Local Stores Become Showrooms for Online Buying
In the ever expanding universe of tech & media parlance, we’ve recently been given our newest term: “showrooming.” Tied to the emergence of smartphones and shopping apps, it refers to the act of using local stores as showrooms for more price-competitive online purchases.
What’s interesting is that it essentially reverses the “research online to buy offline” (ROBO) phenomenon, we’ve been talking about for years. Just as e-commerce players were relegated to research tools under ROBO, the tables have now turned on their offline counterparts.
Amazon has even gone as far as offering discounts on purchases scanned in stores (using its app), to further push its vested interest in this trend. And lots of local physical stores have retorted with futile lobbying and letter-writing, rather than competing head on.
But to what degree is showrooming actually happening? One indication was offered this week through a new report from Pew. During the holiday shopping season, it found that 52 percent of adult mobile users relied on their devices while shopping in local stores.
38 percent called a friend for advice , 24 percent looked up reviews, and 25 percent looked to see if they could find a better price elsewhere (both online and offline). And the numbers tend to skew higher for users 18-49, urban, and college educated.
But when asked what was the outcome of this in-store mobile research, 35 percent made a purchase at that store. That’s good right? Perhaps not, if you consider that this mobile activity drove 65 percent of shoppers away (glass half full or empty, etc.).
But here’s the kicker: many of those mobile price shoppers were driven straight into the arms of competitors. Specifically 37 percent didn’t purchase at all while 19 purchased the product online and 8 percent did so at another store. That’s a full 27 percent that bought somewhere else.
Is that 35 percent of mobile price-shoppers buying from your store incremental from those that would have bought anyway? If so, is that worth losing 64 percent of customers, some of whom were led straight to competitors?
Regardless of the answer, embracing mobile should no longer be a choice for retailers. With smartphone penetration reaching 50 percent of U.S. mobile subscribers, the ranks of mobile shoppers are themselves becoming smarter and more empowered.
Retailers can get on the right side of this trend by beating Amazon at its own data-centric game. That means launching apps — or working with those that aggregate retail feeds, such as Milo — through which personal recommendations and incentives are offered to in-store buyers.
That includes making transactions easier (i.e. Payments, personalization) and cheaper (i.e. deals and loyalty programs). We’re starting to see just that from retailers like Home Depot, working with PayPal to make transactions easier and eventually offer rewards via mobile.
Meanwhile Shopkick is bucking the showrooming trend in all kinds of ways. It announced last week that its app drove $110 million in revenue for partner retailers last year. To date, it’s also reached 1 billion in-app deals, 5 million store walk-ins and 10 million product scans.
Most of these examples are National-local (chain) retailers as opposed to local-local businesses. But like many other trends in local media, it will move down market as the tools become more pervasive and democratized. A big opportunity will exist to anyone who can fill this gap.
As I once heard Milo founder Jack Abraham (now with eBay) say: “Brick and mortar retailers have to be where their customers are. And where there customers are now, is on their phones.”
Mike Boland is senior analyst at BIA/Kelsey, where he heads up the firm’s mobile local coverage. Previously, he was a tech journalist for Forbes, Red Herring, Business 2.0 and others.