The rapid rise in the use of smartphones has brought a new curse on brick-and-mortar retailers: showrooming.
That’s when shoppers visit a store to try out products and then buy them cheaper online from Amazon or another website — often making their purchases on a smartphone in plain view of the store’s staff.
To combat showrooming, Best Buy and Target recently promised to match the prices of online competitors, but they’re not the only chains that should be worried about losing sales to Amazon.
A new study by Seattle startup Placed identifies home-goods chain Bed Bath & Beyond as most at risk of becoming a showroom for Amazon, followed closely by PetSmart and Toys R Us.
The survey — based on responses from nearly 15,000 U.S. consumers, as well as an analysis of their movements through the physical world — also puts Costco Wholesale on notice that its customers have no qualms about showrooming.
While it’s unclear how many Costco customers use the chain to test-drive products before buying them from Amazon, Placed believes there’s enough overlap to raise the warning flag.
Amazon Prime members, who pay $79 a year for free two-day shipping of their online orders, are 45 percent more likely than the average consumer to shop at Costco, the study found. (By comparison, Costco members pay an annual fee of $55, or $110 if they want a 2 percent reward on most purchases.)
Also, Prime members who tend to showroom are 38 percent more likely than the average showroomer to visit Costco, meaning the chain’s customers regularly shop on Amazon and are adept at using technology to find deals.
Amazon promotes a free mobile app to encourage customers to check prices on its website while browsing in stores. What’s more, it’s known to play hardball: In 2011, it offered a special discount to holiday shoppers who made a purchase on Amazon after using its price-check application.
“I think Costco should be scared,” said David Shim, founder and CEO of Placed, a location-analytics firm backed by Madrona Venture Group. “For Amazon to carry bulk items is not a stretch. It could quickly adjust its merchandise mix and highlight the fact that it has similar products as Costco and can get them to your house in two days.”
The Placed study concludes that showrooming is not media hype, but rather a serious threat to physical stores.
Shim recommends that besides price-matching, stores also provide fast and easy returns or a unique merchandise mix to set themselves apart.
“If you’re not being cannibalized by showrooming, you can take steps now to go on the offensive,” he said.
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