“If Showrooming is so pervasive, why aren’t companies doing more to combat it?” This is a question we are hearing more and more. Companies, be it brands or retailers, realize that this problem is reaching epidemic proportions, yet seem to be doing little to change the dynamic. Why?
We can’t manage what we don’t measure. And we don’t know how to measure showrooming. Until now.
It is possible to define an objective measure that is applicable to both retailers and brands. Essentially we need to measure the “risk” of being showroomed. How likely is it that a customer will see our product at retail and then choose to purchase the item on-line at a discount?
The risk is a function of several factors
• How many of the SKU’s being investigated are available at both retail and the web simultaneously?
• How many web sites are discounting the product?
• How many products does each web-site carry?
• How deeply is each SKU being discounted on-line?
There are probably other factors that could refine the metric, but the above factors are clearly the ones driving the risk. Only once the showrooming risk is measured, can the management of that risk be addressed.
Two companies with an identical showrooming risk profile™ score may have very different underlying causes of their risk. Understanding the numbers behind the numbers is the key to managing the risk. Imagine two golfers return to the clubhouse after playing 18 holes of golf. Each shows a 103 on their scorecard which, among serious golfers, would not be considered a very good score. Before the golfers work on improving their game, they need to understand what is wrong with their game. One may have trouble getting off the tee, and one may have trouble putting. Two very different problems, but yield the same total score.
It’s the same with the showrooming risk profile™ score. Knowing the score is only the start, understanding what is driving the score is where the real improvement begins. Is it a single web site that is deeply discounting, or is multiple web-sites with moderate discounting? Or is it something else entirely?
Now that we have a metric, who should we hold accountable for managing that metric? The organization. The underlying causes, and solutions to showrooming risk can be found across the organization from purchasing to IT to sales. When showrooming risk is a corporate metric the corporation will work together to manage that risk. We are all responsible in some way, large or small, for helping improve the profit of our organization and the same can be said of our role in managing showrooming risk.
David Coleman is the founder of Brandoogle, a company that is focused on helping retailers and brands understand, measure and manage their showrooming risk. He can be contacted by e-mail at email@example.com.