Showrooming is the process in which a shopper goes in a physical store to browse for products. Webrooming is the reverse process of showrooming. In the showrooming process, instead, consumers browse for products in the physical store, to finalize the purchase on an online platform at a lower price.
|Definition||Webrooming is a consumer behavior where individuals research products or services online before visiting a physical store to make their purchase.||Showrooming refers to the practice of visiting a physical store to examine a product in person before purchasing it online, often at a lower price.|
|Online Research||Shoppers primarily conduct online research, including reading product reviews, comparing prices, and gathering information about features and specifications.||Shoppers use the physical store as a showroom, examining the product in person, testing it, and asking questions to sales associates.|
|Motivation||Webroomers use online resources to make more informed decisions before visiting a store to ensure they make the right purchase.||Showroomers are motivated by the desire to physically interact with a product and seek expert advice but may ultimately buy it online due to price advantages.|
|In-Store Behavior||In-store visits by webroomers are purposeful, often resulting in quicker, more decisive purchases since research has already been done online.||In-store behavior of showroomers may involve extensive product exploration, which may or may not lead to an immediate purchase in the physical store.|
|Retailer Impact||Webrooming is generally seen as advantageous for traditional retailers, as it drives foot traffic to physical stores, where customers may make additional purchases.||Showrooming can be challenging for physical retailers, as it may lead to lost sales if customers buy the same product online from a different seller.|
|Technology Role||Webrooming relies on online resources such as e-commerce websites, review platforms, and mobile apps to facilitate research and product comparison.||Showrooming leverages mobile devices and price comparison apps to quickly find online deals while in the physical store.|
|Examples||1. Researching smartphone features online before visiting an electronics store to make an informed purchase decision. 2. Reading reviews of fitness trackers before going to a sporting goods store to buy one.||1. Visiting an electronics store to test a camera’s features, then ordering it online from a different retailer for a lower price. 2. Trying on clothing in a clothing store and later purchasing it from an online fashion retailer.|
How are showrooming and webrooming connected to business model innovation?
Everywhere we look, it seems there are phenomena of business model innovation through disruption. In this article, I want to highlight how change is in many cases, evolutive, rather than disruptive. And how processes that are successful in the short-term, can be reversed.
Indeed, business model innovation often goes through changing consumers habits, and as incumbents adopt new technologies to force new consumers behavior. Over time established industries and organizations manage to take advantage of their traditional positioning to reverse the consumers’ behavior in their favor.
Let’s see the case of how brick-and-mortar retailers have reversed a phenomenon called “showrooming,” which was eating up most of their margins.
What is Showrooming?
Showrooming is the process in which a shopper goes in a physical store to browse for products. However, before purchasing them, the consumer has access to reviews sites, e-commerce platforms, and comparison sites, where she has the option to buy the same product at a lower price. Thus, while the consumer makes a choice in the brick-and-mortar store, she eventually finalizes the purchase on an online store.
In this scenario, the physical retailer loses margins, and it sees its business stolen by online players that make it easy for consumers to showroom for products. We saw the Best Buy case and how the company had to adapt its business model to survive.
Interestingly enough innovation is an evolutive process, where more traditional players learn how to take advantage of new and existing technologies to reverse the process that tightened their margins in the first place.
What is Werbrooming? Reverse showrooming in a nutshell
Webrooming is the reverse process of showrooming. Where in the showrooming process, consumers browse for products in the physical store, to finalize the purchase on an online platform at a lower price. With webrooming the consumer browses for the product on an online store, to complete the purchase on a physical store.
While showrooming makes perfect sense, as consumers can find products to buy at a lower price, why do people webroom?
People webroom for several reasons. For instance, because for items over a specific budget, it makes sense to experience it on the physical store before making the final purchase. Or for a specific category of products (for instance apparel or groceries) finalizing the purchase, in the physical store might make more sense.
Thus, webrooming is a weapon that physical stores can leverage on to actually bring more people that browse online.
Is there a winner?
Consumer behavior is a complex issue.
Thus, it is essential to notice that there isn’t a definitive answer to what behavior will dominate, and probably both will curve their space. However, as new technologies will allow consumers to simulate experiences (like trying shoes or sunglasses through augmented reality), it becomes more challenging for physical stores to keep up with online counterparts.
However, if physical stores will be able to redefine their value proposition, and redefine the way they make money, there might be a space to reverse the digital processes that will inevitably bring more consumers to perform more and more actions online or in an augmented reality.
- Electronics Retail: A customer visits an electronics store to test out the latest smartphone models but later purchases the chosen phone online from a different retailer offering a lower price.
- Bookstore: A shopper browses through books in a local bookstore, notes down the titles, and then orders them online for home delivery or in an e-book format.
- Clothing Retail: A customer tries on various clothing items in a fashion store, takes pictures, and searches for better deals on similar items from online retailers.
- Furniture Shopping: Shoppers visit a furniture showroom to see and feel the furniture’s quality and design. They then search online for better prices or discounts.
- High-End Electronics: A customer researches high-end home theater systems online, reads reviews, and compares prices. They then visit a physical electronics store to make their purchase and seek expert advice.
- Automobile Shopping: A car buyer explores different car models, configurations, and financing options on a manufacturer’s website. They visit local dealerships to test drive the chosen model and negotiate a deal.
- Grocery Shopping: An individual makes a grocery list using a supermarket’s mobile app, taking advantage of online promotions. They visit the store to pick up the items, saving time on selecting products.
- Home Appliances: A consumer investigates energy-efficient appliances online, studies product specifications, and customer reviews. They visit an appliance store to physically assess the products before making a selection.
Business Model Innovation Examples:
- Netflix: Netflix transformed the video rental industry by shifting from physical DVD rentals to a subscription-based streaming service, disrupting traditional rental stores.
- Amazon: Amazon started as an online bookstore but expanded its business model to become a global e-commerce giant, cloud services provider (Amazon Web Services), and more.
- Uber: Uber revolutionized the taxi and transportation industry by introducing a business model based on ride-sharing, accessible through a mobile app.
- Airbnb: Airbnb disrupted the hospitality industry by allowing homeowners to rent out their properties to travelers, offering an alternative to traditional hotels.
- Tesla: Tesla’s innovative business model combines electric vehicle manufacturing with direct-to-consumer sales and over-the-air software updates, redefining the automotive industry.
- Apple: Apple shifted from a focus on hardware sales to a more service-oriented model, offering services like Apple Music, iCloud, and the App Store as significant revenue streams.
- Subscription Boxes: Companies like Birchbox and Blue Apron introduced subscription box models, delivering personalized products or meal kits directly to customers’ doors.
- Showrooming: This shopping phenomenon involves customers visiting physical stores to explore products but opting to make their purchases online, often at a lower cost.
- Webrooming: In contrast to showrooming, webrooming is when consumers research products online but ultimately decide to buy them in brick-and-mortar stores. This behavior is common for high-budget items or certain product categories.
- Business Model Innovation: Business models evolve, sometimes driven by shifts in consumer behavior due to technological advancements. Innovations may aim to address new customer habits and preferences.
- Evolutionary Change: Business model innovation isn’t always disruptive; it can also involve gradual adaptations to changing consumer behaviors. Established industries and organizations leverage their existing strengths to reverse adverse trends.
- Showrooming Challenge: Brick-and-mortar retailers face challenges as showrooming erodes their profit margins. Consumers use physical stores for research but complete purchases online, impacting traditional retail businesses.
- Webrooming Opportunity: Physical stores can leverage webrooming by attracting consumers who initially research products online to their physical locations. This approach allows traditional retailers to benefit from online research.
- Winner Uncertain: The future balance between showrooming and webrooming remains uncertain. Both behaviors may coexist, with technology playing a pivotal role in shaping their dynamics.
- Augmented Reality: Emerging technologies like augmented reality could further disrupt traditional retail. For example, consumers might virtually try on shoes or sunglasses, potentially diminishing the appeal of physical stores.
- Adaptation Key: Physical retailers must redefine their value propositions and revenue streams to remain competitive in a changing retail landscape. Adapting to evolving consumer preferences is essential for their survival and success.
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