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Channel Transparency

CHANNEL TRANSPARENCY

Channel transparency refers to the flexibility and versatility of sales channels within a business. Channel transparency is a major goal of businesses struggling to remain competitive. This is attributable to several factors, including: the rise of e-commerce; the increasingly complex web of relationships between manufacturers, retailers, and distributors; and the variety of physical and virtual channels firms maintain with their customers and partners. Customers more and more seek quick, easy, and cheap means of finding, purchasing, and receiving products and services using the Web. Channel transparency makes the avenues for each of these tasks nearly interchangeable. Additionally, it eliminates conflict within and between firms associated with utilizing new channels to reach customers in ways that subtract from, rather than add to, business operations and profit margins.

Therefore, channel transparency creates the opportunity for customers to conduct research through one channel, make their purchase through another channel, and receive customer service through yet another channel, where each channel supports the others and is quickly and easily navigable. In e-commerce, channel transparency refers specifically to the resolution of the conflict between traditional and Web-based sales channels, where channel conflict is transformed into a seamless click-and-mortar operation.

Frequently the drive toward channel transparency involves a great deal of coordination between firms. Simply setting up online operations in pursuit of reduced transaction costs can lead to dangerous channel conflict. In the automobile business, for example, dealerships felt threatened by automakers' moves to sell cars directly to customers over the World Wide Web, thereby cutting dealers out of the process. Dealers raised so much opposition that manufacturers like Ford initially were forced to back down from their e-commerce plans. Companies seeking to resolve channel conflict and create channel transparency need to consider their relationships with distributors and customers. In large part, this entails understanding just what customers want and value in their dealings with companies. If customers have come to develop a taste for the particular brand of service offered by retailers, manufacturers would do well to preserve their relationship with those retailers rather than eye the bottom line of perceived boosted profit margins.

A strategy for channel transparency, then, would seek to bundle and augment the different sales channels to create a more desirable experience for the consumer. For example, a physical storefront can offer online services with the purchase of a product, while an online storefront can coordinate customer service at a retail outlet near the customer. In all cases, the parties are encouraged to play to their strengths, but without the disintermediation of their business partners. Retailers' sales and service expertise becomes an even more valuable commodity, while the manufacturers still sit at the heart of the process by maintaining control over the products themselves.

In addition, channel transparency achieves a greater synchronicity between online and offline operations. This means purchasing and service processes are similar to customers whether they are at a storefront, talking to a call center, ordering from a catalog via mail, or sitting at a personal computer. Thus, an order purchased online could be returned to a retail store before sending for a replacement product in a catalog.

However, this can be harder than it sounds. Often the creation of channel transparency involves going deep into a company's infrastructure and updating or overhauling entire systems in order to create a single system that can harmonize operations and partner relationships to achieve transparency. This investment, in fact, is one of the chief obstacles click-and-mortar companies face in striving for channel transparency. Nonetheless, the pressure to create a seamless, integrated relationship with customers across all channels was growing, forcing more and more firms to take such measures, no matter how initially problematic it may seem.

FURTHER READING:

"e-Biz on the Fast Track." eWeek. November 13, 2000.

Gibson, Stan. "Say it Again: Channel Transparency." eWeek. September 4, 2000.

Hollen, Cynthia. "The New Channel Dynamic: Age-Old Partnership Endures." e-Commerce Times. June 9, 1999. Available from www.ecommercetimes.com.

Paul, Lauren Gibbons, and Lisa Vaas. "Click or Brick? Your Pick." eWeek. November 13, 2000.

SEE ALSO: Channel Conflict/Harmony; Disintermediation

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