BrainTrust Query: Amazon Showrooming – Reasons Your Retail Store is Susceptible
Through a special arrangement, presented here for discussion is a summary of an article from The Retail Doctor’s blog.
Showrooming occurs when customers, after having physically touched, smelled, lifted, handled and, most importantly, priced your products in person, go online through their smartphones and comparison shop — most often with Amazon.
Customers walking into your store no longer are "just looking," they’re taking your hard-earned retail reputation, using all the beautiful displays, premium products and employees to cancel out any suspicions they have before they buy online.
To shoppers, it’s smart shopping.
To cellular companies it is the reason they can sell the more expensive smartphones.
To Amazon, it’s just business.
So how does your store open the door for them to go to Amazon or other online retailers in the first place? Here are a few ways stores become susceptible to showrooming:
- Your merchandise is stacked and displayed like everyone else’s. When the merchandise is seen as nothing special, online sites beckon.
- You don’t have enough employees. When it’s tough to find someone to answer your questions, the customer’s smartphone is always-at-the-ready for a quick Amazon price check.
- The employees you have take too much time with one customer. It’s great to have technically proficient employees whose passion is knowing every nuance and who can regale the customer with story after story, but like a restaurant, your selling floor needs to turn customers regularly.
- The employees you have take too little time with customers. Employees who say, "It’s over there," or "I’ll get someone" might as well say, "Find it yourself." When there’s no relationship, there’s no loyalty to shop with your brick and mortar store.
Your shopping experience is unremarkable. If a customer gets the silent treatment and is only spoken to at the cash wrap, they don’t get a good feeling from their purchase. - You let customers help themselves with self-service. If you designed the store for customers to feel free to help themselves, they will now feel free to help themselves … with their smartphones.
- You have an owner or stockholder who doesn’t want to lose any business. They want you to offer whatever discount it takes to keep all customers. The best merchants know you have to walk away from unprofitable customers in order to remain profitable.
- Customers assume everything online is the same as yours. Unless your employee shows the value of the real thing in your store, customers might be misled to buy something online at a lower price that could be counterfeit, damaged or mismatched. If your employees aren’t trained to poke holes in online shopping habits, customers may purchase apples when they wanted oranges.
Discussion Questions
Discussion Questions: Do you think there are stores that are more susceptible to showrooming than others? Does the decision to engage in the behavior take place before? How would you recommend stores combat showrooming?
You are more likely to see showrooming in a fashion store. Customers will go into the stores to try on the product, since not all size twos are the same for each designer. I do not think the supermarket is the place for it, but consumer electronics, games, toys and shoes are good targets for showroom shopping.
In a fashion store one way to combat the showroom buying is too get creative with the customers. There is something to say about having the garment now instead of waiting for a delivery. So why not have the sales staff empowered to offer a deal, say 15% off the garment the customer tries on if they buy two of the same item or maybe a full outfit? Make it more of a deal than it is to buy it online.
Stores that offer products that can be purchased online with no perceived loss in quality or usability are most vulnerable. Further as the price goes up and the gap between the online store and the retail store increases, it would seem that the the likelihood to buy online increases. As far as the decision to engage in this behavior, I think many times shoppers go to the store hoping they will find a good deal, but when it becomes evident that there isn’t one, it is easy to justify saving the money…again, especially if it is a product where there is no perceived difference in quality or usability. To combat showrooming, prove that there is value for the extra money being spent. If not, it will be hard for the shopper to justify spending more.
Yes, there are both chains and stores within chains that are more susceptible to showrooming. Several factors are already well identified in the article, including lack of visible, knowledgeable, and engaged store staff. Although it may be impossible to combat all showrooming, here are some ideas:
1. Have the right number of engaged and helpful staff.
2. Have the products customers want.
3. Provide the experience that your customer want.
4. Provide a value proposition that includes, but goes beyond, just price, including assortment, availability, service, and location.
5. Support omni-channel shopping, including buy in-store combined with home delivery, buy online combined with pickup in store, etc.
6. Make checkout quick, smooth, and easy
7. Recognize and reward loyal customers.
Finally, to ensure ongoing delivery of compelling customer value retailers are going to have to learn measuring, monitoring, and managing the customer experience.
Electronics and cameras are particularly susceptible to showrooming. Consumers see these items as commodities and there can be large price differences between a brick and mortar store and on online retailer.
Showrooming is a fact of life. It’s not going away. Stores can combat it with value pricing (not necessarily the lowest price), knowledgable employees who know their products and how to close a sale, and limited out of stocks.
Perhaps the most important reason for showrooming isn’t included in the list. Stores need to be more proactive about building their assortments and (when possible) making sure that their products are exclusive, rather than goods that can be easily compared on Amazon or other e-commerce sites.
Stores can also be proactive by using location-based technology more aggressively. Figure out how to reach a customer on his or her cell phone via text message with special incentives when they are in your store. And by all means have enough sales associates to prevent consumers from simply walking out the door.
First, we need to stop just agonizing over this and start measuring it. I would like to know the percent of transactions that are lost by “showrooming” rather than the percent of people who ever do it at least once. It could be like DVRs or online video viewing vs. TV. While maybe half of the people watch TV programming in time-shifted ways, it only accounts for 10% or so of minutes. Let’s get the facts first.
Now, what to do about it? Last time I was in Best Buy, they wouldn’t match Amazon prices. That seems stupid to me and by the way, I think Amazon prices aren’t even that good — it’s the 3rd party vendors. Why not compete with this head on? Why not trumpet better prices, immediate gratification, and perhaps some store personnel follow up regarding installation?
Bob is 100% correct on this one and brings to light an important fact. A well-orchestrated and executed in-store service strategy is crucial to the success of the bricks and mortar retailer. Never before has the need for well selected and trained associates been so critical.
Stacking it deep and selling it cheap will no longer win while Amazon et al will beat any price, anywhere, at any time. Differentiation through service, bundling of products and services, and some good old fashion salesmanship are the mandatory ingredients for survival.
One advantage that retail stores have over Amazon is that retail stores can allow the customer to take home the goods right now, today! Showroom shoppers need to be lured to the novelty of “take it home right now.” The power of suggestion, even right at the point of purchase can do wonders.
Another advantage that retailers need to exploit better is the customer convenience for exchange and heaven forbid, returns. Most consumers will agree that this is neither always so easy to do, nor very convenient, online.
Had a frustrating experience over the weekend with a brick and mortar specialty shop. I asked about a “refurbished” item in stock and visited the store with excitment about the product. However, the item was actually broken and the price was actually high around $200 USD. I asked if they would drop the price if I fixed it myself and their response was “No. Someone else will eventually buy it.” I asked for the store manager, but they stated no one was available to change the price.
To make a long story short, I left disappointed, got on my tablet, did an Internet search and found the item brand new for $133 USD with free shipping. I placed the order but now my faith in that brick and mortar is shaken.
Brick and mortar retailers need to be serious about showrooming and realize that their customers do have options to go elsewhere — even while they are in the store!
This is a timely topic. Forrester just released a study on showrooming, RetailWire is conducting research, and Bob goes step further with his tips.
I’ll defer to the experts here, but two observations jump out for me:
By 2016, Forrester predicts 60%+ of US retail sales will be Web-influenced. Offline sales of $3.4T will continue to be more than 10X the size of online sales.
Online purchases are still risky for many consumers. Traditional retailers can capitalize on name recognition and higher click-thru rates to influence sales PRE-STORE. Obviously, certain categories like apparel are better off than electronics. Beyond Bob’s tips above, by paying close attention to the price premium over online, retailers win purchases IN-STORE.
The mattress industry has dealt with showrooming for years by providing different channels with different SKUs so customers can’t easily match items across channels. Showrooming will cause more challenges for manufacturer/retail relationships as retailers seek unique items that don’t necessarily work with manufacturers’ processes and cost structures.
Great shopping experiences will triumph. People spend more inside “experiences” (witness the Apple Store and what people pay for food inside Disney). Retailers will need to think differently about how they use their square footage. Where “stack it high and watch it fly” once sufficed, creating community, entertainment and experience will be retail necessities in the next wave.
On one level, showrooming is the equivalent of your strongest competitor opening next door, a relatively common occurrence. I’m somewhat surprised that most retailers don’t take the offense in this and make a big deal of matching the online price. Most successful retailers will honor a competitor’s coupons. How is that different from matching the online price?
The other defense against showrooming is the best — don’t depend heavily on products that are broadly distributed. Build your private label and/or seek out emerging vendors that will grow with you. Otherwise, either from online or 4-wall competitors, you have no price control.
But it is going to get a LOT better for the shoppers! And a lot worse for retailers. This is because the Convergence of Online, Mobile and Bricks (COMB) retailing is here to stay, and will DOMINATE retailing in years ahead. Fight it and be an also-ran, or embrace it and survive and thrive. You can’t stop the future, just because you have not dealt with it in the past.
When I say “dominate,” I do not mean that all shopping will involve use of a personal digital device (smart phone,) all the time. Only that it will become pervasive.
There is only one way to “combat” showrooming. Embrace it and make sure that when the shopper goes online with their smart phone that they buy online from you rather than a competitor. Online shopping and buying is a behavioral trend that is only going to accelerate.
Consider data reported in today’s NYTimes. The growth in online visits to retailers in May is astonishing. Amazon +5%, Walmart +26%, Home Depot +42%, Macy’s +23%. Even Sears +21%.
There is no turning this around. Give the shopper better and unique merchandising. Nice idea, then they go online. Give them more and more helpful retail associates. Fine, then they go online.
One wonders if online retailing came before brick and mortar retailing what it would take to get someone to go to a store. I suspect, the answer to this question is showrooming.
P.S. I have never gotten a counterfeit, damaged, or mismatched product from Amazon or Walmart or Best Buy or Zappos or Disney or BN or Soap.com.
You can combat showrooming by embracing it. Encourage customers to check out the products you are offering. If you can’t figure out a way to add value to the products you sell by bundling, financing, and quick/instant delivery, then maybe you need to discontinue the product line or get out of retail.
Retail has never been a business for the lazy, but the lazy seem to feel that getting the doors open is a chore. If Amazon rids us of these, then we will all be better served.
We have some clients who have zero issues with showrooming, and others who combat it every day. Two of our biggest challenges is in consumer electronics and baby gear. They’re higher priced products with very aggressive online pricing.
In addition to Bob’s well thought out list, here are two other thoughts.
1. The staff has to deliver a very personal high value experience. Studies show that 85% of consumers will spend more for a better experience, but unless the staff is adding that value, the customer is going to default to the online purchase. Why wouldn’t they? The staff is key!
2.Retailer have to teach the staff to address showrooming. I’ve seen too many retailers watch people showroom in their stores, and then complain about them after they’ve left. The staff has to be able to proactively explain the benefits from buying from the retailer and not online, and if there aren’t any then the store has even bigger problems.
Bottom line, the difference is in our people.
It’s all about experience. Brick and mortar stores that deliver an interesting, fun shopping experience will thrive. If all a retailer does is sell commodities at a price a tad higher than shoppers can get at Walmart or online, they will have increasing problems.
By far, the best way to become susceptible to showroom is to simply not have what the customer wants. The overwhelming majority of online orders placed on mobile devices from a retail store, are for items that the shopper COULD NOT find in the retail store.
Showrooming is a sexy story, but only a small minority of shoppers actually use a mobile devices in a store to discover a better price and buy it online. If you survey all the shoppers that walk out of a retail store without a purchase, you’ll find MANY more intending to drive to another store to complete a purchase than you will shoppers who bought from Amazon while in the store.
Visiting a retail store is a major commitment for most consumers in our increasingly time-compressed lives. No one wants to drive to a store, navigate traffic, find a parking spot, manage the kids, walk across a miserable parking lot into a store, and ONLY THEN decide to get the product 2 days later from Amazon to save $0.39. Online growth is coming from consumers who shop online instead of going to all that hassle to ever go to the store, not from customers who find exactly what they want in a store, but then choose to buy it cheaper online.
There are many compelling elements to online shopping, but give me a consumer standing in a retail isle with a product they want in their hand, and I’ll beat my online competition for that customer every time.
Consumer electronics are the most susceptible, but others which have products in the Amazon sweet spot including multi-line retailers (Sears) and some discounters (Target, Walmart) are also at risk.
The advent of showrooming is a perfect opportunity for retailers to improve service levels and demonstrate the advantages of being able to interact with products physically (see the discussion item on Apple stores posted today on RetailWire).
Has anyone considered the value of time for the customer? That is something important to consider to battle the impact of showrooming.
Times and technology have created a new selling paradigm that takes advantage of fixed conditions some others maintain. This phenomenon seems similar to how how non-union Walmart competes against unionized stores with more costly work rules. One type of single-focus system (Amazon) seems to have built-in advantages over dual focused systems (B&M).
If you have investments in B&M stores today, they must develop a new, stronger appeal magnet: a fun aura, a sense of modern theater and also have an equally convenient manner for buying goods both in-store or on the wire. This question is emerging: What impact will all this have on future investments in retailing?
Cross-selling and up-selling can really help. A good salesperson (assuming they are available, as others have stated) will recommend complimentary products, aftermarket products or other components of a ‘whole package’. Make the package available at a discount — and make sure the complimentary products aren’t available via the competitive online stores since they play this game as well.
Sell the total solution — and make the case to buy it all now.
First of all, any attempt to prohibit or stifle showrooming is doomed to failure. Whether it is done overtly at the shelf edge or privately prior to visiting the retail outlet, showrooming is here to stay. The Internet is simply too convenient of a source for both product and price data. It also provides customer satisfaction information on both the product and the retailer. Anyone considering a significant purchase would be foolish not to first research it on the Internet.
So brick and mortar retailers have to hit the online retailers on their own turf. The obvious answer is to use the Internet to expand the retailer’s market area beyond the local community. They have to figure out ways to make their advantages heard when the consumer is conducting their online research. This could mean having online research tools that reference proprietary content developed by the retailer. It could include things like online tools for doing sizing or configuration plans that demonstrate unique product knowledge. I don’t think offering price adjustments is a good idea, but offering “free resources” like paper or ink cartridges for a printer can make price less important.
I am sure there are other techniques, but the point is to use the Internet as a tool instead of regarding it as threat. Think of ways you can use it to point consumers in your direction and convince them of your value advantage.
ALL stores, electronics, DIY, apparel, even grocery (for higher-end items, especially) are at risk. Stores can fight this by having employee interaction primarily. That is still the best way to differentiate from online. Having knowledgeable, and personable employees is money well spent.
There are some great discussions on LinkedIn about this with some fascinating thoughts, including this thread.
Electronics and appliances are examples where showrooming is most prevalent. Why: 1) Customers need to see, hold and try these products before they buy. 2) It’s easy for them to quickly find the item online and compare price. I would say in most cases the customer is going into the store knowing that they plan to get the best deal (in store or online).
A way to combat showrooming is to offer something your online competitors can’t. For example:
Service to transfer music to an MP3 player in store.
Service to program your remote for a TV.
An exclusive program you create with another manufacturer. For example, a program that includes a monthly delivery of laundry detergent at a greatly reduced price with the purchase of a washing machine.
A set of drinking glasses offered with your dishwasher.
Omaha Steaks deal with the purchase of a refrigerator.
All of these examples become tough for an online competitor to easily replicate. They are also real value to the customer who would have a hard time breaking down the value of the extras compared to the few dollars they would save by buying online.
If you can’t create unique value or experiences, then you are really just competing on price. Tough model to sustain in today’s world.
If you’re selling the same products available online, you can expect to get showroomed. Period. Where we’re all headed as retailers because of this is exclusivity.
It’s going to be a great market for product designers going forward.
One of Bob’s observations is that merchandise needs to be displayed in some way that is differentiated. That may be true, but some retailers believe they need to take it even further by having custom SKUs that don’t have an online equivalent susceptible to showrooming.
As for the need for more employees to assist the shoppers, retailers aren’t likely to be able to “throw people at the problem” because of the major cost of headcount vs sales they “might” lose to showrooming. However, retailers might be able to better leverage the associates they do employ. How about letting shoppers use the retailer’s mobile app to “page” an associate to help them, or other ways to optimize labor productivity related to customer experience?
Verlin’s comments on omnichannel execution are right on target. This is key in solving showrooming challenges. And rewarding loyal customers also might be executed much more effectively than the way most programs currently function.
Jason Goldberg makes a compelling argument for the need to measure the actual amount of showrooming that is happening. His assertion is that many shoppers who are opting to buy online are not even browsing at a physical store before a purchase. If this is true, and it probably is in many cases, then marketing to get the customer is the store is part of the conversation (as it always has been), but then executing a great experience for a shopper who has invested the time to come in the store can win the business.
Lots of comments already so I’ll just focus on ways to combat showrooming:
1. Develop and curate an exclusive assortment of private label or branded products that are truly differentiated and only available under your banner.
2. Offer more overall convenience than online shopping — Once the consumer is in the store; their easiest option should be to go ahead and transact with you. Nordstrom and Walmart are both demonstrating that this is possible with variants on an “endless aisle” strategy.
3. Create an experience (like Apple, REI, Cabelas) that leads consumers to see you as their retailer of choice.
4. Create incentives in your loyalty program that motivate consumers to buy from you and shop on more than just ticket price.
5. Use Mobile to your advantage — Joining a program like Shopkick or building your own app that consumers love and engage with while they are in your store can keep their attention focused on you instead of split with your competitors.
The “me too” aspect of many stores today is a recipe for failure. Today shoppers crave retailtainment, and the best deal. Best Buy is used as textbook case of showrooming. The challenge today for many chains is putting multi-channel in place; integrated shopping strategies that involve both B&M stores and online without cannibalizing each others’ sales.
Bob is correct: All physical stores are susceptible to showrooming. But the ones most at risk are those that fail to engage customers when they enter the store. Of course, the customer comes to the store to find out more about the product, but recent research (Pew Internet and American Life Project, January 2012) suggests most shoppers prefer to walk out with the product they came to buy: 35% of respondents bought from the store they were comparison shopping in (via smartphone), versus 19% who bought online and 8% who went to another store.
The fact is, the customer is already there. Regardless of whether the product is cheaper online or not, if the physical store delivers the convenient, informative and efficient experience that customers are looking for, the majority will buy there and be done with it. Most shoppers are willing to pay a bit more for a better experience. And as Bob mentions in this article, the pain points that make a store susceptible to showrooming are related to HR, customer service, and store differentiation – all brick-and-mortar retailers must address those issues.
I would disagree with Bob’s point about self-service, however. We’ve found that installing self-service touchscreen terminals in-store that display info that a customer would otherwise look up on their phone (i.e. product specs, inventory status, and pricing) can help keep customers engaged even while they wait for a sales associate to help them.