Showrooming: Myth or Real Threat to Retail?

Imagine a nightmare retailer.

A potential customer enters the store. In his hand he has a small electronic device that allows you to compare the price of any product with the price of competitors. He slowly swims along the rows, finds the right product, carefully examines it, feels it, examines it from all sides and ... places an order at another store. After that, fully satisfied with the purchase, leaves, leaving you no penny.

Unfortunately, this is not a dream, gentlemen, but the harsh reality!

Weekday showrooming

Five years ago, when smartphones were just beginning to come into vogue, few people understood their real potential. Companies that sell retail products (retailers) hardly anticipated that consumers could use the Internet while visiting their stores, comparing prices and reviews from numerous competitors before making a decision about online purchasing. This practice did not even have a name for a long time, but now it has appeared - "show-roaming."

Showrooming is the study of goods in a retail store in order to then buy it at a cheaper price on the Internet.

The term “showrooming” became very popular in December 2011, when Amazon, a large online retailer, offered special discounts, encouraging shoppers to use retail stores as showrooms. The company has developed a special application Price Check, using which the client saw the comparative price of the selected product on Amazon. Moreover, the online retailer offered another 5% discount for this product because consumers indicated the price of a retail store.

Thus, the e-commerce giant not only actively encouraged show-roaming, but also obtained the necessary information about the price of competitors with the help of the users themselves. Not surprisingly, a huge number of companies that quickly began to lose money after this offer, wanted to put an end to showrooming.

Online vs. offline

Now consumers easily and carefree make purchases over the Internet. Delivery is often free, and most people are no longer afraid to leave their credit card number on the website of an online store. Online shopping in most cases saves time and money. However, traditional retailers still have an advantage, which is paramount for many customers.

Buying in a store is a physical interaction with a product. You can study it far and wide, try on or make a test drive. And no matter how bright and attractive pictures look on the Internet, how detailed the descriptions will be and how colorful the reviews will be when buying on the Internet, you always doubt your purchase much more. You do not want to buy a cat in a bag - a poor-quality product that is unsuitable for size or other criteria.

It is for this reason that many buyers still go to retail stores. They study the product and, if it satisfies all their requirements, buy it at a better price on the Internet.

In fact, most consumers do not care if the seller gets their money. All that really cares for them is to find the best products at the lowest prices. At the same time, they do not want to think about the problems of transportation or pay extra money for delivery. That is why in modern conditions it is so difficult to compete with Amazon and other large online retailers who can provide free delivery right to your door (even for Russians, buying from Amazon is still profitable, despite the expensive delivery).

Companies are taking action

Since the percentage of online purchases has grown significantly lately, traditional retailers have already lost millions of dollars due to showrooming. In America, the situation has become so serious that large companies are taking drastic measures to counter this strategy.

In 2012, Best Buy (one of the main electronics retailers in the United States) announced that it was number one priority to overcome the trend of showrooming. To get rid of this terribly unpleasant adversity, she replaced the standard bar codes with special Best Buy codes so that they could not be scanned. The company then introduced its own price comparison with 19 major online competitors, including Apple, Amazon and Buy.com.

By offering to compare prices with other online players, the retailer clearly showed that he is confident in his pricing policy, and prices in online stores are not always the lowest. Thus, this strategy helped him to attract visitors to his offline stores again. And this is, in fact, the most important thing, because there already comes into play the ability to sell and other tricks that all Best Buy personnel masterfully own.

The popular trading network Target soon also applied this tactic. At first she wanted to negotiate with suppliers and significantly reduce prices in order to remain competitive, but this was not economically viable. In this regard, it was decided to increase the number of unique products that the customer can not buy elsewhere in order to increase the exclusive value of the store.

Small retailers around the world have also begun to actively take action. Unlike their larger competitors, they try to improve interaction with consumers inside their stores. In most cases, this approach helps to preserve their margins and business.

Not so bad as it seems

According to a study conducted by Columbia Business School and Aimia, only 6% of people use mobile phones in stores to make an online purchase. More than 60% of consumers surveyed during the survey state that it is easier for them to make a purchase in the store if they can find positive reviews on the selected product. Like the millions of good bacteria that live in a person's stomach, smartphones do help retailers more than harm them.

Who are showroomers?

It may well be you or one of your friends. According to the latest survey from the Harris Interactive analytical agency, about 40% of Americans have already practiced show-roaming. And these numbers continue to grow. According to the IDC Retail Insights report, the number of showrooms will increase from 59 million in 2013 to 78 million in 2015.

In Russia, research into the number of active showrooms has not been conducted, but the Russians, as fairly practical people, also do not miss the opportunity to buy the thing they like more cheaply. In addition, in Russia there is a more acute issue with qualified and competent sellers, so it is sometimes easier to quickly learn the thing you like and buy online than in some supermarket to fight back from the annoying salespeople and bank employees offering a loan to buy a large-sized airship.

It should be noted that not all showrooms are the same. According to the same study by Columbia Business School and Aimia, there are five types of showroomers:

1) Exploiters

These people have no desire to buy in a retail store. Their sole purpose of shopping is to conduct research and price comparisons. Retailers could easily remove these people from their list of customers, but this is clearly not worth it. The best solution to the problem in this case will be a simple improvement of your store's website. When the exploiters see the goods on the counter and pull out their "miracle machine", they are ready to examine information about it on your own website, as well as on the competitor's website.

2) Geniuses

These are smart phone connoisseurs who deftly snatch their smart phones like the cowboys from old westerns in order to compare prices, find the best deal and even make a purchase online. Although at the moment they represent only 13% of the total number of show-routers, clever people are the best audience for testing new offers for customers, improving the mobile version of the site and new applications for customers. They are much more active on the Internet, ready to register in the loyalty program and receive additional offers and bonuses.

3) Price Sensitive

These are the people who will actively respond to special offers, such as an extended warranty or loyalty program. They periodically use their smartphones in stores, but not as often as other types. In most cases, the competent interaction of your sellers with this type of people will entail a successful sale. Their mobile devices may be with them, but will remain in their pockets and purses.

4) Sensation seekers

These are consumers who fly into retail stores, especially for pre-holiday sales or some events. This part of the showroom will buy with a mobile phone, only if it is very inconvenient to buy in the store. Considering that they are the most common type of showroom retailers, retailers may find ways to non-commercially involve these people and their mobile phones. Give them the opportunity to comment, make ratings, etc. It is this type of people that makes us all understand that retailers still have to invest in themselves and create a unique consumer experience inside their stores.

5) Traditionalists

Prefer to buy in stores and use smartphones to ask someone for advice before making a purchase. These consumers are accustomed to buying in stores, making them the least dangerous segment among customers armed with mobile devices. They are ready to interact with retail stores on the store's website, via a mobile application or using a QR code of the goods. However, most often they use their mobile phones to consult about a purchase with their family or friends.

Why do shoppers use showrooming?

Looking for the best price - the obvious answer to this question. Although the lack of products in retail or the convenience of delivering goods directly to the doorstep of your own home are also a good reason for consumers to look for more convenient online options.

Showrooming can be a big headache for traditional retailers (this pain is usually exacerbated during the holidays when they risk losing a good profit). At the same time, it is a cool tool for buyers who want to combine physical research of goods in a store and purchase at a lower price in any online store. Convenient mobile applications greatly simplify this process. You only need to scan the barcode of the product using the camera of your smartphone, and you will instantly get access to the prices of competitors and reviews of this product. Below we have selected a small list of the most popular showroom applications for you.

Amazon Price Check

The Amazon app is not the coolest, as you might think. It only shows you the comparative price of the selected item on amazon.com. However, it was this application that infuriated most retailers. As mentioned above, at the end of 2011, the company offered a 5% discount on the product if the customer provided information on the retail price of this product. This promotion has long been completed, but the application remains a very useful tool, allowing you to scan barcodes, watch the price on Amazon and buy using a convenient interface.

Flow

Another Amazon app is Flow. In fact, the same Price Check with one additional feature: you do not need to look for a barcode. This application uses image recognition technology, so you can just point your camera at the cover of a book, album, game, or DVD, and Amazon will try to identify the product. Then you will receive a price on Amazon.com and you can go to the site to buy goods.

The Flow app benefits from the wow effect it creates. Image recognition technology is really impressive: all you have to do is point the camera at a product, and the price of this product will come into your field of vision. Imagine an application that would be compatible with Google Glass - you would simply look at the products, and the application would give out the best prices and links to sites.

Red laser

This may shock you, but Amazon does not always have the best prices, so it would be more useful to use an application that compares prices not only with Amazon.

The Red Laser application is created by eBay and is distributed free of charge for iPhones and Android. Using this application, you can feel like a real Jedi (the application uses a red laser to scan the code), get a detailed list of online and offline prices, as well as find the nearest store (the GPS function is built into the program).

The application interface is intuitive, in addition, the application has a huge library of barcode and QR codes. You can even use it to generate your own QR codes that can be used to disseminate information or links.

Google shopper

Google has one of the best tools to compare prices. Google Shopper can scan barcodes as well as book covers, albums, DVDs and games. Despite the lack of a futuristic interface like Flow, image recognition works great and happens almost instantly. The application also allows you to find a product using your voice.

The main disadvantage is that Google Shopper does not show results for all available retailers, so you will not get a large list of prices. The most significant exception is the same Amazon, which, quite possibly, will not appear in Google Shopper, since the service uses a paid issuance model (those retailers who pay for advertising in the application are shown first).

How to improve customer interaction?

Dear retailers, do not rush to wring hands and lament that you missed the sale at the moment when the buyer took out a mobile phone. If a customer goes to your website, you still have the opportunity to give him a great consumer experience that will not only help close the sale in your favor, but also increase the loyalty of this customer.

There are some simple tips:

1. Lead the decision making process of your clients

Consumer travel usually begins with the study of goods on the Internet. Potential buyers are exploring products, reviews, looking for discounts and special offers. Retailers should add all these items to their websites and online stores so that potential consumers have all the necessary information in front of them at the moment when they are ready to make a decision.

In the end, the consumer will still look for this information, so why not facilitate the process and give consumers everything they are looking for on your website? This approach can help establish trust in your brand in the eyes of the consumer. At the same time, some retailers are afraid that posting all the product information may alienate the consumer. Remember, if the consumer is already on your site, you have a great opportunity to close the deal. Therefore…

2. Train your salespeople

So that they can give customers honest and impartial information. Start an online chat or give your staff a tablet so that they can personally tell about the product and show it to customers, even if it is not available, or the customer wants to find feedback and recommendations. Do not underestimate the impact of the human factor on the successful completion of the transaction.

3. Build long-term relationships

As soon as you have built customer support (competent sellers and the availability of expert information on the site), start building long-term consumer relationships. Offer 24-hour customer support, a convenient return policy, loyalty program and customer bonuses. Increase the loyalty of your customers, this leads to future sales.

We combine online and offline channels

By combining online and offline, you can form closer ties with consumers. This means that communication with customers will continue, even if your stores are closed. For the development of the dialogue it will not be important how and when the last interaction with the buyer took place.

For this you need:

1. Использовать разные офлайновые и онлайновые каналы и тактики

Это могут быть специальные предложения по клубным картам, печатные купоны, геотаргетинг (специальные предложения и скидки для покупателей определенных районов), вовлечение в социальных сетях. Make sure that each tactic contains a unique link or QR code to identify where the buyer came from.

Taking advantage of this advice, Walmart retailer introduced a new strategy called “endless passage”. When a customer cannot find what he needs in a certain store, instead of risking the loss of a deal, the company offers to search on the wallmart.com website. The purchase is credited to the store's account, which is closest to the address of the consumer. Thus, employees of the Walmart network, who receive bonuses for increasing sales of a specific store, do not view wallmart.com as a competitor.

2. Make a competitive offer

Traditional business can offer free Wi-Fi in their stores. The consumer just needs to register to get access. Then offer to visit the site of your store immediately. Along with special offers, you can also analyze web traffic to determine which products are most exposed to showrooming. Registration may confuse some customers, but free Wi-Fi and additional offers will help your visitors make the right decision.

3. Personal customer coverage

Use consumer research data and study consumer behavior patterns that reflect different points of interaction with online and offline users. This allows you to better understand your customers, personalize your reach and track the effectiveness of your campaign. Be sure to include the possibility of buying through mobile phones, smartphones and laptops in your stores, as well as use marketing campaigns that use various marketing channels - Internet search, affiliate programs and presentations.

4. Affiliate programs

Use the expertise of other people in affiliate programs. Offer them a percentage for the clients they have listed. This is a great way to complement your marketing campaign when you are looking for new ways to interact with your target audience and better transform your online shopping experience into offline.

The future of showrooming

Showrooming firmly entered our daily life. This is not a myth, and many retailers suffer serious losses due to it. You can either accept reality and use it to create more competitive online and offline customer interactions, or you can lose a large chunk of online sales revenue, which will soon be 15% of total retail sales.

Perhaps in the near future, retail stores will be able to widely use the model of showrooming in their activities - allowing buyers to explore products and then ask them to buy on the website or through the application. And do not forget that online retailers have an excellent response in stock - soon, they are likely to start opening local stores, also using the benefits of a combined online and offline strategy.

Watch the video: Retail Showrooming and ROPO (October 2019).

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