E-Commerce Times Talkback
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How can classic retail, the brick-and-mortar physical stores dotting our
neighborhoods, compete with the likes of Amazon and Zappos? Can real-world retail survive e-commerce? And if it can, what's the trick? How do retailers intend to meet this growing threat? We're now seeing something insidious that threatens the very heart of brick-and-mortar retail: showrooming. Showrooming is the practice of visiting a store to look at an item, but then buying it somewhere else -- usually from an online source.
B&M stores like Wallmart, with what might be called a limited sales-floor experience, may be able to match the prices of online competitors, especially with shipping costs included. But stores that offer the ammenities that many customers want (but would rather not pay for), like knowlegable staff and working (ie. plugged in and running) floor samples, probably can't. The obvious solution for such stores is to demand that suppliers sell them models that are either unique to the store, or are at least not available to online retailers. This has been done for decades in the computer business with re-branded items sometimes selling for double the price of the suppier's version. It's often done with mattresses and, I'm sure many other items as well (Sunbeam actually changes the brand-name (to Rival) of some of the items they ship to WallMart in order to avoid angering their other re-sellers). Often, the color, trim and features are altered to avoid giving away any similarity with competitor's versions. B&M stores should also emphasize the risk of getting used, rejected and "factory reconditioned" merchandise on-line that cannot be easily returned. B&M stores have advantages, but they've never had to emphasize them as such before, since online shopping wasn't a factor until recently. Now they need to let customers know why they should still exist. I hope they succeed; I don't enjoy ordering anything and hate the thought of buying cloths or anything with a large-screen or speaker online. You can't judge such things by the pictures on a web site.
Showrooming is nothing less than a combination of mooching, tax evasion and subsidization. Consumers are mooching off of brick and mortars for an experience they cannot otherwise obtain from online retailers. Consequently online retailers take advantage of product displays wholly subsidized by their competition (and their competition's customers). Similarly, the showroomers' shopping experience is subsidized by customers who actually support the stores in which these people window shop before making purchases online.
I failed to elaborate on my "tax evasion" reference in my previous comment. Consumers who buy online generally see the lack of a sales tax on transactions with out-of-State vendors as a "savings". It's not. In fact, it's tax evasion. Unless their State happens to be sales and use tax free (here in NH that is the case) then they are obligated to report online purchases and pay the appropriate amount of use tax due to the State.
That very rarely happens. So online retailers use it as a differentiator by enticing consumers to purchase their goods "tax free"...something a brick and mortar competitor cannot do because it is obligated to collect sales tax at the point of sale.
If Congress passes legislation to force the collection of sales and use tax at the point of sale for online retailers, that "price advantage" will cease to exist.