Getting Multi-Channel Distribution Right

CHAPTER 12Three Cases on Online Distribution

12.1 INTRODUCTION

The previous chapter provided a framework to analyze which segments of consumers are being targeted online, why those consumers go online, and therefore how the supplier should go online to meet those consumers where they want to search and buy, while preserving as much control as possible over brand, price, and profitability. In this chapter, we use three very different cases—running shoes, travel services, and media and entertainment—to illustrate how our framework can help suppliers navigate the online channel.

12.2 THE SAGA OF BROOKS RUNNING AND AMAZON.COM

Let's first revisit Brooks Running, the company we introduced in Chapter 7. It is 2013. While Brooks is the number one performance running shoe brand in specialty retail, it is number three overall, with market share in the low teens, so there is plenty of room for growth. The company must manage its distribution to stay apace with its share growth goals. Reckoning with online distribution is the most challenging part of this balancing act.

The frequent runner buys 2.6 pairs of shoes per year. Brick-and-mortar stores are still important for gait analysis, fit, and advice for the first shoe, but the second and third shoe is increasingly a price or convenience buy online. So Brooks cannot afford to fall behind in the growing online channel. But its goals are to effectively service convenience-seeking runners on the web without devaluing the brand and continue ...