Will 'showrooming' kill businesses?

[Meis]



Not sure you're getting the math...if you buy from the B&M store instead of going home and buying online, you're still spending the same amount of time, money, and petrol; you're just paying a higher price for the item in question. Obviously it's silly if the difference in price is relatively small or if it's a particularly inexpensive item, but you're still saving the difference between the two prices.

Also, for those of us that live in major cities with public transit (and use unlimited monthly passes or the equivalent) there's 0 travel costs... if I want to check out an item at Barneys before buying it from some online-only retailer it costs me no $ to do so.

 

[TWorksheets]



Also, for those of us that live in major cities with public transit (and use unlimited monthly passes or the equivalent) there's 0 travel costs... if I want to check out an item at Barneys before buying it from some online-only retailer it costs me no $ to do so.

While that's technically true if you don't take into account the time spent travelling, I think we're still confusing the point. The travel/time cost is irrelevant in both cases because you would have to pay for transportation if you were going to the B&M to try the item on or purchase it.

A senior partner at the BSG even commented on how few luxury brand reps even understood how much (20%) of the total online retail Amazon controlled. Put it this way. Back in 2005 and 2006, I spent a lot of time trying to convince boutiques and brands that they absolutely needed an online presence. A site with collections and contact information and stockists, at very least, and with e-commerce, if possible (closest connection to the customer). Some brands are still now only testing the waters. A lot of them still see online things as a fad, a trend. This is in 2012, people.

Wouldn't it be fair to chalk some of this hesitance up to the fact that clothing is a high risk item to buy online? If I buy a book, or iPod online I can be almost certain that I will still be able to derive some sort of utility out of it even if It's not exactly what I wanted. With clothing, if it doesn't fit or you don't want to wear it (due to styling, materiel, etc) it's 100% useless. I would personally be curious to hear what the relative cost of returns is for a clothing e-tailer vs. a site that sells books or electronics or something

 

[BLAUGRANA]

[Edit: misread your first sentence. oops.] You're right: if the price is lower and shipping is cheap and easy then nobody will care if Amazon is "cool" enough. Amazon is so big that they can sell cheaper than just about any competitor and offer things like free shipping. They'll probably have great SEO too, so if you go use your local B&M as a showroom and then google the product you're looking for, Amazon will likely be the first result you see, selling what you're after at a cheaper price than anyone else.

Hell, I have the Amazon app on my phone. I made a trip to a "Half Price Books" a few months ago. I went with the sole purpose of selling or hopefully trading some books. So I dropped my box off and then looked around. I hadn't been to one in forever and spent a good hour looking. I put the app to the test and it worked out great. Amazon was the same price OR LESS than Half Price Books. What's more they only paid cash for my books and gave me almost nothing. It's funny because going in I was like "how does this place stay in business" and then I saw the prices and what they give you for what you're selling and quickly figured it out.

Designers are also worried about Amazon's image as an off-price/low price site, a little like a bazaar, and they've been having issues getting designers. The only real success so far has been their MyHabit flash sale site.
You also have to realize, to really comprehend the situation, how behind the curve luxury brands and retailers are in terms of understanding and using the digital landscape. A senior partner at the BSG even commented on how few luxury brand reps even understood how much (20%) of the total online retail Amazon controlled. Put it this way. Back in 2005 and 2006, I spent a lot of time trying to convince boutiques and brands that they absolutely needed an online presence. A site with collections and contact information and stockists, at very least, and with e-commerce, if possible (closest connection to the customer). Some brands are still now only testing the waters. A lot of them still see online things as a fad, a trend. This is in 2012, people.

Their shoe site, I can't for the life of me think of the name of it, has a TON of designers on it and rivals Zappos and Piperlime. Piperlime is a bit smaller than the other two, but Endless (that's the name) and Zappos are both big and Endless has some bigger name designers.

At the end of the day I think the small designers will stay away. You may see some collaborations here or there and even some buyouts, but I don't see some of them who actually post here on Styleforum joining forces with an Amazon.

I agree on the online presence. I keep telling my employees this when a store in town here closes. I'm either like "did you see their website" or "they didn't have an online presence." You really need to be in a big market to get away without one or have been in business for some time.

 

[Find Finn]



I've purchased furniture found on the web from the US and Europe and shipped to Asia. Arranging shipment was not a pointy-clicky task.
Size and weight determine cost of shipping, and once you're sofa, refrigerator and automobile large you're well beyond the well-known shipper's limits.

Furniture is one thing as they are easy to see quality etc. from a good picture and fabrics etc. come from big manufacturers, so if it says Kvadrat fabric you know what it is.

I was wondering regarding f.ex. cars, as people around here are complaining that main dealer showrooms are to big and expensive, so if they closed down and you could only buy a brand new car via their website, would you?

I have been looking a used MB's and BMW's lately and some of the dealers 100-500km away offer to ship the car to you, which means you buy a car from a picture without test driving it etc.

While that's technically true if you don't take into account the time spent travelling, I think we're still confusing the point. The travel/time cost is irrelevant in both cases because you would have to pay for transportation if you were going to the B&M to try the item on or purchase it.

Someone got where I was getting at.

 

[Raindrop]

Free shipping and return is what kills B&M lol

 

[LA Guy]



Free shipping and return is what kills B&M lol

Lack of it is what makes a webstore not competitive. Study after study shows that tacking on high shipping during the checkout period makes people leave their baskets. Free shipping and returns should be your standard. If it is not, second best are low cost, set price, options. Making people pay more shipping for more expensive goods is one of the most stupid policies I've seen, but even some very good stores do this.

 

[impolyt_one]

I have no interest in offering free shipping and returns, no matter what kind of store I have - I feel that too is eating away at the retail model. Look at styleforum, where people will take advtantage of that and order three sizes of the same thing to try on, with the intent to keep only one. As a retailer I'd not want my merch floating around like that, terribly inefficient. If it means less sales, so be it - shipping is too expensive and having someone vet the in and out on merch all the time would cost money too. It could pay for itself, but the idea of sending a customer a sloppy thirds item doesn't sit well with me, and I say the same as a customer of a store - I've gotten shoes with creased toeboxes and nicks in the soles, I might as be buying **** used at that point.

 

[wogbog]



Study after study shows that tacking on high shipping during the checkout period makes people leave their baskets.

I've done this at least a half dozen times. Probably more. And I almost didn't buy something from Nomad because I thought their "buy more, pay more for shipping" policy was just plain silly.

 

[zippyh]



Their shoe site, I can't for the life of me think of the name of it, has a TON of designers on it and rivals Zappos and Piperlime. Piperlime is a bit smaller than the other two, but Endless (that's the name) and Zappos are both big and Endless has some bigger name designers. 

Zappos is owned by Amazon btw.

 

[PhiPsi32]

I have no interest in offering free shipping and returns, no matter what kind of store I have - I feel that too is eating away at the retail model. Look at styleforum, where people will take advtantage of that and order three sizes of the same thing to try on, with the intent to keep only one. As a retailer I'd not want my merch floating around like that, terribly inefficient. If it means less sales, so be it - shipping is too expensive and having someone vet the in and out on merch all the time would cost money too. It could pay for itself, but the idea of sending a customer a sloppy thirds item doesn't sit well with me, and I say the same as a customer of a store - I've gotten shoes with creased toeboxes and nicks in the soles, I might as be buying **** used at that point.

I hear you, but this is the face of e-commerce. I expect that vendors will factor in the overhead associated with liberal return policies either by increasing the price or accepting a lower margin on the sale.

 

[LA Guy]



I have no interest in offering free shipping and returns, no matter what kind of store I have - I feel that too is eating away at the retail model. Look at styleforum, where people will take advtantage of that and order three sizes of the same thing to try on, with the intent to keep only one. As a retailer I'd not want my merch floating around like that, terribly inefficient. If it means less sales, so be it - shipping is too expensive and having someone vet the in and out on merch all the time would cost money too. It could pay for itself, but the idea of sending a customer a sloppy thirds item doesn't sit well with me, and I say the same as a customer of a store - I've gotten shoes with creased toeboxes and nicks in the soles, I might as be buying **** used at that point.

You assume that there is a correlation between free shipping and returns and return rates. This correlation simply does not exist. If you don't have free shipping and returns, unless you have a "all sales are final" policy, something that a vendor can only afford if their prices are far lower than those of their competitors, you are just losing sales. Put it this way - if I am not sure whether size X or size Y fits me, the only thing constraining me from buying both sizes, and returning 1, rather than taking a gamble, and then returning it and getting the other if it does not fit, is whether I can afford the combined cost of 2 items, even for a short time.

There is a correlation between return rates and certain types of items. However, some categories which have high return rates are also the most popular categories, so it's sort of a pick your poison type of situation.

 

[PhiPsi32]

+1

All other factors aside, you have to look at the market. To compete with large retailers offering liberal policies (e.g. Nordstrom free shipping and free returns), retailers face the decision of accepting lower margins or going out of business.

On a broader scale, it's not just about e-commerce. The rise of big box retailers such as Walmart, Home Depot, Blockbuster, & Best Buy displaced local small businesses competing for the same customers. As a kid, I remember shopping with my parents at the local hardware store and picking up a movie from the independent rental shop. Now, I can drive half way through the county without seeing a locally owned shop. With the advent of the internet, big companies like Best Buy and Blockbuster are also feeling the pain. So phenomena like e-commerce and show rooming are just the next stage in an evolving market place.

 

[London]

Mr. Porter is coming to eat everyone's lunch.

 

[BLAUGRANA]

Zappos is owned by Amazon btw.

Interesting. I did not know that. So they own the two biggies.

 

[Gus]

Unless you are the exclusive source of a product, don't bother building a web retail business these days unless you give free shipping and returns or charge a very low flat rate. But even a flat rate will limit your upside potential.