webrooming-and-showrooming

Webrooming And Showrooming In A Nutshell

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.

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Published by

Gennaro Cuofano

Gennaro is the creator of FourWeekMBA which reached over a million business students, professionals, and entrepreneurs in 2019 alone | Gennaro is also Head of Business Development for a high-tech startup, which he helped grow at double-digit rate and become profitable | Gennaro is an International MBA with emphasis on Corporate Finance | Subscribe to the FourWeekMBA Newsletter | Or Get in touch with Gennaro here

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