Showrooming : Is it eating into sales at Retail Point of Sales?
Posted by: Karunamoorthi P | Digital Marketing
Techopedia, defines showrooming as;
"Showrooming is when a shopper visits a store to check out a product but then purchases the product online from home. This occurs because, while many people still prefer seeing and touching the merchandise they buy, many items are available at lower prices through online vendors. As such, local stores essentially become showrooms for online shoppers."? Even though the exact definition of showrooming doesn’t seem to exist in the various journals and literature reveals three primary thoughts . The first one being that , customers zeal to get the best bargain motivates them to showroom (Evans2012). This is some thing that has been happening in the past too as consumers always look for value or the lowest possible prices for a commodity. (Kalyanaram and Winer 1995).It has been noted that in case of products where the prices are high or has greater complexity consumers regularly compare prices by visiting and checking different retail shops(Kushwaha and Shankar 2013).The second thought ; once the consumer has seen and felt the product and also checked the prices, they may buy the products some where else which may be even at a click only store. (Evans 2012; e-Marketer 2012).Even though the purchase may be made online, it is been seen that most of the purchases are being made on competitors web sites(O’Donnell 2012).This is facilitated by the third view which is emerging now is the reach of inexpensive mobile technologies (Spaid and Flint 2014).
Dr. Gary Edwards from Empathica brought in yet another word called Webrooming:
"Webrooming is the opposite behavior to 'showrooming.' Incase of showrooming, it is seen that customers go into stores to touch,feel,test and see a demonstration of the product and then go online and by the product from a click and mortar store or a click only store. Where as Webrooming, is when consumer searches for information regarding the product online and then goes to a brick and mortar store and buys the product there.
Showrooming Vs. Webrooming
Till very recently, executives who were experts in the field of retailing talked about how showrooming was impacting retail as it was taking away large chunks of margins of retailers, and that there was very little they could do to stop showrooming. However, it is being seen that retailers have hit back by using various tactics to square off the impact of showrooming and this has brought in the rise of webrooming.
According to a survey done by Harris in North America , webrooming is done by about 69% of people where as showrooming is done only 46% surveyed. The major reason for this shift is the fact that the brick and mortar retailers have started understanding the relevance and importance of using multiple channel distribution which has resulted in brick and mortar stores moving to a click and mortar formats and also providing best in class customer experience.Companies have deployed well trained front end salesmen , in-store pick-ups of online orders, also [providing various amenities in the store like Wi-Fi , Location based services including discounts there by pushing customers to buy in store, Because of all these tactics web rooming is increasing as a phenomenon.
Merchant Warehouse (now known as Cayan ) which is a provider of payment technologies based out of Boston,had provided knowledge get insights about the trend. They concluded that customers prefered webrooming over showrooming because of the following reasons;
47% of the customers do not want to pay the charges associated with shippings
23% of the customers disliked the idea of waiting for the product to be delevered.
46% of the customers prefer going to a store and would like to touch and feel a product before they really buy the product
36% of the customers normally ask the store sales persons to match the price of a product which they found online
37% of the customers tend to like the option of being able to return the item to the store if required.
Apart from this;
Cash On Delivery To Decline
The introduction of Cash on Delivery (CoD), which has now
become the most preferred mode of payment for many
customers, specially if they are new entrants into the click
world. But this will see a decline as more customers
familiarize themselves with using payment wallets .
Increased Transactions
"There were 50 million transacting users in 2015. In the year 2016 we saw about 75 million,it is predicted that more users would be logging in through their smartphones. For ex in China, customers tend to browse on the desk top but they transact using smartphones as these devices connect faster to the payment gateways.
Newer Categories
As new users join the digital bandwagon, companies will tend to have a busy time as they would have to serve the needs of the customers. This would bring forth new categories of service likes delivering groceries and water , which will eventually replace the neighbor store.
The Rise of Artificial Intelligence
As the use of AI is on the increase , the e comm players would be effectively using the intelligence through application of data available which would be analyzed using various analytic tools and softwares. This would bring in an enhanced targeted marketing approaches.
Digital Payment Types
With the advent of various technologies which have been introduced by companies like Apple Pay, Amazon Pay etc., customers need not take out their card to complete an online transaction, transactions can be closed with a fingerprint or online pin number.
The Rise of Fast Delivery- Click & Collect
As the e-commerce market matures customers would expect even more stringent time lines for delivery of the product they purchase. Companies have now introduced an option called click & collect which ensures super fast delivery of products. Some companies like ,…….. have started delivery with in an hour of purchase. In India too there are companies like FlipKart which promises delivery with in 3 hours.
Even More Omni-Channel
Initially commerce was limited stores, phone sales ,e-commerce & TV sales Companies started facing an issue of channel fragmentation. With products being launched which have more and more features. Leaves the customer confused there by diluting their brand image.PureNet predicts that the year 2017 would be the catalyst for retailers to begin truly unifying their shopping channels by delivering features such as multichannel wish lists and real-time stock information. Customers would be able to experiment more innovative omni-channel technologies.
Mobile Mobile Mobile
Mobile commerce is expected to increase by more than 25% over the last year . According to e Marketer, this growth would be garnered by convergence of technologies and customer experience on larger screens, smoother buying experiences, better mobile search and context-driven discovery. e-Commerce companies have already started working ensuring unique experience that works in line with various mobile devices, thus making the mobile devices a new shopping destination .
Chatbots
With the boom in AI lead innovations, many retailers have started an entirely new way of engaging with the customers -chatbots. Chatbots are AI led automated messenger service that permits customers to engage with the company using Instant Messenger.
The coolest chatbot can predict with precision what the customer is searching for and suggests various products, it goes on to place order and also answers to questions from the customer.
In an retail market which was growing comparing the previous year it is normally seen that most of the retailers felt that they were loosing customers to showrooming. These customers were checking out products at the retail showrooms but were not coming back to buy the product from their shops.
The impact of showrooming is being felt more by the modern trade retail outlets, there by loosing customers to showrooming.
Comparing modern trade outlets, regular retail out lets seemed to have lesser impact by showrooming.
Retailers informed that customers who were showrooming were predominantly young customers .
A sizeable number of retailers also feel that many young customers who buy from their shops had already visited online web sites and had technical knowhow about the product and this in modern parlance amounts to webrooming.
