Consumers use the showrooming technique to touch and feel a product in a brick-and-mortar store before searching online marketplaces for the best price. In essence, this enables the consumer to have the best of both worlds. Showrooming, therefore, is a practice where the consumer inspects a product in a brick-and-mortar store before buying it online for a cheaper price.
Aspect
Explanation
Showrooming
Showrooming is a consumer behavior in which individuals visit physical brick-and-mortar stores to evaluate and experience products in person and then use their mobile devices or online platforms to search for better deals or make purchases from online retailers. It involves researching products offline and buying them online, leveraging the advantages of both physical stores and e-commerce.
Characteristics
– In-Store Evaluation: Consumers physically visit retail stores to see, touch, try out, or test products. – Mobile Research: While in the store, they use smartphones or tablets to access online resources for price comparisons, reviews, and additional information. – Online Purchase: After evaluating products in-store, consumers make the final purchase online, often from e-commerce websites or apps. – Price Sensitivity: Showrooming is driven by the desire to find the best deal or discounts available online. – Convenience: Shoppers appreciate the convenience of online shopping, including home delivery.
Motivations
– Price Comparison: Consumers seek better prices or discounts available from online retailers. – Wider Selection: Online platforms offer a broader range of products and brands. – Convenience: Online shopping offers the convenience of home delivery and 24/7 availability. – Avoiding Sales Pressure: Shoppers can make decisions at their own pace without in-store sales pressure. – Research: They gather information, read reviews, and check product specifications online.
Examples
– Electronics: Shoppers visit an electronics store to try out the latest smartphones but buy them at a lower price online. – Fashion: Customers browse clothing collections in-store but purchase fashion items from e-commerce sites. – Appliances: Individuals examine household appliances in a store and order them online to benefit from discounts. – Books: Bookstore visitors check book prices in-store but order them online for convenience.
Challenges
– Loss of Sales: Physical retailers may lose sales to online competitors due to showrooming. – Price Matching: Competing with online prices can be challenging for brick-and-mortar stores. – Customer Engagement: Engaging and retaining customers in physical stores is crucial. – Inventory Management: Balancing inventory for both in-store and online sales can be complex. – E-commerce Integration: Retailers need effective e-commerce strategies to stay competitive.
Benefits
– Customer Experience: In-store shopping allows customers to interact with products. – Online Sales: Retailers can capture online sales from showrooming customers. – Customer Insights: Showrooming provides insights into customer preferences and behavior. – Brand Loyalty: Positive in-store experiences can lead to brand loyalty. – Cross-Channel Strategy: Retailers can develop strategies that bridge the online and offline shopping experience.
Conclusion
Showrooming is a shopping behavior that reflects the blending of physical and online retail experiences. Shoppers visit physical stores for product evaluation and then make informed decisions to purchase online, often driven by price comparisons and convenience. Retailers need to adapt by offering competitive pricing, a seamless multichannel experience, and strategies to engage and retain customers across channels.
Showrooming is a consequence of mass smartphone uptake and the increased prevalence of eCommerce companies. Unlike their predecessors, the consumers of today shop in retail stores with a smartphone in hand and are easily able to compare prices among various merchants and read product reviews.
Showrooming can be a problem for brick-and-mortar store owners who do not have an established online presence or are otherwise unable to compete on price. Online retailers such as Amazon, on the other hand, are benefitting from the trend.
How can showrooming be offset?
Showrooming is a trend that is not likely to disappear any time soon. With that in mind, here are some ways a retailer can discourage or prevent the practice:
Buy online, pick-up in-store
In the buy online, pick-up in-store (BOPIS) strategy, the customer orders a product from the retailer’s online store and then collects it from the physical store. Retailers can also benefit from this approach by locating popular items near the store checkouts to maximize impulse purchases.
Price-match guarantee
Many retailers now offer a price match guarantee to combat showrooming. This means they will match the lower price of a competitor for in-store purchases. Many consumers are attracted to this option because allows them to own the product immediately by purchasing in the store.
In-store experience
Retailers need to offer experiences that make consumers want to visit their stores. Some may choose to offer Wi-Fi or products that are not available online, while others may do the same with promotions and sales events. The business can also benefit by ensuring that the checkout process is as quick and painless as possible, with a study finding that 52% of American consumers are frustrated in retail stores because of having to wait in line to pay.
Intuitive mobile sites
In a report compiled by the Acuity Group, an intuitive and well-organized mobile site was the most important factor in a consumer deciding whether to purchase from a business. With 73% of those aged 26-45 having bought something from their smartphone, retailers must meet consumers where they are and focus on providing an attractive mobile shopping experience.
Case Studies
Technology and Gadgets:
Consumers often visit tech stores like Best Buy or Apple to try out gadgets like laptops, headphones, or smartwatches. After testing and getting a feel for the product, they might then search for the best deals online on platforms like Amazon, eBay, or other e-commerce websites.
Fashion and Apparel:
People frequently visit clothing stores to try on outfits for size, style, and comfort. Once they’ve decided on what they like, they might search online platforms for discounts, different color options, or user reviews before making a purchase.
Books:
Bookstores are common places where showrooming occurs. Readers might browse books at a Barnes & Noble, only to purchase them at a lower price on Amazon Kindle or other online retailers.
Home Appliances and Furniture:
Customers might visit IKEA or Home Depot to inspect furniture or home appliances in person. After assessing the product’s quality and dimensions, they might then order the same product online where there might be a sale or free delivery offers.
Sports Equipment:
Individuals could go to a sports store to check out equipment like tennis rackets, golf clubs, or running shoes. After trying them out, they might look for the best deals or variations online.
Toys and Games:
Parents and children might visit toy stores to see the latest games or toys, and after deciding what they want, check online platforms for better prices or package deals.
Electronics:
Customers often visit stores to check out televisions, sound systems, or kitchen electronics. They evaluate the product’s features and quality in-store and then hunt for the best online deals or bundles.
Cars:
Many potential car buyers visit dealerships to test drive cars. After getting a feel for the car they want, they might then search online for dealers offering the best prices, financing options, or promotions.
Beauty Products:
People go to stores like Sephora or Ulta to try out makeup or skincare products. Once they find a product that suits them, they might look for discounts, larger sizes, or value packs online.
Jewelry:
Consumers might visit jewelry stores to try on rings, necklaces, or watches. After selecting a style or design, they might then compare prices and offers on various online platforms before making a purchase.
Key takeaways:
Showrooming is a practice where the consumer inspects a product in a brick-and-mortar store before buying it online for a cheaper price.
Showrooming can be a problem for bricks-and-mortar stores without an online presence – particularly if they are unable to compete on price.
To combat showrooming, the business has a few options. These include the buy online, pick up in-store strategy, price match guarantees, in-store experiences, and intuitive mobile sites.
Key highlights of showrooming:
Definition: Showrooming is a shopping practice where consumers inspect a product in a physical store and then purchase it online at a lower price.
Enabled by Technology: Showrooming is facilitated by the widespread use of smartphones and the availability of online marketplaces for price comparison and product reviews.
Impact on Brick-and-Mortar Stores: Showrooming can be a challenge for traditional retailers who lack an online presence or cannot compete on price with online retailers like Amazon.
Strategies to Offset Showrooming: Retailers can implement various strategies to discourage or prevent showrooming, such as offering buy online, pick-up in-store (BOPIS) options, price-match guarantees, enhancing the in-store experience, and optimizing their mobile sites for a seamless shopping experience.
Importance of Mobile Experience: A well-organized and intuitive mobile site is crucial for businesses to attract consumers and encourage them to make purchases from their smartphones.
Consumers’ Changing Behavior: Showrooming is a growing trend that retailers must adapt to in order to remain competitive in the evolving retail landscape.
Related Frameworks, Models, or Concepts
Description
When to Apply
E-commerce
– E-commerce refers to the buying and selling of goods or services over the internet. – It encompasses various online transactions, including online retail, electronic payments, online auctions, and digital marketplaces. – E-commerce platforms facilitate the exchange of goods and services between businesses and consumers, often offering convenience, accessibility, and a wide selection of products.
– When businesses want to expand their reach and accessibility by establishing an online presence. – E-commerce platforms provide opportunities for businesses to sell products directly to consumers online, bypassing traditional brick-and-mortar retail channels. – E-commerce is applicable in various industries, including retail, entertainment, travel, and financial services, catering to diverse consumer needs and preferences.
Omni-Channel Retailing
– Omni-channel retailing is a strategy that integrates multiple sales channels, such as physical stores, websites, mobile apps, and social media, to provide customers with a seamless shopping experience across different touchpoints. – It allows customers to browse, purchase, and return products through various channels, enabling flexibility and convenience in shopping. – Omni-channel retailers leverage technology and data to personalize customer interactions and optimize inventory management across channels.
– When retailers aim to provide a unified shopping experience across online and offline channels. – Omni-channel retailing helps retailers reach customers wherever they are and offer consistent service and product availability across channels. – It is applicable in industries such as retail, hospitality, and consumer goods, where customer engagement and convenience are critical for business success.
Brick-and-Mortar Retail
– Brick-and-mortar retail refers to traditional physical stores where customers can browse, purchase, and interact with products in person. – It offers tangible shopping experiences, immediate product availability, and face-to-face customer service. – Brick-and-mortar retailers often invest in store layout, merchandising, and customer service to create immersive shopping environments and drive foot traffic.
– When businesses want to establish a physical presence to engage with customers directly and showcase products in a tangible environment. – Brick-and-mortar retail provides opportunities for personalized customer interactions, product demonstrations, and immediate gratification through in-store purchases. – It is applicable in various industries, including fashion, electronics, home goods, and grocery, where tactile experiences and in-person assistance enhance the shopping process.
Price Comparison Websites
– Price comparison websites aggregate product information and prices from multiple retailers, allowing consumers to compare prices, features, and reviews before making a purchase decision. – They provide transparency and convenience in shopping by presenting relevant product options and pricing information in one place. – Price comparison websites may earn revenue through referral fees, advertising, or affiliate marketing partnerships with retailers.
– When consumers want to compare prices and features across different retailers to find the best deals and value for their money. – Price comparison websites help consumers make informed purchasing decisions by presenting comprehensive product information and pricing options. – They are applicable in various product categories, including electronics, appliances, travel, and insurance, where price transparency and competitive pricing are important factors for consumers.
Mobile Commerce (M-commerce)
– Mobile commerce refers to the buying and selling of goods or services through mobile devices, such as smartphones and tablets. – It enables consumers to shop anytime, anywhere, using mobile apps, mobile websites, or messaging platforms. – Mobile commerce leverages mobile technology, geolocation services, and digital wallets to provide seamless shopping experiences on mobile devices.
– When businesses want to reach customers on-the-go and offer mobile-friendly shopping experiences. – Mobile commerce caters to the increasing use of smartphones and tablets for online shopping, allowing businesses to engage with customers across multiple touchpoints. – It is applicable in industries such as retail, travel, food delivery, and digital entertainment, where mobile devices serve as primary channels for consumer interactions and transactions.
Customer Experience Management
– Customer experience management (CEM) focuses on designing and optimizing the interactions between customers and businesses across all touchpoints and channels. – It aims to create positive, memorable experiences that meet or exceed customer expectations and drive loyalty and advocacy. – CEM encompasses various aspects, including customer service, product quality, brand messaging, and user experience design.
– When businesses want to prioritize customer satisfaction and loyalty by delivering exceptional experiences at every stage of the customer journey. – Customer experience management helps businesses understand customer needs, preferences, and pain points, enabling them to tailor products, services, and interactions to meet customer expectations. – It is applicable in industries such as retail, hospitality, finance, and healthcare, where customer satisfaction and retention are critical for long-term success.
Online Reviews and Ratings
– Online reviews and ratings are user-generated content that provide feedback, opinions, and recommendations about products, services, and businesses on the internet. – They influence purchase decisions by providing social proof, credibility, and insights into the quality and performance of products and services. – Online reviews and ratings platforms, such as Yelp, TripAdvisor, and Amazon, enable consumers to share their experiences and help others make informed choices.
– When consumers want to research and evaluate products or services before making a purchase decision. – Online reviews and ratings provide valuable insights and perspectives from real customers, helping consumers assess product quality, reliability, and suitability for their needs. – They are applicable in various industries, including retail, hospitality, healthcare, and e-commerce, where consumer trust and reputation management are essential for business success.
Customer Loyalty Programs
– Customer loyalty programs are initiatives designed to incentivize repeat purchases and foster long-term relationships between businesses and customers. – They reward customers for their loyalty and engagement through points, discounts, exclusive offers, and personalized rewards. – Customer loyalty programs collect data on customer behavior and preferences, allowing businesses to segment and target customers with relevant promotions and experiences.
– When businesses want to cultivate customer loyalty, increase retention, and drive repeat purchases. – Customer loyalty programs encourage customers to engage with the brand regularly and incentivize them to choose the brand over competitors. – They are applicable in various industries, including retail, hospitality, airlines, and banking, where customer retention and lifetime value are key metrics for business growth and sustainability.
Social Commerce
– Social commerce combines social media and e-commerce to facilitate online shopping and transactions within social networking platforms. – It allows users to discover, share, and purchase products directly from social media platforms, leveraging social influence and peer recommendations. – Social commerce features include shoppable posts, in-app checkout, social shopping communities, and influencer marketing collaborations.
– When businesses want to leverage social media channels to drive product discovery, engagement, and sales. – Social commerce enables brands to reach and engage with customers in their social environments, leveraging user-generated content, social proof, and influencer endorsements to drive purchase decisions. – It is applicable in industries such as fashion, beauty, lifestyle, and consumer goods, where visual content and social interactions play a significant role in shaping consumer preferences and behaviors.
User-generated Content (UGC)
– User-generated content (UGC) refers to any form of content, such as reviews, photos, videos, and social media posts, created by users rather than brands or organizations. – It provides authentic and relatable content that reflects real-life experiences, opinions, and recommendations from consumers. – UGC can influence purchasing decisions by providing social proof, building trust, and engaging audiences through authentic storytelling.
– When businesses want to leverage user-generated content to enhance brand authenticity, credibility, and engagement. – User-generated content amplifies the voice of customers and encourages community participation, fostering brand advocacy and loyalty. – It is applicable in various marketing and advertising initiatives, including social media campaigns, influencer partnerships, and content marketing strategies, where authentic and relatable content resonates with target audiences and drives conversion.
Bundling is a business process where a series of blocks in a value chain are grouped to lock in consumers as the bundler takes advantage of its distributionnetwork to limit competition and gain market shares in adjacent markets. This is a distribution-driven strategy where incumbents take advantage of their leading position.
According to the book, Unlocking The Value Chain, Harvard professor Thales Teixeira identified three waves of disruption (unbundling, disintermediation, and decoupling). Decoupling is the third wave (2006-still ongoing) where companies break apart the customer value chain to deliver part of the value, without bearing the costs to sustain the whole value chain.
Unbundling is a business process where a series of products or blocks inside a value chain are broken down to provide better value by removing the parts of the value chain that are less valuable to consumers and keep those that in a period in time consumers value the most.
Business modelinnovation is about increasing the success of an organization with existing products and technologies by crafting a compelling value proposition able to propel a new business model to scale up customers and create a lasting competitive advantage. And it all starts by mastering the key customers.
The innovation loop is a methodology/framework derived from the Bell Labs, which produced innovation at scale throughout the 20th century. They learned how to leverage a hybrid innovationmanagementmodel based on science, invention, engineering, and manufacturing at scale. By leveraging individual genius, creativity, and small/large groups.
According to how well defined is the problem and how well defined the domain, we have four main types of innovations: basic research (problem and domain or not well defined); breakthrough innovation (domain is not well defined, the problem is well defined); sustaining innovation (both problem and domain are well defined); and disruptive innovation (domain is well defined, the problem is not well defined).
That is a process that requires a continuous feedback loop to develop a valuable product and build a viable businessmodel. Continuous innovation is a mindset where products and services are designed and delivered to tune them around the customers’ problem and not the technical solution of its founders.
Disruptive innovation as a term was first described by Clayton M. Christensen, an American academic and business consultant whom The Economist called “the most influential management thinker of his time.” Disruptive innovation describes the process by which a product or service takes hold at the bottom of a market and eventually displaces established competitors, products, firms, or alliances.
In a business world driven by technology and digitalization, competition is much more fluid, as innovation becomes a bottom-up approach that can come from anywhere. Thus, making it much harder to define the boundaries of existing markets. Therefore, a proper business competition analysis looks at customer, technology, distribution, and financial model overlaps. While at the same time looking at future potential intersections among industries that in the short-term seem unrelated.
Technological modeling is a discipline to provide the basis for companies to sustain innovation, thus developing incremental products. While also looking at breakthrough innovative products that can pave the way for long-term success. In a sort of Barbell Strategy, technological modeling suggests having a two-sided approach, on the one hand, to keep sustaining continuous innovation as a core part of the businessmodel. On the other hand, it places bets on future developments that have the potential to break through and take a leap forward.
Sociologist E.M Rogers developed the Diffusion of Innovation Theory in 1962 with the premise that with enough time, tech products are adopted by wider society as a whole. People adopting those technologies are divided according to their psychologic profiles in five groups: innovators, early adopters, early majority, late majority, and laggards.
In the TED talk entitled “creative problem-solving in the face of extreme limits” Navi Radjou defined frugal innovation as “the ability to create more economic and social value using fewer resources. Frugal innovation is not about making do; it’s about making things better.” Indian people call it Jugaad, a Hindi word that means finding inexpensive solutions based on existing scarce resources to solve problems smartly.
A consumer brand company like Procter & Gamble (P&G) defines “Constructive Disruption” as: a willingness to change, adapt, and create new trends and technologies that will shape our industry for the future. According to P&G, it moves around four pillars: lean innovation, brand building, supply chain, and digitalization & data analytics.
In the FourWeekMBA growth matrix, you can apply growth for existing customers by tackling the same problems (gain mode). Or by tackling existing problems, for new customers (expand mode). Or by tackling new problems for existing customers (extend mode). Or perhaps by tackling whole new problems for new customers (reinvent mode).
An innovation funnel is a tool or process ensuring only the best ideas are executed. In a metaphorical sense, the funnel screens innovative ideas for viability so that only the best products, processes, or business models are launched to the market. An innovation funnel provides a framework for the screening and testing of innovative ideas for viability.
Tim Brown, Executive Chair of IDEO, defined design thinking as “a human-centered approach to innovation that draws from the designer’s toolkit to integrate the needs of people, the possibilities of technology, and the requirements for business success.” Therefore, desirability, feasibility, and viability are balanced to solve critical problems.
Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
