In the last couple of days, I have been to two different retail stores and several websites in order to evaluate my options, compare features and prices before making the final decision to buy a TV (and I might visit a few more stores and websites before the actual purchase). This is a fairly common process that any diligent customer will go through before making a purchase.
While the retailer has to pay for a lot of overhead in maintaining sales staff and store rent and so on, e-commerce sites selling the same wares have lesser overheads allowing them to price their offerings more competitively. This is a problem that retailers are doing their best to overcome with better in-store experiences, service guarantees and the like.
In my research for options to purchase a TV, I realised that the key advantage a retail store offers me is the chance to physically interact with the product under consideration. I could read a hundred reviews and product descriptions, see photos and videos online, but it is still no match to actually handling the product before purchase. So, the retailers still provide good value to the customers that make the effort to go to their store, and this value is worth the 3-8% premium customers pay (over e-commerce alternatives).
But, the biggest risk to retailers is showrooming. This is when a customer goes to a retail store, handles the product, compares it with other options (all physically), solicits advise from the sales representatives, but finally makes the purchase on an e-commerce site for a lower price. This way, the retailer is taking the overhead for a sale being made by an e-commerce store, on which he earns nothing.
So, when a specialty food store in Brisbane, Australia posted a notice on its door saying "As of the first of February, this store will be charging people a $5 fee per person for 'just looking'. The $5 fee will be deducted when goods are purchased.", it came as no surprise to me.
But, it is simply not possible for every retailer to charge a fee for 'just looking'. The store has to provide some experience of value to the customer (like the TV retailer that allowed me to physically inspect the features and do a physical comparison with other alternatives) in order to justify the fee. Otherwise, its just shunning away potential customers.
While the retailer has to pay for a lot of overhead in maintaining sales staff and store rent and so on, e-commerce sites selling the same wares have lesser overheads allowing them to price their offerings more competitively. This is a problem that retailers are doing their best to overcome with better in-store experiences, service guarantees and the like.
In my research for options to purchase a TV, I realised that the key advantage a retail store offers me is the chance to physically interact with the product under consideration. I could read a hundred reviews and product descriptions, see photos and videos online, but it is still no match to actually handling the product before purchase. So, the retailers still provide good value to the customers that make the effort to go to their store, and this value is worth the 3-8% premium customers pay (over e-commerce alternatives).
But, the biggest risk to retailers is showrooming. This is when a customer goes to a retail store, handles the product, compares it with other options (all physically), solicits advise from the sales representatives, but finally makes the purchase on an e-commerce site for a lower price. This way, the retailer is taking the overhead for a sale being made by an e-commerce store, on which he earns nothing.
So, when a specialty food store in Brisbane, Australia posted a notice on its door saying "As of the first of February, this store will be charging people a $5 fee per person for 'just looking'. The $5 fee will be deducted when goods are purchased.", it came as no surprise to me.
But, it is simply not possible for every retailer to charge a fee for 'just looking'. The store has to provide some experience of value to the customer (like the TV retailer that allowed me to physically inspect the features and do a physical comparison with other alternatives) in order to justify the fee. Otherwise, its just shunning away potential customers.
CONVERSATION