The international e-commerce boom has brought with it a significant change in consumer habits, giving rise to two very interesting trends whose popularity has soared in recent years. We are talking about showrooming and webrooming, two ways of carrying out the buyer’s journey, which despite their similarities, are very different in practice.
A Nielsen Global Connected Commerce survey conducted in 2016 revealed that most consumers are informed online before purchasing a product or service. Although this survey did not specify whether the conversion took place within or outside the digital world, it did highlight the growing importance of the Internet as an informative and therefore essential means of converting customers.
Other research in retail environments has gone a step further, showing the existing ramification between showrooming customers (which culminate the sales cycle in the online store) and webrooming (which make their own in the physical store).
The differences between showrooming and webrooming are remarkable, but before delving deeper into them, it is worth knowing precisely what each of these trends consists of and what their strengths are. Will you join us?
Showrooming, when ecommerces take advantage of their physical competitors
According to a report published by the Columbia Business School Center, the term showrooming was coined in 2010, when various media claimed that Best Buy had become a “showroom for Amazon. But what exactly is the showrooming phenomenon and why has it increased in recent years?
Consumers showroomers are those who visit the physical store to know in detail the products and services of it, overcoming the obstacles of e-commerce (trying on a shoe, for example), but makes the purchase through the Internet. That is to say, it is informed in the physical store to carry out the conversion in the online store.
As is evident, the practice of webrooming has harmed small retailers who have not known how to make the digital leap or whose development is at an early stage and still has no presence on the Internet. One of the main beneficiaries of showroomers are e-commerce giants such as Amazon, AliExpress or eBay.
But how exactly is the sales process in showrooming? First, a particular customer (a 25-year-old hiking enthusiast) visits the nearest branches of Decathlon, Sprinters and other similar stores in search of mountain boots and trekking. After trying on a dozen pairs, he decides that the Lowa Renegade GTX are perfect – moreover, it has become clear that the price range you’ll find in any store.
But then, this buyer leaves the physical store and searches this model on the internet, comparing prices on Amazon, eBay and other popular marketplaces, ending the sales process in this channel. What has happened from the merchant’s perspective? While Decathlon and other retailers have ‘cultivated’ this sale, the conversion has been scored by Amazon and other ecommerce. Injuto? That’s possible, but that’s the showrooming sales process.
Obviously, many companies have become aware of this trend and, far from making it their enemy, they have known how to adapt. Sephora, for example, makes it easier for customers to navigate through mobiles and tablets while they are in their physical branches, thus complementing online and offline channels. Other companies simply encourage their customers to pick up the products in the physical store in order to save on shipping costs, which is an excellent strategy.
Webrooming, or how to take advantage of ecommerces to enrich the local merchant
According to the latest statistics, 78% of consumers claim to have searched for products online at least once in the last 12 months. Moreover, according to a survey by Merchant Warehouse (now Cayan), 80% of local mobile searches end in a sale, and about 75% of those sales are made in the physical store, sometimes on the same day.
The customer of the 21st century is undoubtedly a digital native, which means he uses digital channels for shopping. Contrary to general opinion, webrooming is more common and has grown faster than showrooming.
In this case, webroom customers are those who visit the virtual store first to know the products and specifications of the desired products and services, benefiting from the advantages of this channel (compare prices quickly, for example), but that ends the purchase process in the physical store. That is to say, it is reported in the online store to carry out the conversion in the physical branch.
But what exactly is this consumer’s buyer´s journey like? Let’s see: a 30-year-old clerk decides it’s time to tour the Great Wall of China and begins to get information through the most popular portals on the Internet. The most interesting tours are found in Viator.com, Viajes el Corte Inglés, Halcón Viajes and other established companies in the sector, who also respond to your emails about the average cost of accommodation, tourist visa and other aspects.
When this clerk has a clear idea of the details of this adventure, she disconnects from the Internet and visits Viajes El Gorrión Feliz, a travel agency located at the end of her street, whose manager she also knows as a member of her husband’s football club. While Viajes El Gorrión Feliz records this sale, Halcón Viajes and its competitors have limited themselves to cultivating it, because despite having a physical branch, it is not in the immediate vicinity of this office worker’s home.
Webrooming is responsible for the loss of customers and massive sales on AliExpress, Amazon and other ecommerces. However, many of them have been able to catch up to minimize the impact of webroomers on their quarterly profits. The most common way to combat this trend is to implement loyalty programs through a mobile application or offer online coupons, which can only benefit in a physical branch of the same company, rather than in the competition.
Having clarified what webrooming is, it’s worth delving into the less obvious differences between showroomers and webroomers, as well as how they benefit and harm online stores and traditional retailers.
What are the main differences between showrooming and webrooming?
Although showrooming and webrooming are trends present in consumers of all ages, gender and purchasing power, statistics show that young people bet on the second way to buy products. Urban Land Institute carried out a survey that showed that more than half of the millennials usually get information on the Internet before going to the physical store and purchasing the desired product/service, compared to 11% of this public that opts for showrooming.
This survey, however, contradicts to a certain extent the one carried out by the NPD group, which states that generation Y goes out to lunch/dinner one day less per week than their counterparts in 2007. However, the home-cooking sector is perhaps the exception that confirms the rule, due to the irruption of services such as Just Eat or Glovo, which are changing the consumption habits of the millennials.
Acceptance at festive events
But the target is the only differentiating factor between showrooming and webrooming, because also the calendar influences notably. For example, Black Friday, the January sales and other dates indicated cause an imbalance in the adoption of these trends, according to a report by TC Group Solutinos, which states that webrooming is imposed with ease during Black Friday, the day that inaugurates Christmas shopping, when pedestrian traffic grows 11% in Spain.
Even during Christmas, showrooming loses ground in favor of webrooming, as it is common for families to be informed in advance of toys, leisure experiences and so on on the Internet, before making these purchases in person.
Perception of the price of the product…
Another of the most obvious differences between showrooming and webrooming lies in consumers’ perception of the price of products and services. Are they necessarily more expensive in online stores? That’s what customers surveyed in The Rise Of Webrooming: A Changing Consumer Landscape report published on RetailPerceptions.com believe.
3 out of 4 consumers surveyed (75%) believe that ecommerce and other online businesses are ideal for gathering information, while the best value for money is found in physical stores. The cause of this perception, far removed from reality, can be found in the expenses associated with delivery, which disappear in offline purchases. This leads us to the following difference between these trends:
…and shipping costs
A study by Cayan (formerly known as Merchant Warehouse) revealed that 75% of consumers prefer to visit and shop on-site if you can save on shipping costs. This ‘aversion’ to the added costs of ecommerce has led Amazon and other industry giants to offer free shipping on some of their products.
On the other hand, Cayan’s researchers discovered that the immediacy of receiving the product also influenced webrooming customers. In addition, 37% said that if necessary, they would prefer to return the product to the physical store rather than via the internet.
Showrooming, a threat to offline business
Traditional businesses that have lagged behind in the digital revolution recognize the showrooming trend as a serious threat to their business, which is reasonable. What’s the point of helping a customer if the conversion will be scored by the competition? That’s why webrooming consumers have compensated for this problem by searching for information on the Internet, comparing prices, and going to the nearest physical store to buy that same product, without the hassles of shipping or the expenses associated with delivery.
One of the causes of the popularity of webrooming lies in the lack of confidence of a part of consumers in e-commerce, by the few guarantees perceived in the processes of chekout and shipments.
Multi-channel e-commerce to benefit from showrooming and webrooming
But can’t companies take advantage of showrooming and webrooming? Isn’t it possible to reconcile both trends for the benefit of the same company with physical and online presence? Of course it can! In contrast to businesses that concentrated on omnicanal sales in the beginning (see Amazon before the opening of Amazon Fresh, Amazon Books and other physical branches), the future of e-commerce is clearly multichannel.
Showroomers and webroomers are partly responsible for the rise of multichannel commerce. For any business, offering consumers a cohesive experience across multiple channels is an excellent way to encourage them to interact with the brand both inside and outside the digital world. Some statistics also suggest that retailers with two markets (online and offline, for example) generate 190% more revenue than those with only one.
On the other hand, many companies have become aware of the detrimental effects of webrooming on their business model and have decided to stop this ‘leakage’ of customers to the competition. A good example is Walmart, which in addition to launching its own online store (thus adding to the multichannel trend) has chosen to adjust to the maximum their shipping costs and improve the speed of delivery, in order to reduce these and other frictions in the online purchase.
Of course, there are many differences between showrooming and webrooming. Both trends, however, show that the emergence of e-commerce has forever changed consumer habits. The future of these forms of purchase, moreover, is very promising, so it is not strange that companies are actively exploiting both showroom shopping and webrooming.