March 1, 2013

Is showrooming unstoppable?


Indie booksellers have been complaining for a while now about “showrooming” — whereby shoppers go to a brick-and-mortar store to look at books they’re interested in, then buy them from Amazon. But a new survey shows how “showrooming is crushing brick and mortar,” as a Forbes Magazine story puts it, throughout the marketplace. The survey shows how the phenomenon is especially hammering places like Bed Bath and Beyond, PetSmart, and Toys ‘R’ Us.

Conducted by Placed, a company that according to its website specializes in “location analytics,” the study specifically focused on people who were admitted Amazon customers. A New York Times report by Nick Wingfield explains, “The study relies on Placed’s panel of more than 14,000 mobile phone users who consent to have their locations tracked in exchange for store gift cards and other perks. Placed can tell when those people visit a particular retailer without them having to proactively report their store visits.”

So what exactly did the survey show? Per the Times,

Placed found that Bed Bath and Beyond, PetSmart and Toys ‘R’ Us were the retailers that Amazon showroomers visited the most, with Amazon showroomers 27 percent, 25 percent and 21 percent more likely to visit the three stores, respectively, than the average consumer.

When Placed examined Amazon showroomers by gender, it found Best Buy, the Home Depot and Lowe’s were the three retailers men were most likely to visit, while Kohl’s, PetSmart and Bed Bath and Beyond held the top spots for women.

A report from Business Insider by Jim Edwards observes that while the study shows that “Bed Bath & Beyond is most likely to suffer from its own in-store customers looking up cheaper stuff on Amazon … general retailers have less risk than those like BB&B, PetSmart and Toys R Us, which sell one-off purchases that are often more expensive than stuff sold at JC Penney or Target.”

The report’s findings resonate perfectly with other studies — see the recent Moby post on the Enders Analysis survey showing about half Amazon’s customers don’t browse but go directly to the items they intend to buy, for one example. However, many large retailers claim they’ve figured out how to combat showrooming. Target — as an earlier Moby report detailed — took a stand against showrooming Amazon’s own devices, dropping Kindles from its stores despite the fact that they sold well. A Mashable story reports that many companies are using Shutl to achieve same-day deliver service, just like you-know-who. And a Best Buy spokesman tells the Times that “showrooming is now dead to us” because the company matches the cutthroat prices of Amazon and other online retailers.

But in a column for Retail Week, Evan Schuman calls Best Buy’s statement “mind boggling,” saying that for the company to claim its pricing campaign has ended showrooming is to “exaggerate it to the point of absurdity.”

He cites a number of reasons for this, but this one may be most meaningful to indie booksellers:

This Best Buy effort will likely make a meaningful dent in its showrooming losses. But to truly slash showrooming (in reality complete elimination of showrooming is simply not mathematically possible) will require making the Best Buy shopping experience a much more pleasant, profitable and easy experience than working with a rival.

That involves strong customer service to generate trust and brand loyalty, something Best Buy has lost much of in recent years.

The Forbes piece cited above makes a similar observation, noting that “retailers focused on children were way ahead of the curve” on beating showrooming. ” Case in point: American Girl Stores, Build-a-Bear Workshops, FAO Schwarz. What all of these brands have in common is an experience-based, engaging offline strategy to get customers in stores and keep them coming back.”

Which is indeed a strategy that’s working for some indie booksellers right now, and it’s inspiring. Still, it’s hard to see how, in the long run, most bookshops can outlast the kind of discounting and tax avoidance that Amazon’s been allowed to get away with — the underpricing that’s behind the showrooming phenomenon. That’s where the real battle lies, and always has: in combatting loss-leader pricing. And don’t forget, as surveys detail the impact of showrooming cobwebbing out into the larger retail world, even in the book business the threat extends beyond just brick-and-mortar stores — I’ve noted before, for example, that ebooks sales seem to rely heavily on showrooming, so online retailers of ebooks are threatened, too.

Although, well, the company controlling 90 percent of America’s ebook sales probably isn’t worried. After all, it was Amazon itself that first exploded the phenomenon of showrooming on a largely unsuspecting public, with the invention, and corrosive promotion, of its Price Check App (see the earlier Moby report). Still, with about 40 percent of Amazon’s book sales coming from people who’ve looked at the book in a bookstore first, you’d think even the behemoth from Seattle would feel endangered.

But, hell, this is a company that doesn’t pay taxes in entire countries and has lost money just about every quarter they’ve been in business. They seem confident they’ll get by.

Dennis Johnson is the founder of MobyLives, and the co-founder and co-publisher of Melville House. Follow him on Twitter at @mobylives