Competitive Advantages of Traditional Retailers in China E-market

Abstract

There are two types of marketing channels growing with the rapid development of network economy. One is the online marketing channel, which came after the appearance of the internet. In this channel, goods and services are only sold through online channel, usually without a physical store. The other is the traditional marketing channel, which we've been familiar for centuries. Therefore, three kinds of retailers can be defined according to its marketing channels: the pure-play e-tailers using the online marketing channel, the traditional (bricks-and-mortar) retailers using the traditional marketing channel, and the multichannel (bricks-and-clicks) retailers, came from traditional retailers who adopt online channel as well as traditional channel. Each of them has its own advantages, respectively. In this article, the author developed the theory of the competitive advantages that traditional retailers hold in the e-market, through model analysis on behaviors of price competition among these three types of retailers. The result shows that if consumers prefer the traditional marketing channel, the traditional retailers who adopt dual-channel could charge a higher price than that of pure-play e-tailers, and get higher profits. Moreover, we find that the market share of the multichannel retailers relates to the extent of customer s' preference toward the traditional marketing channel: the more consumers prefer the traditional market, the better opportunities that the multichannel retailers have to enlarge its market share.