fixed logistics costs and profitability of traditional (offline) distribution channels.

In calculation model only logistics costs and whole demand are take into account. It is a limitation of the paper. Start-up a new sales channel can has an influence on more aspects of trade business. In further research authors want to spread a range of aspects take into account in calculation model. Calculation model can be used by trade companies in decision making process about developing of sales channels.

 

Key words: e-commerce, logistics costs, calculation model

Author Biography

Piotr Cyplik

Nowadays competition on the market takes place not only by offering products better tailored to the customer's needs at the lowest possible price, but also by the way in which the product goes the customer. The direction of development of the distribution network organized in the form of omnichannel is clearly perceptible. From the point of view of sales, such solutions allow retail companies to reach customers more easily and offer them sales without risk (easy and free return of purchased goods). This affects the widening of the potential customers and increased sales. On the other hand, omnichannel solutions cause that sales in each channel is not as large as it would be if this channel would function as the only possible one (the phenomenon of cannibalization of sales). Omnichannel solutions also increase logistic costs caused by increased complexity of logistics processes.

The authors in their article describe the developed by them cost model coexistence of traditional sales channel and e-commerce from the point of view of logistics costs. The aim of the publication is to show that the implementation of the e-commerce in a situation where the traditional sales channel already exists is possible from the point of view of logistic costs only when the phenomenon of cannibalization of sales between channels is took into consideration. cannibalization of sales between channels in omnichannel retail is a crucial factor in decision making process about developing distribution channels in way of cross-channel integration. Due to author's model there is possible to assess an influence of introducing online channel on fixed logistics costs and profitability of traditional (offline) distribution channels.

In calculation model only logistics costs and whole demand are take into account. It is a limitation of the paper. Start-up a new sales channel can has an influence on more aspects of trade business. In further research authors want to spread a range of aspects take into account in calculation model. Calculation model can be used by trade companies in decision making process about developing of sales channels.

Key words: e-commerce, logistics costs, calculation model

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Published

2018-12-20

Issue

2018: Proceedings of The 18th International Scientific Conference Business Logistics in Modern Management

Section

Articles