Lets Hold the Panic About Retail Showrooming – It’s Driven by Research Errors

I discovered an excellent blog post (link here) this week about marketers being mis-led by major research mistakes. One of his main examples? How “showrooming” fears have been blown out of proportion..

Showrooming Is…? In case this is new to you, showrooming happens when someone looks at a product in the retail show room then purchases online (most often with their smartphone). Amazon is rumored to thrive on showrooming and even released an app so that bookstore browsers could scan bar codes with their phones then have Amazon ship them the books.

A few retailers have seemed to provide substance to fears when they have blamed poor financial results on showrooming. All this is fed by articles from digerati that are desperate to claim they have destroyed retail.

And that gives us a classic case of FUD – Fear, Uncertainty, and Doubt – about the impact of in-store mobile searches. But…the truth is stranger than FUD. So let’s start by turning the tables…

“THREAT ALERT…CAN AMAZON SURVIVE REVERSE SHOWROOMING?”. I reverse showroomed last weekend when I shopped printers at Amazon to evaluate options, then went to Best Buy and purchased the printer I wanted. In this case, I needed to check out options and focus my interest. But I wanted the printer RIGHT THEN to keep ahead of the curve getting things in place for my son’s freshman year of high school.

“THREAT ALERT…AMAZON STRUGGLES BECAUSE DEALS AREN’T GOOD ENOUGH!!!” Suppose I’m in Best Buy and the product I want is sitting on the shelf for $29.99. How much do I need to save through Amazon to put up with waiting several days for delivery? What about a $1,500 HDTV. How much do you need to save to have Amazon deliver it (without setup)?

The usual drips and drabs of online discounting aren’t enough (for me). So I buy online when there’s a reason – selection, dramatic discount, or pure simplicity of putting in an order while I’m at an airport.

Neither of these all-cap headlines really suggests an issue that threatens Amazon’s well being. But my point is that the world is far more complex than the one-dimensional thinking that has led to all cap headlines about showrooming. How did research mis-lead us here? Read on.

Showrooming And Research Errors. The article noted in my opening paragraph identifies two research mistakes that are quite common in today’s tech battles. Let me offer them in my own words:

1. We often confuse “have done behavior x” with “do behavior x all the time”. As in, confusing “I once saw something in a store then checked price on my phone” with “When I see something in the store I always check price on my phone then buy the absolute cheapest I can find even if it’s only a penny or two.” Big difference between those two.

2. We rely on questions that are asked of consumers that consumers can’t answer truthfully. Ask any criminal lawyer about how accurately people recall things and they’ll tell you recall of even important things is exceptionally poor. And recall on shopping habits? Horrific. Sadly some researchers don’t or won’t figure this out and ask anyway. (Shouldn’t we need “research licenses” before using Survey Monkey?)

How These Errors Feed Showrooming Fears. Showrooming fears have been driven astronomically out of proportion by these errors.

In the first error, industry decided showrooming is a serious issue based on finding that a lot of people “somewhere, sometime showroomed”. Except, as Mr. Rubinson notes in his post, that doesn’t mean scary trend. It only becomes a scary trend if people do it “a lot”.

And the factual truth he reports is that only 1-3% of iPhone users price compare on their phones an average of 1-2 times per month. In other words, 97%+ aren’t even doing this price comparison once a month.

In the second error, Mr. Rubinson notes that Media Post asked consumers to “predict the retail environment in 2020″. Huh? Retail experts can’t predict that – and they know about a lot of possibilities that consumers don’t. But consumers will ALWAYS answer whatever you ask so Media Post got answers and they said showrooming was a big problem. (Do people answer this way from years of training to “fill in the blank”? But, truth is that most research doesn’t even let us tell the truth with an “I don’t know” answer.)

The Consumer Market is Robust Enough for Both Online and Brick & Mortar. In reality, the market is robust enough for everybody. And while high profile retail closures are very noticeable (e.g. Borders Books), there are far, far more internet store closures than retail closures. Just consider how easily and quickly competitors can knock off an internet store.

I think the truth is that smartphones help the retailer – instantly. Having a mobile device in the store with me often means I spend MORE in the store on a given shopping trip. Why? Because I can answer my questions then and there – instead of having to come home to call friends or check the internet.

So shake off that showrooming sense of doom and dread and wake up to something far better. Like, what would happen if you really embraced the combination of retail and internet. Just this week Jerry Storch, chairmand and CEO of Toys-r-Us, observed that “The future belongs to brands that build best the consumer-facing network, incorporating stores, Internet, mobile, social and local components.” (Link Here.)

Now THAT’s a vision worthy of pursuit. And Amazon should fear retailers who crack that code. Because they’ll reap amazing sales power from the show room that Amazon can’t even touch.

Copyright 2012 – Doug Garnett – All Rights Reserved

About Doug Garnett
Growing businesses through television, DRTV, and all forms of video. Doug is a strategist, executive producer, director, author, & teacher.

9 Responses to Lets Hold the Panic About Retail Showrooming – It’s Driven by Research Errors

  1. enjoyed your blog and gratified that you referenced mine as well. Nice to meet someone else who knows when to challenge the echo chamber.
    Regards Joel

    • Doug Garnett says:

      Joel -

      Great to hear from you. Really enjoyed your write-up. Seems like we’re all fighting this plague of, as you note, the echo chamber. You are spot on for far more issues than just the showrooming example. But as a specialist in retail, that hit home with me.

      Cheers.

      …Doug

  2. Chris says:

    Doug, I really look forward to reading your posts these days. It’s great to see balanced and challenging assessment of things rather than just blind acceptance.

  3. Alan P. Carr says:

    I do the reverse showroom thing far more often than the other way. Not least because Amazon doesn’t seem to ship ANYTHING that isn’t book-shaped and made of paper, outside of the US, UK and Germany. I spend most of my time in Asia now, so I use Amazon to check reviews, then go and buy it downtown.

    I get sick and tired of people telling me that Amazon is some international monster. No, it’s not, it’s really not. It’s incredibly UK/US centric, and a real waste of time trying to order anything that doesn’t have pages.

    Cabelas on the other hand? Now THEY understand that the entire world is part of the online market and do all that Amazon do in terms of reviews, suggested goodies, wide choice etc. I often pay MORE for a good-quality item from there than some local cheap version, even though I also have to pay shipping on top and wait a week or two.

    If Cabelas starts selling the same range of books I’d switch in a heart-beat, if only because I could grab a few non-readable items at the same time.

    • Doug Garnett says:

      It’s great to get an international perspective. In the US market, part of Amazon’s publicity power is that they perform well financially. So it has struck me, even in our markets here, that Amazon’s power is a bit of a mis-direction.

      For example, they suggest Amazon’s so big they’ll do away with stores like Home Depot or Lowe’s. Except, when you dice down Amazon’s sales to just those competitive areas, they’re quite small. In fact, I wonder (but don’t have good data to answer the question) whether Amazon’s non-book/music/movie sales don’t fall into the 5% to 10% of any market that seems to be the natural level of online sales.

      Great to hear about Cabela’s.

      Cheers…

      …Doug

      • Alan P. Carr says:

        Yes, it does seem they’re huge online – but in general? Not so much.

        I should also add that from a marketer’s point of view they’re not so hot either. Used to be that you could make a reasonable living with some reviews and carefully selected links to Amazon. Today even my best Amazon-based site brings me chump change really.

        Certainly not enough to give up my day job, if I had one :)

        The international thing is quite surprising to me. I’ve traveled a lot around Asia and there are a LOT of middle-class consumers out here. Sure, maybe not as a percentage but we’re still talking many thousands, if not millions, of English-speaking spenders. People who will happily drop $300, even $3,000 on a good coffee grinder for example, yet Amazon won’t ship such a thing?

        If you ask they bleat on about not being covered by manufacturer’s warranties. Wow. So a company with the buying power and online presence of Amazon can’t lean on said makers and say ‘Make it so.’?

        Well it’s their loss I spose.

  4. Sean Ryan says:

    I too search for pricing but typically end up buying in a store. The internet is full of price slashing but with so many new names out there it’s tough to know what you’ll actually get or more importantly if they’ll be around should something go wrong. I work in Direct to Consumer Advertising and for most of my marketers it doesn’t matter where the sale come from. This presents a challenge for us to grade efforts. Bottom line for me though is if I’m paying for something significant I like to walk through a door I’m both familiar with and will remember where it is when something goes wrong. Best Buy sold me a TV that 5 months after using it got replaced by an installer at no cost to me; not from the manufacturer but from Best Buy. Regardless to who paid for it I wasn’t affected. Get that from Amazon.

  5. Dave Simms says:

    Big box retailers will often discount on the spot to some degree if you look like a hot prospect and show them an internet price right there on your phone. It feels sleazy to do, but I think places like Best Buy build in enough margin to make deals. Sometimes they do it, sometimes not, but it’s always worth a shot. I usually end up buying it right then anyway.

  6. Pingback: Challenge the Myths of Internet TV with Reality « Doug Garnett's Blog

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