Amazon ticked off both Walmart and Target enough that the retailers yanked the Amazon Kindle from their shelves. Their complaint? The Amazon showrooming app, which enables consumers to scan a barcode in brick-and-mortar stores and find a cheaper Amazon price.
How big a threat is showrooming? A September Prosper Mobile Insights survey found that while a third of mobile shoppers said they have compared prices on their device but still purchased from the same retailer, another third compared prices and purchased from another retailer's physical store. After comparing prices, respondents were more likely to have purchased from another retailer’s website using their device than from the same retailer's website using their device (25.9% vs. 17.1%).
As a knowledge@wharton article describes, they key to confronting the showroom challenge is to exploit the brick-and-mortar advantages. Best Buy for example has overhauled some locations with Solution Central help desks (something like Apple's "Genius Bar").
A second strategy is to compete on shipping. Brick-and-mortars must surrender some margin to compete with lower-price online retailers, but those onlines are having to eat the cost of shipping. And as a June 2012 report from comScore and UPS found that while comparison shopping, shipping charges are almost as important to consumers as product pricing (23% and 26%, respectively), and 55% had abandoned an online shopping cart due to shipping charges. So retailers like Home Depot offer a shipping-free "hybrid experience" by selling merchandise online for in-store pickup. They have captured the online experience, negated the shipping charge, and enabled faster delivery. Walmart, Macy's, Best Buy and the Container Store also offer the hybrid experience.
Such a model also allows a consumer to, for example, buy from Best Buy online or offline. And if online becomes more profitable? Then the store becomes the "showroom and communications center for the website," says Wharton professor of operations and information management Marshall Fisher. Fisher observes that such an approach can cannibalize the brick-and-mortars, but likely that will be an acceptable tradeoff. (The web-based tail wags the brick-and-mortar dog.)
