BRANDOOGLE

Category: Retailers

  • The Showrooming Scorecard

    “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 dcoleman@brandoogle.com.

  • Showrooming is the New Shoplifting

    Showrooming isn’t technically a crime, but if you ask many of my clients they think it should be.
    Each year, showrooming costs retailers tens of millions in lost profits. Showrooming is when someone purchases a product online after researching it in a brick and mortar store. Last year, $42.3b was spent online and a large percentage of those sales were from showrooming. While exact numbers are difficult to determine, it’s clear that brick and mortar retailers are facing a critical challenge. Everybody showrooms. Who among us hasn’t seen an item in a store, checked prices, purchased it online, and then gleefully bragged about our savings to a friend?
    Unfortunately, my retail clients don’t share that same joy.
    By some estimates, as much as 48% of visitors to brick and mortar retailers are showrooming them…and doing it in plain sight.
    Showroomers aren’t hard to find. They are usually the person scanning items with their smartphone, punching a few keys, and then walking straight out the door—usually with a smile on their face. The problem can be even worse for retailers of high end, highly technical, or complex products. Their staff is swamped answering questions on product features and functionality, yet rarely closes a sale.
    Well-established brands with high-value, high-margin items are the most lucrative for online flea marketeers to exploit. Margins can be shaved with lower, overhead structure and customers can be reached easily through the Internet.
    Retailers can be at fault too. “We Match Internet Prices!!!” is not a leadership strategy, a marketing strategy, or even a pricing strategy. It’s a retailer’s suicide note.
    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.
    What is a retailer supposed to do?
    The answer is to fight back with a comprehensive battle plan…a plan that appreciates the changing retail landscape. Some ideas:
    1. Understand which high-value, high-margin items are likely candidates for showrooming.
    2. Learn how the product assortment and pricing stacks up against Internet vendors. Showrooming only occurs when a product is available in the store AND on the web. If it’s not on the web, the retailer is not going to get showroomed.
    3. Track the pricing and distribution of items online. Identify potential challenges. Identify the sources of any showrooming.
    4. Have frank discussions with branded goods vendors. Remind them that retailers still make up the lion’s share of most product manufacturers sales and profits and if they wish to be part of the assortment tomorrow, they must clean up their Internet presence today.
    5. Monitor over time and be vigilant. A clean product line can be showroomed in a matter of weeks.
    6. Don’t be afraid to take action. Whether you pull a product line, pursue a legal strategy, or simply host a frank “sit down” with a supplier, don’t be afraid to be aggressive.
    Unfortunately, there is no “silver bullet” to fix the showrooming problem. It’s going to be a complex and labor intensive fight. But it can be won. Retailers and their high-end brands still have a lot to offer that the Internet does not. The key for retailers is recognize those differences, understand that showrooming is a problem, and adapt their business models to aggressively compete in this changing landscape.

    David Coleman is the founder of Brandoogle, an online brand protection company and has nearly two decades of supply chain and brand management experience serving Fortune 100 and Fortune 500 clients.