۱- Introduction

۲- Methodology

۳- Results

۴- Conclusion

References

Abstract

Distribution channels have changed rapidly with the advent of online channels, and many companies built an omni-channel by adding online channels to their existing offline channels. However, mall enterprises face difficulties in broadening their distribution channel due to budget constraints, and therefore, most of them still use only one channel, offline or online. To increase their revenue, small-scale enterprises need to decide which will be more efficient, using only one channel or using online and offline channels together. This paper uses stochastic frontier analysis to estimate the technical efficiencies of small-scale enterprises selling clothing or fashion items. In addition, this paper categorizes the enterprises into two groups, those that sell their products only though the online channel and those that use both online and offline channels (omni-channel companies), and compares the efficiencies of the two groups using a meta-frontier analysis. In the results, the omni-channel group is superior to the pure online channel group by 17% in terms of technology gap ratio. These results indicate that the value of offering customers a choice of channel affects the efficiency of a company’s earnings, and that the company’s channel choice increases the efficiency of resource allocation.

Introduction

A distribution channel represents a significant and cohesive relationship among all independent companies responsible for distributing a product to a particular market and the market distributors surrounding it (Corey, 1976). It also refers to a collection of interdependent organizations that participate in that process (El-Ansary and Stern, 1972). From a traditional point of view, a distribution channel is an aggregate that builds and manages vertical links from manufacturers to consumers. In the industrial society of the early 19th century, as the industrial revolution enabled mass production, the original distributors were not separated from the manufacturer. In late industrial society, the manufacturer was responsible only for the production function, and the distributor was in charge of the distribution function. In 20th century industrialized markets, the distribution industry, which supports the distribution needs of the manufacturing industry, continued until the 1960s, but unification and internationalization increased the status of the distribution industry, which found a balance between manufacturing and distribution. Since around 1980, the distribution industry has been spreading various types of offline distribution businesses, including hyper market, category killer, and super supermarket,1 based on the strong bargaining power of large retailers. The distribution industry has matured and store expansion has slowed since the 1990s, requiring distributors to expand the range of possible distribution channels in the consumer market (Schoenbachler and Gordon, 2002). As e-commerce has become more active as the Internet has evolved, retailers have turned to multi-channel or omnichannel strategies that discard single-channel approaches such as traditional retail and catalog methods. Ponsford (2000) typified three distribution channels; the traditional offline sales channels (brick-andmortar), online single-channel (click-and-click), and traditional offline channels with an online shopping channel (click-and-mortar). In spite of its various advantages, the online distribution channel cannot communicate the physical presence of a product. Therefore, online distribution channels, which also face problems such as insufficient after-sales services, consumer distrust of electronic payment systems, and privacy risks, have not completely replaced offline distribution channels (Hammond et al., 1998).