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“Showrooming” and the Next-Generation Retailer

On May 19th, The Age reported on a story that suggests the rise of smart phones and smart phone applications, spells doom for our struggling retail industry.

In the article, “The app crisis alarming Retail“, Adele Ferguson, shares insight into Amazon’s Price Check application and the response by Big W, to the growing practice of “showrooming”.

There is a pattern unfolding people! A pattern that was repeated again only in the last 15 years.

During the DotCom era in the late 1990s, we saw a similar phenomenon. At the time, it was being widely reported that Internet startups were threatening the very existence of big companies. Terms like “New Economy”, “Paradigm Shift” and “Digital Strategy” became commonplace and even more commonplace was the site of Corporate Executives struggling to find a answer.

Many years later, those that remained understood that the Internet represented a way of capturing not just the hearts of customers, but also their minds. Every single piece of marketing asset could be put to use on the Internet in a way that has customer engaging with the company with mutually meaningful outcomes.

Everything else was, and remains, essentially the same. The company must still have adequate plans in place for their six main areas of business. Distribution, Finance, Marketing, Team, Sales & Production.

Is there a crisis?

Semantia believes there is potentially a crisis but that crisis will only likely affect retailers that are unable to make the connection better where they are today and where they want to be if the changes were totally within their control.

In the B2B markets, online activity will remain largely as is. In this space, very little activity is based on impulse purchases. B2B procurement tends to go through long relationship-building sales cycles that make “showrooming” difficult.

In the retail sector though, there is a driver towards high-volume, low-margin and production-line accuracy. Where a season’s range must be bought in bulk and often more than a season in advance, retailers are without doubt susceptible to fluctuations in pricing. And, with a global economy truly in progress, price competition is on the rise from an increasingly international marketplace.

Think about it…

Your customers are always going to want what’s important to them. If price is important to them then they will search for the most price-competitive. If special offers and discounts are important, then that’s what will grab their attention.

When there’s something else that’s more important than money though, then that’s your opportunity to become their only choice. This means you have to really know who is your ideal customer.

Let’s take a look at on of our clients – PrixCar Transport Services.

As the leading car transport company in Australia and they got to be in this position, not because of the Internet. They became #1 because of the exceptional service the provide.

In fact, the Internet had also become a threat to their business, as car transport brokers came onto the scene offering “best fares” and serious bidding between car transport companies against each other, in the hope of being selected as the cheapest option.

What was PrixCar’s response?

PrixCar Transport refocused it’s online strategy on a segment of the market for which there is synergy between core values. And, it was not on price.

In our work with PrixCar, we set out to really understand their ideal customer profile and then we developed everything with that ideal customer in mind.

We found out that there was something far more important to PrixCar’s customers than price. So, instead of targeting everyone, we helped PrixCar Transport focus on a segment of the market that was the best fit for it’s services.

With this understanding of what is really important to our client’s customers, we were able to shape the experience for very high conversion rates.

Our whole approach was based on the Conversion Leadership Framework and has led to increased visitor rates, higher confirmed Page 1 rankings on Google and an ROI of 1,000%.

Leveraging the “Showroom” Effect

“Showrooming” is a label that’s applied to a segment of the market driven by price. This may not be your ideal market.

To become a leader in any market means first knowing who your market really is. After that it’s making sure you’re able to fulfill a need that’s unique to their circumstances.

Are your ideal customers price-sensitive shoppers or risk-averse, conservative bureaucrats? Do they make decisions based on logic and a well though out plan or do they prefer to be shown the answer. Knowing your ideal customer profile will help you decide.

Just as large corporations learnt by competing against Internet startups a decade ago, so can retailers learn today what it means to compete for their customers’ attention..

From a growth mindset perspective, the answer is not to prevent “showrooming” from happening. Instead, the answer would be to look for opportunities that leverage off of showrooming to become a point of preference for your customers.

The key is to develop a vision of how they fit into this vast electronic world.

What is it that you’re really contributing to your customers?

About the Author

SemantiaSemantia is a strategic technology services and advisory company. Through its specialty business divisions the company provides a comprehensive range of software development, systems integration, semantic web development, business process outsourcing, digital marketing, online marketing automation, conversion rate intelligence and business IT insights and advice. Semantia collaborates with clients to deliver solutions optimised for business success including increasing performance in sales and marketing, reducing errors and processing times for data & identifying new insights from analytics for leaders to make better informed business decisions.View all posts by Semantia →

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