Showrooming Gets Complicated: Assessing The 'Amazon Risk' Is Not So Simple
As a subject, "showrooming" is already contested ground, and so Placed’s new report on the impact that Amazon's mobile presence may be having on retail brick-and-mortar experiences will only add more metrics to the fire. The first wave of showrooming paranoia, generally supported by scant research that was too general to be helpful, revolved around the idea that people were popping open their smartphones in the store aisles, finding and buying better deals elsewhere.
Another more specific wave of concern zeroed in on the electronics categories and big retailers like Best Buy and Target, which actually removed Amazon Kindle products from its stores in apparent retaliation for perceived customer poaching by the online giant. Another corrective showrooming meme more recently suggests that brick-and-mortar retailers might actually be the main beneficiary of in-store smartphone use because so many mobile shoppers go to that store’s mobile site or app first.
And now the location analytic firm Placed comes out with study specifically on Amazon’s in-store mobile impact that not only reasserts the negative impact of showrooming at retail, but also suggests a much wider swath of merchants is at risk than we formerly supposed. Placed surveyed 14,925 mobile users in the U.S. and also measured over 1 billion location data points to understand the physical journeys consumers were making in the physical world.
Placed did some granular research that I have not seen done around showrooming. They looked at the Amazon shopper’s real-world profile, like the fact that they overlap most dramatically with Walmart shoppers (25.2%) and then Target (10.7%) and Walgreens (7.7%). But they also looked at where Amazon’s big spenders tend to shop -- which then embraced brands like Costco, BJs and Toys R Us as well as Victoria’s Secret.
The study then did a profile of showroomers -- people who claimed a propensity for shopping products in a store and then buying online. And it turns out that people with these behaviors do tend to be 20% more likely to shop at Best Buy and 15% more likely to shop at Target.
But when all of the numbers are added together, it turns out that according to Placed’s “Retailer Risk Index,” Bed Bath and Beyond, Petsmart, Toys R Us, Best Buy and Sears are the top five retailers most at risk from people showrooming at their physical locations and then buying via Amazon because these are the places admitted that Amazon showroomers tend to frequent.
But the results are even more involved than that -- in that retailers like Best Buy, Home Depot, Lowe’s and Sears are the most at risk from males showrooming, versus Kohl’s, Petsmart, Bed, Bath & Beyond and Marshall’s most at risk among women.
Cut the showroomers yet another way and the high spenders at Amazon tend to visit Victoria’s Secret, BJs, Bed Bath and Beyond, Toys R Us and Costco most often.
If we focus just on the mobile in-store price check behavior (via Amazon’s Price Check app), then those users were most likely TJ Maxx, Costco, Office Depot, AT&T Wireless and Toys R Us customers. In other words, the price check behavior is not just a function of product category but of user psychology -- the price-sensitive consumer. That idea is also borne out when the researchers looked at Amazon Prime customer, or those who get free two-day shipping from the online retailer for an annual membership fee. Among these Amazon Prime customers who also showed showrooming behaviors, they were more likely to visit Costco, BJs, Petsmart, Dick’s and Barnes & Noble.
The research here is certainly suggestive -- if not definitive -- of how people may showroom at particular retailers. The research is mapping showrooming behaviors on top of likelihood to visit certain stores. We are not getting profiles here of how people really are using their smartphones in specific retail environments to purchase via their phones or later online. It would also have been interesting to layer into these questions counterpoint questions about how many of these retail customers ended up buying from the brick-and-mortar physical or online store.
But Placed’s study does suggest how imperative it is for retailers to construct their own profile of customers’ mobile and showrooming behaviors in even greater detail. Without an understanding of how demographics, category, shopper habits, purchase levels, etc. impact the impulse to showroom in their specific store, retailers will be taking scattershot efforts at managing the new reality of the retail environment.