Showrooming a retail shift?

Showrooming

Photo credit: http://www.freedigitalphotos.net

Social Commerce maybe a foreign idea to our parents back in the days.  Today however, buying stuff online is just as common and even easier than going to a physical  (brick and mortar) store.  With the falling prices of smart phones and tablets and availability of fast internet connection (although internet connection in developing countries remain way below the average global broadband speed), more and more people are favoring Social Shopping.

What is Social Commerce?

Social Commerce is the use of social networks in the context of E-Commerce transactions.  The social networks that spread advice increase customer’s trust over one retail over another.  Shoppers now can post comments, reviews, take part in forums and conversations among others.

What is Social Shopping?

Social Shopping is a method of E-commerce where a shopper’s friends get involved in the shopping experience.  The whole idea of social shopping is to use technology to mimic the social experience in physical malls and stores.  Sites that use this technology usually asks their users to participate through motivational tactics like offering tangible rewards for sharing information, incentives in the form of reputations points, or points that can be used to redeem gifts.  Majority of these sites though rely on the user’s intrinsic sense of social reward to share with the community.

With a growing number of shoppers researching on the internet before buying a product in stores or the internet a new phenomenon in Social Shopping is emerging called Showrooming.

What is Showrooming?  Why should I care?

Showrooming is when a customer goes to a physical store to touch and test a product and then go online or go to a low-service, factory outlet, or warehouse store to purchase the item at a lower cost.  Online stores offer the same product at a lower price because they don’t have a huge overhead cost compared to physical stores.  Showrooming can be very costly to these brick and mortar stores not only because of the loss of sale but also because of the lost time, energy, and manpower as well as the possible damage to the samples of the product.

This is a huge concern for retailers and most of them are left with no other choice but to compete by slashing their prices.  Experts say that the best way to counter showrooming is by adding value via included services and other tactics.

A study conducted by Edgell Network and eBay Local said:

  • 80% of the retailers said that they expect their sales to be affected negatively by 5%
  • 49% of retailers said they are not prepared and only 12% said they have a strategy re showrooming
Shoppers who use smartphones as tools when doing their showrooming are 40% more likely to purchase in the store than those who do not.  This means that when a sales person catches a customer researching on the phone they should be help immediately
How to combat Showrooming?
  1. Training – If a customer can find more or better info from his phone about your product then that’s bad for your business.
  2. Price matching – Although matching the price consumers find online maybe easier said than done.
  3. Embrace it – Embrace showrooming through mobile apps, online promotions, and developing a short term and long term social shopping strategy

How do you counter Showrooming?  Share your thoughts by leaving a comment below.

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