"Showrooming" is the practice of looking at/checking out a product at a store, then leaving and buying it cheaper online. How it works and what retailers are doing about it was highlighted in this piece from MSNBC if you'd like more details.
Showrooming is becoming more and more popular with the growth of smart phones and even apps designed to showroom (Amazon's app was the first I remember causing controversy in this way.) It's very easy to be in a store and at the same time check prices online on your phone.
But physical-location retailers hate it, saying it's unfair. Why? Because they provide everything for the customer -- the chance to see the product (try it out, touch it, etc.), a nice shopping environment, knowledgeable employees to answer questions, and so on. But then don't get the sale because the customer finds somewhere else to buy it at a lower price.
Of course price is not the only factor people consider when buying a product (selection, time, other charges/fees, etc. play roles as well), but it's a major one for sure.
Given these points, I have a couple questions for you about showrooming:
- Do you think showrooming is fair to physical-location retailers?
- Do you showroom yourself?
Personally, I think all is fair (within the law, of course) in the competition for sales. And in fact, showrooming can have benefits for everyone -- not only consumers, but physical-location stores.
The article linked above tells how showrooming has been impacting Best Buy's sales. As a result, Best Buy is making changes that will make it a better retailer. Becoming a better retailer will earn them more sales, more loyal customers, and so on. So the practice of showrooming (AKA "competition") has challenged them to do better. Retailers that respond positively to showrooming will be stronger and thrive. Those that sit back and complain will fall by the wayside.
I have showroomed in the past, but I do it more to make sure buying in person is not a total rip off. For instance, I was in Best Buy the other day to buy a belt clip for my phone. It was something like $25 at Best Buy. I looked at Amazon and it was $22 (or something like that.) I needed it right away and the price was close, so I bought it at Best Buy.
Now if the Amazon price had been $10, I would have felt that Best Buy was trying to rip me off. Even if I had needed it right away, I may or may not have purchased it there. Perhaps I would have dealt with the inconvenience of not having it immediately because I felt taken advantage of (and to save $15).
Furthermore, I rarely buy something after looking in just one place for it. For instance, I'm in the process of buying a computer for my son. I've looked in-store at Costco, Best Buy, and Staples so far. I've also looked online and in numerous ads. So if I ultimately buy at Staples will Costco complain that they provided the store for me to shop, the products to look at, and the employees to talk to just for me to buy it somewhere else? Of course not. Everyone considers this process fair competition for retail sales. So what's the difference if I look at a physical store and then buy it online?
I know, I know -- the physical retailer is providing some value (and thus has some costs) that the online store does not. But as I said, price is not the only factor people consider when buying -- just one of the factors. If the retailer "wins" on enough of those other factors and the price is close enough to what the online options are offering, the physical-location retailer will still get the sale. But oftentimes retailers want to offer sub-par service, selection, convenience, and then charge a big premium for their products. And they complain when they don't get the sale. They feel entitled to the sale when they simply should be earning the sale.
So yes, I do showroom, but not often and not as a standard practice. In many cases I simply forget to check online. But if I think of it, I will consult online prices before making a purchase.
So, what are your answers to the questions above? I'm interested in hearing what I assume will be a variety of comments.
I tend to have a rough idea of the cost of an item before buying it, but I must admit will usually look instore not just to compare prices, but gather more information about the product, either from the sales literature, or the salesperson. I then usually go home and buy online, though not always, even if it is a little cheaper. It's something I can understand those bricks and mortar stores don't like, but it'll never stop.
Posted by: Sarah | July 19, 2012 at 07:15 AM
There was a very good camera store with extremely knowledgeable people, close to our house, that did not make it because of showrooming. People would come in get educated on the product and then go buy it somewhere else becasue it was cheaper.
Bottom line is price sells no matter what. If they could not use there vast knowledge to provide a superior value that resulted in sales they eventually failed.
Posted by: Matt | July 19, 2012 at 07:29 AM
I think this is nonsense. Basically brick and mortar stores whining and looking for an excuse. I buy nearly everything online - only things I need immediately and food do I bother going to the store. I can compare, find better information, and get coupons all using Google from my desk. Sure a store may have a knowledgeable sales person that knows everything about all the products in the store (about as likely as a unicorn), but their knowledge is still limited. There is simply too much information for any salesperson to be useful.
Posted by: mdb | July 19, 2012 at 07:50 AM
It's unfair in the sense that one side has to spend on infrastructure and the other doesn't. One provides a service that the other doesn't. The bare bones offers the same thing for a lower price and snags buyer's who used the services of the former to get that consumer informed and ready for their final selection. Companies have to rise to the competition and do, but it will never be totally fair because of the infrastructure costs. What to do about it is a whole other question. I do not practice showrooming but I do buy online often. The best place to buy a computer is B&N and no need to see one in person before you buy. Asus all the way!
Posted by: Luis | July 19, 2012 at 07:50 AM
I think it is fair and I do it. There is nothing stopping stores like best buy from shutting their stores down and becoming a website retailer. Best buy has advantages like having people walk by products that they may impulsively purchase and salespeople to push extended warranties harder than clicking no thanks on Amazon. There are advantages to both models.
Posted by: Lance@MoneyLife&More | July 19, 2012 at 08:35 AM
I do it sometimes, mainly with books. When I'm looking to buy a foreign language book for instance, I have to be able to look at the contents to see if it's actually useful and Amazon doesn't let me do that. Sometimes I'm tempted to buy the copy in the store, but if there's a $10 price difference (or more) between the store and online, I'd be an idiot to buy it in person. But if the price is close, I'll be more likely to buy it in the retail store instead.
Posted by: Tiffany | July 19, 2012 at 08:42 AM
If enough people 'showroom' there will be no physical retailer's left, which I think is just a matter of time.
If the market's demand cheaper prices, non-online stores will need to lower their prices to compete. This includes removing sales tax and any shipping they would normally charge.
I love Amazon mainly because I get things cheaper and in a couple of days but I must say that the fact that they do not charge sales tax doesn't hurt, I am not sure how a physical retailer could compete with that.
Posted by: Brent | July 19, 2012 at 08:53 AM
Actually, I sometimes do the opposite of showrooming. I'll research a product online until I've decided that I want to buy it, then find out who the local retailer is, and visit them to make my purchase. I've found that it's often handy to have local service easily available, and it's much easier to return an item that is broken or unsatisfactory if I just have to drive across town, rather than dealing with a remote and often uncaring online service/returns department. I find, as well, that by the time I pay the shipping costs, it takes a pretty significant discount to make it worth my while to buy everything online, just based on price. The factor that most often influences my choice is availability - some things just aren't available in local stores.
Posted by: Jon | July 19, 2012 at 09:08 AM
I showroom all the time. If brick and mortar stores want to compete with online retailers, then they better get wise and compete.
Amazon is slowly starting to lose it's luster as states start imposing taxes on goods purchased from their site. That said, you can often find anything and everything at least a few $ cheaper on Amazon than Target, Best Buy or the like.
The only brick and mortar store that is competing with Amazon and online retailers is Walmart.
Posted by: tom | July 19, 2012 at 09:11 AM
So "window shopping" is now immoral & illegal?
Long before the internet, many people visited stores and looked at stuff displayed in them, without any intention or actual purchasing of the items. Was this "unfair"? No, it actually whetted people's appetite for purchases of the sort of things they spent time looking at. Many cars and farm tools and products are displayed at county fairs even today---because people find it entertaining to look at the "latest thing", and because it eventually puts people in mind to purchase something--either these actual items or something similar within their price range. But if they don't look, they don't realize they "need" anything new.
This practice led to the development of our consumer culture---the fact is that looking always leads to spending, on something somewhere. So in the end it helps every retailer. Retailers should think of showrooming as advertising---they have the chance to show tech-obsessed showrooming visiters to their store even more items and expose them to even more things they might think of purchasing. Way better than a banner ad!
I'd also bet that people who "showroom" on items like electronics actually end up spending way MORE on electronics in total (purchased anywhere) than people who don't showroom. It's because they are seeing and thinking about all the cool toys they could/might "need", they spend more time thinking about them, and of course, they will see more of these types of items the more time the spend doing shopping online or in stores.
Shopping leads to spending, always. Showrooming is just a form of shopping.
Posted by: KH | July 19, 2012 at 09:14 AM
In my effort to save more American jobs I will purchase 50% of items at the brick and mortars. I have friends who do the show rooming and except for groceries only buy cheap goods online but then struggle to connect the dots of why it's so hard for them to maintain US employment. There will soon be fewer and fewer physical location stores. Also in my area for USA made goods local stores don't carry many of them so I will go online to purchase USA made shoes, socks, and other items.
Posted by: D | July 19, 2012 at 09:30 AM
i've formed a habit of showrooming, often resorting to amazon/dealnews for price checks. most often, i end up buying online because of convenience + significant price difference in many cases.
that said, i know it is something plaguing retailers. best buy has indeed become amazon's free showroom. not sure how retailers will get their hands around that, but then again, you have customer segments of all sorts.
i'd imagine most in the personal finance space would behave like me? but then also i suppose there are other factors as well as D brings up above.
it's not a bad dilemma for the end consumer :)
Posted by: Sunil l Entrepreneurship & Personal Finance | July 19, 2012 at 09:55 AM
I do most of my buying online and have been for several years.
One of the reasons is price but the fact that most stores have a terible return policy is another.Just this past week I had negative return experiences with retailers Ross and Justice.I still shop at Nordstrom,Kohl's and Costco because they have a fair return policy and offer value for what they are selling.So customer service is more important in todays world.
Posted by: Cheryl | July 19, 2012 at 10:07 AM
The main disadvantage of buying online is the cost of shipping. I always try to get Amazon's "Supersaver" shipping which costs $0 in many cases if the product is over $25. As an illustrative example we have had a British store here in Silicon Valley for as long as I can remember. There are a few British food items that are part of my life and I would be one sorry Brit if I had to forgo. Wouldn't you know it, the store just closed for good. I wasn't too surprised since the shelves have been getting pretty bare lately and the store has few customers. I searched Amazon for what I needed and lo and behold they had exactly what I wanted in their grocery section at a "British Delights Ltd." storefront. My first purchase which was 8 jars of my favorite Branston Pickle was delivered to my door yesterday, securely packed in big bubble wrap, at a great price, for $0 shipping.
What it shows me is that some enterprising individual went into business with an on-line store with the goods stored in an Amazon warehouse, and has put a Brick & Mortar store out of business. It just goes to show that you can't fight progress. If you try to fight progress you will get run over!
Bottom line - some American jobs were eliminated in one location of the country but created, more efficiently in another location of the country where warehouse rent is cheaper. It also helped the USPS which is in dire need of help.
I also find that I can buy my Nike "Dri Fit" hiking shirts, brand new on eBay for about half the retail price of a store. It's also a great help to have a "Sniping tool" by which my bid gets submitted automatically a few seconds before an auction closes.
Posted by: Old Limey | July 19, 2012 at 10:30 AM
Clearly the online retailers have a cost advantage by not having to support the infrastructure required to show physical products to potential customers.
I think we will see more of the bricks-and-mortar stores go out of business or go online only, as they can no longer afford to support the showroom. It started with bookstores because books can easily be viewed online (e.g. Amazon "Look Inside") and are bought based on factors other than the feel of the physical product.
They will be replaced by branded stores similar to the Apple Store (and now also Microsoft, Sony, etc.) which will obviously be set up to support one brand only. Those stores truly will not care whether you buy from them or elsewhere (including online). If the Apple Store leads you to buy an Apple product from Amazon, Apple is still happy.
So what do physical stores really offer to offset the price difference:
1. Information? Actual technical information and objective reviews are more available online than in stores anyway. A salesperson seldom knows more.
2. Immediate availability? Even Amazon can only get you a product in a day or two at best. I have purchased a hard drive and a cell phone locally because I needed to replace a dead product NOW.
3. Easy returns? Depends on the store. I have only once had to return a product to Amazon and it was pretty simple. But I did have to box it up and attach the prepaid label they supplied.
4. Physical touch? This is what show-rooming provides.
Personally, I showroom only if I physically need to see the product before I buy it. I think it is somewhat unethical if I do it with no intention of even considering buying from that retailer, but I still do it! Like many things in the capitalist system (e.g. coupons, free samples, credit card rewards) it is not totally fair, but the seller offers something to potential buyers hoping it will lead to a sale. It is up to them to set up a system that maximizes their profits, and up to us as consumers to maximize our benefits without breaking the law.
Regarding the "sales tax" advantage, most people don't realize that state sales taxes are usually "sales and use tax" and that they are breaking their state law by not reporting their online sales to their states and paying the tax.
Posted by: Mark | July 19, 2012 at 10:40 AM
Many people will be offended by my comment which is unfortunate because it shows they haven't really thought through what they are doing. Showrooming is stealing. It's stealing just like it would be stealing to hire a professional advisor to help you make an important decision and then after getting his advice, not pay him.
Showrooming is not simply price shopping. If you just go into a store to find a price on a product, don't like the price and leave that's not showrooming. That's typical comparison shopping.
But when you go into a store for the purpose of gathering product information that you can't get somewhere else, to play with a camera, get your hands on it, try out its features, compare it to 3 other models to determine which one you want to buy, perhaps ask a store employee some questions about it and then you go buy it somewhere else because you know it's cheaper, and especially if you came in there knowing that you are going to buy it somewhere else because its cheaper, then you have knowingly used a service without paying for it. That's stealing.
As more people continue to steal services from stores without paying for them the stores will slowly go away.
Posted by: Apex | July 19, 2012 at 10:46 AM
I think showrooming is unfair to retailers because they have to pay for rent, employees, wear and tear on display units, air conditioning, etc. to provide service to "customers" who will make their purchase elsewhere. However, if B&M retailers improved their price-matching policies to include large internet retailers, there would be less showrooming. As for the Amazon sales tax issue, there is talk about Amazon providing same-day shipping for states that require sales tax, which will keep them very competitive. Why waste gas and time to go to the store when it can be shipped to you the same day?
Posted by: minimalist | July 19, 2012 at 10:54 AM
"As a result, Best Buy is making changes that will make it a better retailer. Becoming a better retailer will earn them more sales, more loyal customers, and so on. So the practice of showrooming (AKA "competition") has challenged them to do better. Retailers that respond positively to showrooming will be stronger and thrive. Those that sit back and complain will fall by the wayside."
Don't you have an MBA? All of these "changes" will cost Best Buy money, not just one-time costs but ongoing costs, erode its profit margins, and ultimately lead to its demise. Making a statement that "retailers that respond positively to showrooming will be stronger and thrive" is pretty naive and baseless, especially when you yourself said if you could save a few bucks and don't need something right away you buy it online.
Everyone can make their own choices- this is not a moral question at all and certainly is not stealing- there is no contract, implied or otherwise, when you walk into a store and talk to an employee. But in 10 years when there are virtually no mom and pop stores left and the only retailers are disgusting stores like Walmart and everyone is up in arms about how that came about, take a look in the mirror.
Posted by: Pop | July 19, 2012 at 10:58 AM
"I think showrooming is unfair to retailers because they have to pay for rent, employees, wear and tear on display units, air conditioning, etc. to provide service to "customers" who will make their purchase elsewhere. However, if B&M retailers improved their price-matching policies to include large internet retailers, there would be less showrooming."
And in a year or so, there would be no retailer left because THEY MADE NO MONEY!!
Posted by: Pop | July 19, 2012 at 11:02 AM
Pop --
So what is your advice for B&M stores? Simply complain about it and do nothing? That's a wonderful strategy. Let me know how that works out for you.
I think if you look at the retail landscape you will see stores that are thriving despite the fact that their products are widely available. And the reason they are doing well is that they have decided to compete in a different way.
Yes, of course these changes involve investment. Here's a news flash for you -- doing ANYTHING involves investment. But the cost of doing nothing is much higher.
Posted by: FMF | July 19, 2012 at 11:06 AM
Seriously FMF, your comments were stupid. Think about things for a little bit before you write.
Posted by: Pop | July 19, 2012 at 11:12 AM
"I think if you look at the retail landscape you will see stores that are thriving despite the fact that their products are widely available."
Name some. Walmart? Costco?
Posted by: Pop | July 19, 2012 at 11:13 AM
Pop --
You certainly personify this:
http://www.problogger.net/archives/2008/02/13/4-reasons-you-should-encourage-foster-and-harness-dissent-on-your-blog/
Posted by: FMF | July 19, 2012 at 11:15 AM
How is "showrooming" different than comparison shopping? Do all these people that think showrooming is wrong buy from the first store they walk into? I still question the prevalence of this activity and it is probably the age demographic that reads this blog that makes this seem more prevalent - since you do not see young people in stores. Brick and mortar is dead - showrooming is a red herring.
Posted by: mdb | July 19, 2012 at 11:20 AM
@Pop,
I do think there is a moral component but your business analysis of what will happen is one I share. Eventually B&M stores cannot stay in business if they continue providing services that cost them money without getting paid for it.
Perhaps there will need to be two kinds of stores. One will be a product warehouse and one will be a product information services store. The product warehouse will have cheaper prices, comparable to online. The information services store will charge you a membership fee or a fee to get in the door or per product that you want to research. Basically split the cost of the service from the cost of the product. Currently B&M stores combine them and people are using (I say stealing) the services part without paying for it and then going and buying the product part at the online warehouse that doesn't provide the service.
This cannot continue forever if more and more people keep doing it.
Posted by: Apex | July 19, 2012 at 11:24 AM
when you write something like "That's a wonderful strategy. Let me know how that works out for you." then you're asking for it. If you think what you wrote is not stupid, then defend yourself. If you can.
Posted by: Pop | July 19, 2012 at 11:30 AM
I don't think I've consciously done 'showrooming'. I have gone to local shops, looked at items, then ended up buying online due to prices. I haven't gone to local shops just to view items before a planned online purchase with no intention of buying locally.
I can see how some retailers might find it annoying. They feel like they're being treated like a showroom for Amazon. I don't know what they can do to stop that other than add extra value that steal those customers back. Maybe great customer service or immediate availability or other things and at least margianlly competitive pricing would help. I'm not going to buy a book for $25 at the store if its $10 online. But I might pay $15 locally if its convenient and the store employees are helpful and I get the book immediately
Posted by: Jim | July 19, 2012 at 11:32 AM
Apex,
I agree with you, this cannot go on. And my answer to FMF's question of "what would I do?" is, I'm not sure the retailers can do much about it- they cannot compete on price. I think it's ultimately up to the consumers, and if enough of them will spend hours and hours of time searching around to save $10 online, which some/many here are prone to do, then I think many, many retailers are in trouble.
Posted by: Pop | July 19, 2012 at 11:35 AM
@Jim,
I think that makes sense. The service they are providing has value but if their prices are so high that the cost of the service is exorbitant then I think you can't be expected to pay for that and get ripped of. But if you go to shop for a $200 camera and spend 20 minutes checking it out at Best Buy and then buy it online for $180 to save 20 bucks but that 20 minutes in Best Buy was valuable in helping you make the right decision, then it seems to me you have used their resources to your benefit without paying for it even though the cost of those resources seems reasonable. That seems to meet just about every reasonable definition of stealing that I can think of.
Posted by: Apex | July 19, 2012 at 11:41 AM
I side with Apex that showrooming is stealing - along the lines of "theft of services". However, because retailers provide those services free to anyone, it is not a crime.
In theory, you could pay by the hour for a consultant's time to assist you to select the right item and learn to use it. Or the store could charge a $5 entry fee, refundable to those who buy something, just like some shopping malls validate parking for those who buy something. But in practice, they find it cheaper to provide service to showroomers than to lose customers who would not pay the entry fee.
Those who claim showrooming is the same as comparison shopping miss one key point: When you comparison shop, you truly may buy from any one of the stores you enter. You are using their facilities and may potentially pick them as the seller. On the other hand, when you showroom, you have no intention of buying.
This is not just an online versus B&M issue though. You could also go to a full-service retailer to learn from knowledgable salespeople and then run down to Walmart to pick it up at the best price.
Posted by: Mark | July 19, 2012 at 11:43 AM
@Mark
Bingo! Well summarized. You hit some points I was thinking about but didn't find a way to properly verbalize.
Posted by: Apex | July 19, 2012 at 11:46 AM
Apex, Yeah I agree that 'showrooming' in its true sense (not just window shopping or comparison shopping) is unfair to the retailer and I DO think unethical to some degree. I don't know if I'd call it 'stealing' as such, but thats probably more of a semantics argument. If I consider it unethical and you call it stealing I think we're mostly on the same page. And like Mark said as long as the retailers provide the services for free to anyone it isn't a crime to use said services.
Showrooming is NOT like comparison shopping or window shopping. Its more like posting a job opening and conducting interviews for a job which you know you're going to give to your brother in law. THe decision is premade.
Posted by: Jim | July 19, 2012 at 12:00 PM
If you go into a store for the express purpose of spending an hour gathering information and then leave, I might have a problem with that. however, going into a store to look at an item, then leave isn't going to hurt the store. If you had not gone into the store, the store would still be open and paying rent and employees.
Also, judging by the number of cars I see in front of places like Walmart and large malls, this activity is so small that it's irrelevant. Very few everyday items are such a good bargain that showrooming makes financial sense unless your time is worth nothing.
Posted by: Noah | July 19, 2012 at 12:03 PM
@Jim,
"Its more like posting a job opening and conducting interviews for a job which you know you're going to give to your brother in law. THe decision is premade."
Oh well if you have worked with the H1-B visa approval process at all then you know that works exactly like that. Government requires that you try to fill that job to any other American first before you can get your H1-B candidate extended. So you advertise the job in the most obscure places possible and put as many obscure requirements on it as you can but people still find it then you have to interview them and waste their time and get their hopes up but you are going to find a valid reason to say they don't qualify. It's terrible. But it's how all the H1-B approvals I have seen end up going.
Posted by: Apex | July 19, 2012 at 12:09 PM
@Noah,
I think you are correct that for a lot of stores its not a big problem. Walmart is diverse enough with enough cheap crap that it doesn't make sense to do it there.
There are a few places where I think it would have a big impact though and stores that are primarily electronics retailers such as Best Buy are one of them. Circuit City already went broke. There are likely many reasons for their failure and certainly far deeper problems than showrooming but it was probably part of it. Best Buy could eventually share their fate if enough people purchase on price alone.
I would put it this way. If people don't find the B&M Service valuable then Best Buy should go away. There is no need for them. Might as well just order electronics on the internet and get it shipped overnight. But if they do provide value and you use their service simply because it is available and will miss it if it is gone then doing so and not paying for it is both stealing and it is ensuring their eventual demise. The loss of the service they provide will be lamented but most of the lamenters will not have been willing to pay for what they now wish was still available.
Posted by: Apex | July 19, 2012 at 12:21 PM
"...knowledgeable employees to answer questions..."
Anyone who makes that claim hasn't been shopping (or showrooming) at the same stores I have!
Posted by: Anonymous Coward | July 19, 2012 at 12:27 PM
I have a hard timing equating Showrooming with Stealing, as some commenters have stated. Stealing is an illegal act punishable by law. Showrooming is legal in every respect.
This debate reminds me of a story from my distant past.
I once worked for a while with a mathematician that was on loan to our department from our research labs. This man was the most "Christian" man that I have ever met. You could give him a Book, Chapter, and Verse from the bible and after a small period of thought he could quote the verse almost verbatim, which we all thought was remarkable.
One day when I was chatting with him he said, "I just found out that I had some reportable income last year that I failed to report so I am filing an amended return. I said, "John, what was the nature of the income?" He replied, "My wife baby sat the children next door for a few hours on one occasion and the neighbor gave her some money that I failed to report". Now that's what I call Honesty.
Posted by: Old Limey | July 19, 2012 at 12:29 PM
I sometimes show room, mainly to see if I am getting a good deal or not. Often I have found things to be on "clearance sale" and its clearance price is the same as Amazon's every day low price.
Posted by: Squeezer @Personal Finance Success | July 19, 2012 at 12:58 PM
I'm pretty much in the same boat as you. If it's within a couple of bucks or if I need it right away, I'll often buy it at a store. We have been buying a lot of stuff for our camper and I bought a lot online, but then found a local business that I fell in love with, and even though their prices are about 10% higher, I've been buying from them when I can because I like the people and the store and am happy to be supporting a local business that's been around for a long time.
Posted by: Money Beagle | July 19, 2012 at 01:12 PM
I don't think showrooming itself would really contribute much at all to any business going bankrupt. All showrooming really does is waste a little bit of an employees time. It doesn't cost extra money as the items are already on display in the store. The total impact to the business is just some wasted employee time. That could have a marginal impact but surely not enough to make the difference in a businesses success or failure. If your that close to bankruptcy then you'd die for one reason or another anyway.
e.g. If BestBuy goes bankrupt theres probably 50 other reasons that would have contributed more to the failure.
SHowrooming is really just a side effect of the price differences. Those price differences are the reason online companies succeed while retail shops fail.
Posted by: Jim | July 19, 2012 at 01:18 PM
@Apex
Circuit City went away because the service was sub-par, the selection was small, and the prices were not competitive. They also went out of business before smart phones and comparison pricing apps were popular.
If Best Buy does not survive, it's certainly not because of showrooming. The products are overpriced compared to other B & M stores. The employees are cutthroat and will follow you throughout the store and try to sell you on useless services like Best Buy's "virus protection". They have also gained a reputation for screwing people over with their rebate system and non-existant price matching policies. There is a reason that Best Buy is closing stores and showrooming is not one of them.
If you want to see a B & M electronics store that has done it right, look no further than Fry's Electronics. They have huge warehouse-size stores and I've never been when there was less than 100 cars in the parking lot. The employees are knowledgeable but not pushy and the atmosphere is relaxed enough that you can wander without feeling like you are followed. They also have a huge selection and will price match with many online stores. Yes, you may have to pay tax, but the convenience of instant gratification is usually worth it. Fry's is one of the only B & M stores I frequent because I do like to browse and the prices are usually good. I have spent close the same amount there over the years that I have at Amazon.com.
ProTip: Do not set foot inside Fry's on a Black Friday :)
Posted by: Noah | July 19, 2012 at 01:20 PM
I don't think there is anything wrong with showrooming. How is this different from car shopping? You go around, find what you want, then look for the for the best price from competitors. Consumers just have so much more information available today, compared to 15 years ago. The consumers are in the driver's seat, just like they always have been.
Either these retailers compete by offering additional value for the higher price, or lose business. However, many consumers are likely to spend money on other items in the store when showrooming.
Posted by: Young Limey | July 19, 2012 at 01:25 PM
I'm really surprised at the opinions presented here. Showrooming is just a temporary phenomenon that will exist until the marketplace adjusts, that almost certainly will be fewer physical stores and a larger share of commerce on the internet.
To equate showrooming with stealing takes quite a leap of logic. A physical store spends money and offers free services in an attempt to win customers. They spend money to market pitch their products to consumers without a guarantee of success. If that's a losing strategy then so be it, they should put everything in a box on the shelf and not employ sales people.
I participate in credit card rewards sign up promotions, I take the generous promotional offer without ever intending to give them my continued business. I'm taking advantage of their up front marketing expenses and never giving them a profitable result.
I've test driven a car at a dealership and then not purchased it. I've gone to an open house at a property sale without any intention of purchasing it.
I watch TV and change the channel during the commercials, I'm taking advantage of that free service the advertiser pay for without ever giving the companies responsible my business.
I've gone to a different store than usual solely to purchase an item that is on sale as a loss leader without ever buying there again.
All of these are akin to showrooming. The company spends money to attract me as a consumer, I use the product or service they offer as enticement and then don't provide enough business to justify the cost.
That's life, if a business model can't generate enough profit to cover the cost of customer acquisition then it's not a good business model. Brick and mortar retail stores don't have a right to existence, if a competitor comes up with a new more efficient way to do business then the old model goes way and a new model replaces it.
Stage coach driver isn't a viable occupation these days. The company that prints customized checks probably isn't as big as it used to be. People are going to buy more ebooks and fewer physical books in the future.
Posted by: Bill | July 19, 2012 at 01:26 PM
@Bill,
You have made the best counter argument to my point that I have read. It's pretty good.
I want to highlight one thing you said:
"A physical store spends money and offers free services in an attempt to win customers. They spend money to market pitch their products to consumers without a guarantee of success. If that's a losing strategy then so be it, they should put everything in a box on the shelf and not employ sales people."
I think that analysis is exactly right. They had a business model based on the idea that they provided a means to help you to make your decision by giving you access to try the product which would result in higher sales. Perhaps in this era that model is not viable and products will just be on the shelf in boxes as you say, like a grocery store.
An interesting comparison would be to Costco who regularly has employees offering samples of products to help people (entice people) to make buying decisions.
I wonder how people would feel if they had a friend who told them they go to Costco regularly to get as many free samples as possible with no intention of ever purchasing anything. Is that only a problem because what is being taken is a physical product rather than a service? Maybe its not a problem since it's part of the company business model?
I wouldn't feel right doing it. Is it different?
Posted by: Apex | July 19, 2012 at 02:03 PM
I haven't really read anything in the comments that speaks to something other than price that online merchants offer which B&M stores don't. There is actually huge consumer value to online sites that B&Ms don't offer, such as:
1. Actual customer reviews
2. Price tracking (since you last saw this item, the price has dropped by $1.43)
3. Bundling similar products for a lower price, or showing you related items based on your personal browsing preferences
If I could walk into a store today, see what 100 people before me thought of the product, check out the way the price has gone up and down over the last month, and was pointed to similar or bundled products based on my personalized history, I'd be much more likely to buy there, even if the price were a few dollars more.
The truth is that I can't. Salespeople rarely want to tell you that the product you're buying has been returned 80% of the time. They don't want you to know the price was lower last week due to a sale. And they certainly don't want to tell you about other products (that they most likely don't stock!) that will take you away from the item in front of you.
That, to me, is the major difference between B&Ms and online stores. Price isn't even the main sticking point... it's the approach. Amazon's approach of "We'll use your info to make your buying more time efficient, and show you products we might not make much profit on because we want you to be fully informed before you buy a product" is far and away a better model than the typical B&M approach that states, "This is our selection, take it or leave it with no more info beyond what's written on the box, and a paid teenager who can go see if we have more in stock that we just haven't gotten around to putting out on the shelf."
Posted by: Kay | July 19, 2012 at 02:17 PM
We don't do this. Ethical considerations aside, I mainly find it to be a waste of time. My "Use it up, wear it out, make it do, do without" philosophy cuts out alot of shopping. If I head into my local independent brick and mortar appliance store with the Amazon price for a certain model of anything, I'm confident they will meet or beat the price. In fact they have for the past ten years when we needed a washing machine, television, dehumidifier, stove and refridgerator. And I was able to inspect the exact models I received.
That said, I find the comparison a bit disingenuous. BestBuy is an online retailer, as is nearly everyone selling some form of durable consumer goods. Priced appropriately, they'll capture an online shopper and a conventional 'showroom' shopper.
Posted by: Catherine | July 19, 2012 at 02:27 PM
Question : What businesses would this actually impact? Anyone besides BestBuy?
I suppose that it could impact the misc. 'mom and pop' shops out there. But how have those shops survived Walmart and online retailing up until now? Small mom&pop shops have had a severe disadvantage versus big box and online retailers for many years now.
Posted by: Jim | July 19, 2012 at 03:16 PM
I like shopping for things in person in retail stores. But I'll never return to a store that expects me to buy an item just because I looked at it.
What are you proposing, Apex, a policy of "you looked at it, you bought it"?
What justifies the continued existence of any retail outlet? Perhaps all retail should all just be eliminated. Retail stores whether online or brick/mortar are already marking up everything significantly from wholesale prices, without adding any value. I'd call that "stealing" from the customer, myself.
Wouldn't it be great if you could buy your next refrigerator direct from LG or Samsung instead of having to go through Sears, Lowes, or Best Buy etc?
Posted by: MC | July 19, 2012 at 03:32 PM
@MC,
I never proposed anything, just that this will drive some retail outlets out of business.
Your statement about retailers providing no value and wishing for them to all cease to exist indicates you don't understand what they do.
You can buy direct. All you have to do is meet their requirements to buy wholesaler. Usually that means something like certain volume of sales and ability to take delivery in bulk. Producers don't have the means to parcel out product to individuals one at a time and distribute it. If they did it would be an entirely separate part of the business. One with added costs that would bring the price up to retail pricing.
Retailers distribute the product to local outlets. They store the product. They display the product. They have buildings, staff, utils, and capital costs to make that all happen. You think that has no value?
I don't think you understand retail distribution versus wholesale production.
Posted by: Apex | July 19, 2012 at 03:55 PM
I'm surprised nobody has said much about the fact that most of these Brick and Mortar stores also have online stores.
If they do not have online stores, well they sure have that option too. I think its safe to say that having a storefront in this "showrooming" age is still a business plan that works and they have chosen to stick with it. As for the future, we'll see.
Posted by: JayB | July 19, 2012 at 04:53 PM