By Jim Porçarelli, Active International
It’s an all-too-familiar sight these days. A man walks into a local retail establishment. He browses the products. He finds one he likes. He tests it out, asks a few questions of a salesperson -- and then snaps an image of the product’s barcode with his cell phone and walks out the door.
That retailer just did all the heavy lifting for what ultimately ended up being an online purchase through Amazon.com, which -- more than likely -- offers a noteworthy price break. This trend, known as “showrooming,” is one of the single greatest challenges facing brick-and-mortar retailers today. Even those with robust online presences, like Target, Walmart, and Best Buy, are scurrying to keep up by upping their online inventories, offering exclusive products, encouraging in-store pickup for online sales to save on delivery fees, and matching online prices and offering free shipping.
But ultimately, Amazon is winning where it matters to the recession-traumatized customer: price. According to a William Blair & Co. study, Amazon is offering prices 14% lower than Target's and 9% lower than Walmart's. And while most retailers once hoped that often-substantial shipping costs would dissuade online shoppers, services such as Amazon Prime (which offers free shipping and other benefits to Amazon customers for $79 a year) and companies like Zappos (the online shoe retailer that famously offers free domestic shipping and returns) are quickly breaking down any e-commerce hesitations that once existed in the minds of customers.
So how can retailers and manufacturers better compete with Amazon and other Internet giants in an age where all the rules of consumption have changed? Brick-and-mortar companies can beat themselves over the heads all day long trying to lower their prices. But ultimately, that’s a losing proposition. Rather, retailers and manufacturers need to consider the ways in which they can make better use of their existing assets, add value to the shopping experience, and foster customer loyalty through exceptional interactions. The following are ways in which successful companies are doing j