The hybrid distribution strategy is characterized by several distributional channel systems that belong to one company or organization, and organizations implement the hybrid system to several market segments. The hybridization of the distribution channels has become a dominant strategy in new businesses due to the changes in customers’ shopping behaviors and market globalization (Webb and Hogan 338).
Segetlija, Mesaric, and Dujak (792) argue that the hybrid distribution systems offer the fast-growing and medium-sized companies to incorporate innovations in their business operations. Nevertheless, organizations that use the hybrid distribution strategy must ensure that each of the distribution channels works harmoniously with the other channels to avoid conflicts between the distribution channels. As Duncan (161) notes, companies that participate in acquisitions and mergers often use the hybrid distribution structure to increase their success in new markets and ventures.
Benefits and Challenges of the Hybrid Distribution Strategy
The first benefit of the hybrid distribution strategy enables businesses to respond to the changing shopping patterns and customer needs. Firms use their adaptive capability in response to the introduction of novel distribution channels and Internet shopping. For instance, the hybrid distribution strategy allows companies to operate brick-and-mortar businesses, brick-and-click businesses, or pure click business models.
Consequently, the hybrid distribution strategy enables companies to reach a diversified customer base. The second benefit of the hybrid distribution structure is that the multiple distribution channels enable companies to optimize on different channels. As Görsch (9) points out, companies can use multiple channels synergistically to increase the quality of goods and services received by customers during various purchase activities.
The third benefit of the hybrid distribution strategy is that the multiple distribution channels enable an organization with excess manufacturing capacity to spread out the excess goods to other channels. The increased distribution capacity of the companies using the hybrid distribution strategy helps in reducing storage costs and risks associated with stockpiling goods. The fourth advantage of the hybrid distribution strategy is that the multiple distribution channels allow businesses to practice target marketing that gives the companies increased competitiveness. For instance, companies can use a combination of offline and online distribution systems to serve different customers (Meier and Henrik, 111).
The multiple distribution channels enable companies to package their products according to their customers’ preferences. According to Baroto, Muhammad, and Hooi (123), the companies that use the hybrid distribution structure often achieve higher performance when compared to the companies that use singular distribution channels.
Although the hybrid distribution structure offers several benefits to organizations, the strategy is also associated with various inherent risks. One of the primary challenges of the hybrid distribution channels is the increased complexity of distributing resources, technology, personnel, and capital. For instance, an organization using the hybrid distribution strategy must determine the most appropriate method of allocating limited resources such as capital and personnel to various distribution channels and departments.
Another challenge associated with the hybrid distribution system is the multiple distribution channels may cause internal disagreements over customers by creating confusion and dissatisfaction among the clients. Internal conflicts may arise during the planning stage where disagreements in pricing, budget allocation, advertisements, and revenue objections may occur. Webb and Hogan (340) suggest that the internal conflicts may arise when one department or channel coalition considers another to be a threat or impediment to realizing its goals. Additionally, the distribution channels may compete for limited resources resulting in a conflict of interests.
Baroto, Mas Bambang, Muhammad Madi Bin Abdullah, and Hooi Lai Wan. Hybrid strategy: a new strategy for competitive advantage. International Journal of Business and Management 7.20 (2012): 120-133.
Duncan, William L. Enterprise Optimization: Making Acquisitions Pay Off. Indianapolis: Dog Ear Publishing, 2006. Print.
Görsch, Daniel. The Impact of Hybrid Channel Structures on the Customer Purchase Process: A Research Outline. 2000. Web.
Meier, Andreas, and Henrik Stormer. Ebusiness & Ecommerce: Managing the Digital Value Chain. Berlin: Springer, 2009. Print.
Segetlija, Zdenko, Mesaric Josip, and Dujak Davor. Importance of Distribution Channels Marketing Channels For National Economy. 2010. Web.
Webb, Kevin and Hogan John. Hybrid Channel Conflict: Causes and Effects on Channel Performance. Journal of Business & Industrial Marketing. 17.5 (2002): 338-356.