Identifying Key Showrooming Risk Factors
Each year, showrooming costs retailers tens of millions in lost profits. In 2013, $42.3b was spent online and a large percentage of those sales were from showrooming.
Showrooming is when someone purchases a product online at a discount after price shopping that item online or at a brick and mortar store.
Well-established brands with high-value, high-margin items are the most lucrative for online marketers to exploit. Margins can be shaved with lower, overhead structure and customers can be reached easily through the Internet. But is your brand at risk for being showroomed? Brandoogle’s proprietary software has identified some common characteristics.
- Brand is well established
- Product is priced over $50
- Product has high margins
- Product is currently sold at full price at retail
- Product has universal sizing (one size fits all)
- Product has a high value to density ratio (shipping costs are a fraction of value)
“At-Risk” Retail Categories
Yet despite this looming menace, most retailers don’t know where to begin. Most retailers ignore showrooming altogether. They tend to spend their time and money fighting tangible threats like shoplifting. Yet, shoplifting only occurs in a fraction of 1% of all store visitors. Showrooming threatens a retailer’s existence.The key to combating showrooming is to eliminate the opportunity for showrooming to occur in the first place. That means addressing inventory assortment. Showrooming can really only occur when what’s available in the store is also available online. Therefore, preventing showrooming starts with an assortment plan that recognizes the risk before inventory is ever purchased. Technology now exists to measure showrooming risk comprehensively and analytically. Brandoogle has developed and perfected that technology.
Questions? Comments? Interested in learning more about Brandoogle? Please feel free to contact us at Questions@Brandoogle.com or call us at (734) 657-8779.
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