The bricks and clicks business model involve a merchant operating both an online store and a physical retail outlet.
The bricks and clicks model may describe a physical retail business that establishes an online presence or the reverse scenario. Many businesses in the latter category are direct-to-consumer (D2C brands).
To be successful, the bricks and clicks model relies on a few key qualities. These include flexible return policies, immersive product displays, augmented browsing, and consistency in inventory. It is also important to integrate the instant gratification of in-store shopping with the convenience of online shopping.
Aspect
Explanation
Definition of Bricks and Clicks Business Model
The Bricks and Clicks Business Model is a hybrid retail strategy that combines both physical (brick-and-mortar) and digital (online) sales channels within a single business operation. This approach allows customers to interact with a brand through physical stores, e-commerce websites, or mobile apps, offering them a seamless and integrated shopping experience. In a bricks-and-clicks model, customers can browse products in-store, make purchases online, or use online research and reviews to inform their in-store buying decisions. This hybrid model leverages the advantages of both physical and digital retail to reach a broader customer base and enhance convenience, while also addressing the evolving needs of modern consumers who value both online and offline shopping options.
Key Concepts
Several key concepts define the Bricks and Clicks Business Model:
– Multichannel Presence
A crucial concept is maintaining a presence across multiple sales channels. This includes physical stores, e-commerce websites, mobile apps, and even social media platforms. A multichannel presence provides customers with choice and flexibility in how they interact with the brand.
– Seamless Integration
The integration of physical and digital channels is essential. Inventory, pricing, promotions, and customer data are often synchronized to provide a consistent and unified shopping experience. Seamless integration ensures that customers can transition between channels effortlessly.
– Omnichannel Experience
The goal is to create an omnichannel shopping experience, where customers can switch between online and offline channels without disruptions. This experience extends to services like buy online, pick up in-store (BOPIS) or online returns in-store. An omnichannel approach enhances customer convenience and satisfaction.
– Data and Analytics
Data collection and analytics play a significant role in understanding customer behavior and preferences across channels. This information helps businesses tailor their offerings, marketing, and operations to meet customer needs effectively. Data-driven insights drive decision-making and optimization in a bricks-and-clicks model.
Characteristics
The Bricks and Clicks Business Model is characterized by the following attributes:
– Physical Store Presence
Companies following this model maintain a network of physical stores, allowing customers to have in-person shopping experiences. The stores may serve as showrooms, points of sale, or pickup locations for online orders. Physical store presence provides a tangible connection with customers.
– E-commerce Platform
Alongside physical stores, businesses operate e-commerce platforms that enable online shopping. These platforms are user-friendly, secure, and optimized for online transactions. E-commerce websites facilitate global reach and convenient online shopping.
– Mobile Apps and Technology
Many bricks-and-clicks retailers offer mobile apps that enhance the shopping experience. These apps may provide features such as mobile payments, personalized recommendations, and in-store navigation. Mobile technology complements both online and offline shopping.
– Cross-Channel Inventory
Inventory management ensures that products are accessible across all channels. It prevents stockouts and allows customers to purchase items online even if they are currently out of stock in physical stores. Cross-channel inventory management maximizes sales opportunities.
Examples of Bricks and Clicks Business Model
The Bricks and Clicks Business Model is employed by various retailers and brands:
– Walmart
Walmart, a multinational retail corporation, combines a vast network of physical stores with a robust e-commerce presence. Customers can shop in stores, order online for home delivery, or use Walmart’s app for in-store shopping and mobile payment.
– Best Buy
Best Buy, an electronics retailer, offers both physical stores and an e-commerce website. It also provides services like in-store pickup for online orders and tech support through its Geek Squad division.
– Target
Target utilizes a bricks-and-clicks model, featuring physical stores, online shopping, and a mobile app. Customers can access various services, including same-day delivery, order pickup, and online-exclusive deals.
– Home Depot
Home Depot combines its brick-and-mortar home improvement stores with an e-commerce platform. Customers can shop in-store, order products online for delivery or pickup, and access online resources like project guides and instructional videos.
Benefits and Considerations
The Bricks and Clicks Business Model offers several benefits and considerations:
– Broad Customer Reach
The model allows retailers to reach a wider customer base by accommodating both online and offline shopping preferences. It appeals to a diverse audience with varying shopping habits.
– Enhanced Customer Experience
Customers benefit from a versatile and seamless shopping experience that caters to their preferences. They can research online, see products in-store, and enjoy flexible purchase and delivery options.
– Operational Challenges
Managing a multichannel operation can be complex. Businesses must coordinate inventory, pricing, logistics, and marketing efforts across channels, which can present operational challenges. Effective management and integration of systems are essential.
– Competitive Advantage
A well-executed bricks-and-clicks strategy can provide a competitive advantage, as it combines the strengths of both online and offline retail while mitigating some of their weaknesses. However, staying competitive requires continuous adaptation to changing consumer preferences and technological advancements.
Understanding the bricks and clicks business model
The bricks and clicks business model involve a merchant operating both an online store and a physical retail outlet.
The bricks and clicks business model refers to a combination of a physical retail store (the “brick”) and an eCommerce presence (the “click”). The model allows businesses to take advantage of both sales channels, drive more sales, and increase brand reach.
Nowadays, many businesses can be classified under the bricks and clicks business model because of the importance of having an online presence. Established retailers such as Target and Walmart are two obvious examples of companies that started with retail stores and then expanded into eCommerce.
However, the bricks and clicks model also works in reverse. Companies that started online and then opened real-world retail locations include Casper, Warby Parker, Bonobos, Allbirds, Glossier, Peloton, and even Tesla. Many of these companies, the keen observer will note, are direct-to-consumer (D2C) brands.
What makes the bricks and clicks business model successful?
Here are a few qualities that make the model successful:
Buy online, pick up in-store – while no one can doubt the popularity of eCommerce, it will never be able to match traditional shopping in terms of instant gratification. But shopping in a store has its own problems such as having to search for an item or standing in a long queue. Brands that utilize the bricks and clicks model combine convenience with instant gratification and allow the customer to get the best of both worlds.
Consistent inventory– one of the most common customer frustrations is arriving at a physical store to find that a product the website said was in stock is actually out of stock. To combat this, bricks and clicks retailers need to ensure there is consistency between their online and offline inventory systems.
Flexible return policies – this means that items must be convenient to return irrespective of how they were purchased. The business must allow in-store purchases to be returned in the mail and online purchases to be returned in-store.
Product displays – for many consumers, one of the only reasons to visit a bricks-and-mortar store is the experience of viewing a product in person. To encourage offline fanatics to interact with its brand online, the business can ensure that its product listings are immersive, interactive, and accurately represent what is being sold.
Augmented browsing – for better or worse, the sheer diversity of products available online causes some shoppers to become disappointed when they walk into a physical store. Retailers who operate smaller stores with fewer products can expand their product range virtually using tablets, QR codes, and self-service stations that connect directly to their online store.
Case Studies
Nike:
Nike, the global sportswear giant, operates both physical retail stores and an extensive e-commerce platform.
Customers can visit Nike’s brick-and-mortar stores to try on products and experience the brand firsthand, while also having the option to browse and purchase products online through Nike’s website or app.
Nike utilizes its online platform not only for sales but also for engaging with customers through exclusive releases, personalized recommendations, and digital experiences.
Apple:
Apple follows the bricks and clicks model with its retail stores, known as Apple Stores, and its online store.
Apple Stores offer customers the opportunity to interact with Apple’s products, receive technical support, and participate in workshops and events.
In addition to its physical stores, Apple operates an online store where customers can purchase Apple products, accessories, and services with the same level of convenience and security.
Sephora:
Sephora, the multinational chain of beauty stores, seamlessly integrates its brick-and-mortar locations with its online platform.
Customers can visit Sephora stores to explore and sample beauty products, receive personalized consultations, and attend beauty classes and events.
Sephora’s online store offers a wide range of products, beauty tips, tutorials, and virtual try-on tools, allowing customers to shop from anywhere at any time.
IKEA:
IKEA, the Swedish furniture retailer, combines its iconic blue-and-yellow stores with a comprehensive e-commerce presence.
Customers can visit IKEA stores to view and interact with furniture displays, take advantage of in-store services like home delivery and assembly, and enjoy amenities like restaurants and play areas.
IKEA’s online store enables customers to browse its entire catalog, plan their purchases using virtual room planners, and order products for home delivery or Click & Collect pickup from their nearest store.
Lululemon:
Lululemon Athletica, a popular athletic apparel retailer, utilizes both physical stores and an online platform to reach its customers.
Customers can visit Lululemon stores to try on yoga pants, sports bras, and other activewear, as well as attend fitness classes and community events organized by the brand.
Lululemon’s e-commerce website offers a wide range of athletic apparel and accessories, along with features like product reviews, size guides, and virtual shopping assistants to enhance the online shopping experience.
Petco:
Petco, a leading pet retailer, operates brick-and-mortar stores alongside an extensive e-commerce platform catering to pet owners.
Customers can visit Petco stores to purchase pet food, supplies, and grooming services, as well as attend pet adoption events and training classes.
Petco’s online store offers a comprehensive selection of pet products, prescription medications, and vet-recommended brands, along with resources like pet care guides, training videos, and live chat support for pet parents.
Warby Parker:
Warby Parker, a disruptive eyewear company, follows the bricks and clicks model by combining its innovative retail stores with an online platform for eyeglass and sunglass sales.
Customers can visit Warby Parker stores to try on frames, receive eye exams, and consult with opticians, while also enjoying perks like free adjustments and replacements.
Warby Parker’s website offers a virtual try-on tool, home try-on program, and easy online ordering process, making it convenient for customers to shop for stylish and affordable eyewear from the comfort of their homes.
Costco:
Costco, the membership-based warehouse club, operates physical warehouse locations supplemented by an online platform for bulk purchasing and home delivery.
Customers can visit Costco warehouses to shop for groceries, electronics, appliances, and other merchandise at discounted prices, as well as enjoy services like pharmacy, optical, and photo center.
Costco’s website offers online-only deals, member-exclusive offers, and same-day grocery delivery through its partnership with Instacart, providing members with additional savings and convenience.
Key Highlights
Definition of Bricks and Clicks Model: The bricks and clicks business model involves a merchant operating both a physical retail store (“brick”) and an online eCommerce platform (“click”). This hybrid model combines the advantages of both sales channels to increase sales and brand reach.
Dual Direction: The model can work in two directions – established physical retailers expanding into eCommerce (e.g., Target, Walmart) and online brands opening physical retail locations (e.g., Casper, Warby Parker).
Direct-to-Consumer (D2C) Brands: Many companies following the bricks and clicks model are direct-to-consumer (D2C) brands, capitalizing on both online and offline customer engagement.
Benefits and Success Factors:
Buy Online, Pick Up In-Store (BOPIS): The model offers a balance between the convenience of online shopping and the instant gratification of in-store purchases, allowing customers to order online and pick up their items in-store.
Consistent Inventory: Maintaining consistent inventory information between online and offline systems to prevent customer frustration caused by product unavailability after they visit a physical store.
Flexible Return Policies: Allowing returns irrespective of the purchase channel (in-store returns for online purchases and vice versa) to provide a seamless experience for customers.
Immersive Product Displays: Enhancing the in-store experience by creating immersive and accurate product displays that replicate the online experience.
Augmented Browsing: Integrating technology like tablets, QR codes, and self-service stations in physical stores to virtually expand the product range and connect customers to the online store.
An effective business model has to focus on two dimensions: the people dimension and the financial dimension. The people dimension will allow you to build a product or service that is 10X better than existing ones and a solid brand. The financial dimension will help you develop proper distribution channels by identifying the people that are willing to pay for your product or service and make it financially sustainable in the long run.
Business model innovation is about increasing the success of an organization with existing products and technologies by crafting a compelling value proposition able to propel a new business model to scale up customers and create a lasting competitive advantage. And it all starts by mastering the key customers.
Digital and tech business models can be classified according to four levels of transformation into digitally-enabled, digitally-enhanced, tech or platform business models, and business platforms/ecosystems.
A digital business model might be defined as a model that leverages digital technologies to improve several aspects of an organization. From how the company acquires customers, to what product/service it provides. A digital business model is such when digital technology helps enhance its value proposition.
A tech business model is made of four main components: value model (value propositions, mission, vision), technological model (R&D management), distribution model (sales and marketing organizational structure), and financial model (revenue modeling, cost structure, profitability and cash generation/management). Those elements coming together can serve as the basis to build a solid tech business model.
A platform business model generates value by enabling interactions between people, groups, and users by leveraging network effects. Platform business models usually comprise two sides: supply and demand. Kicking off the interactions between those two sides is one of the crucial elements for a platform business model success.
A Blockchain Business Model is made of four main components: Value Model (Core Philosophy, Core Value and Value Propositions for the key stakeholders), Blockchain Model (Protocol Rules, Network Shape and Applications Layer/Ecosystem), Distribution Model (the key channels amplifying the protocol and its communities), and the Economic Model (the dynamics through which protocol players make money). Those elements coming together can serve as the basis to build and analyze a solid Blockchain Business Model.
In an asymmetric businessmodel, the organization doesn’t monetize the user directly, but it leverages the data users provide coupled with technology, thus have a key customer pay to sustain the core asset. For example, Google makes money by leveraging users’ data, combined with its algorithms sold to advertisers for visibility.
In an asymmetric businessmodel, the organization doesn’t monetize the user directly, but it leverages the data users provide coupled with technology, thus having a key customer pay to sustain the core asset. For example, Google makes money by leveraging users’ data, combined with its algorithms sold to advertisers for visibility. This is how attention merchants make monetize their business models.
While the term has been coined by Andrew Lampitt, open-core is an evolution of open-source. Where a core part of the software/platform is offered for free, while on top of it are built premium features or add-ons, which get monetized by the corporation who developed the software/platform. An example of the GitLab open core model, where the hosted service is free and open, while the software is closed.
Cloud business models are all built on top of cloud computing, a concept that took over around 2006 when former Google’s CEO Eric Schmit mentioned it. Most cloud-based business models can be classified as IaaS (Infrastructure as a Service), PaaS (Platform as a Service), or SaaS (Software as a Service). While those models are primarily monetized via subscriptions, they are monetized via pay-as-you-go revenue models and hybrid models (subscriptions + pay-as-you-go).
Open source is licensed and usually developed and maintained by a community of independent developers. While the freemium is developed in-house. Thus the freemium give the company that developed it, full control over its distribution. In an open-source model, the for-profit company has to distribute its premium version per its open-source licensing model.
The freemium – unless the whole organization is aligned around it – is a growth strategy rather than a business model. A free service is provided to a majority of users, while a small percentage of those users convert into paying customers through the sales funnel. Free users will help spread the brand through word of mouth.
A freeterprise is a combination of free and enterprise where free professional accounts are driven into the funnel through the free product. As the opportunity is identified the company assigns the free account to a salesperson within the organization (inside sales or fields sales) to convert that into a B2B/enterprise account.
A marketplace is a platform where buyers and sellers interact and transact. The platform acts as a marketplace that will generate revenues in fees from one or all the parties involved in the transaction. Usually, marketplaces can be classified in several ways, like those selling services vs. products or those connecting buyers and sellers at B2B, B2C, or C2C level. And those marketplaces connecting two core players, or more.
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A B2B2C is a particular kind of business model where a company, rather than accessing the consumer market directly, it does that via another business. Yet the final consumers will recognize the brand or the service provided by the B2B2C. The company offering the service might gain direct access to consumers over time.
Direct-to-consumer (D2C) is a business model where companies sell their products directly to the consumer without the assistance of a third-party wholesaler or retailer. In this way, the company can cut through intermediaries and increase its margins. However, to be successful the direct-to-consumers company needs to build its own distribution, which in the short term can be more expensive. Yet in the long-term creates a competitive advantage.
The C2C business model describes a market environment where one customer purchases from another on a third-party platform that may also handle the transaction. Under the C2C model, both the seller and the buyer are considered consumers. Customer to customer (C2C) is, therefore, a business model where consumers buy and sell directly between themselves. Consumer-to-consumer has become a prevalent business model especially as the web helped disintermediate various industries.
A retail business model follows a direct-to-consumer approach, also called B2C, where the company sells directly to final customers a processed/finished product. This implies a business model that is mostly local-based, it carries higher margins, but also higher costs and distribution risks.
The wholesale model is a selling model where wholesalers sell their products in bulk to a retailer at a discounted price. The retailer then on-sells the products to consumers at a higher price. In the wholesale model, a wholesaler sells products in bulk to retail outlets for onward sale. Occasionally, the wholesaler sells direct to the consumer, with supermarket giant Costco the most obvious example.
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In a franchained business model (a short-term chain, long-term franchise) model, the company deliberately launched its operations by keeping tight ownership on the main assets, while those are established, thus choosing a chain model. Once operations are running and established, the company divests its ownership and opts instead for a franchising model.
Businesses employing the brokerage business model make money via brokerage services. This means they are involved with the facilitation, negotiation, or arbitration of a transaction between a buyer and a seller. The brokerage business model involves a business connecting buyers with sellers to collect a commission on the resultant transaction. Therefore, acting as a middleman within a transaction.
Dropshipping is a retail business model where the dropshipper externalizes the manufacturing and logistics and focuses only on distribution and customer acquisition. Therefore, the dropshipper collects final customers’ sales orders, sending them over to third-party suppliers, who ship directly to those customers. In this way, through dropshipping, it is possible to run a business without operational costs and logistics management.
Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
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