Jan 17, 2013

Amazon Prime & Showrooming: Can Mobile Apps Save Retailers?

Amazon winning the 'Retailer of the Year' award at the National Retail Federation convention at New York this week would not surprise any consumers, though it's an interesting decision by NRF mostly comprising brick-and-mortar retailers. Are they surrendering to Amazon or have they figured out a way to stop the juggernaut?

I am a heavy Amazon Prime customer. We hardly went to a retail store in the past holiday season. It's been a life saver for buying last minute gifts, especially for birthday parties (that kindergarteners seem to have every week!) Over the last 1.5 years, Prime missed its delivery estimate only once (in extenuating circumstances - the week of CyberMonday!)

Amazon Prime is probably the greatest business model innovation since Apple iTunes. In one stroke of genius, Prime addressed the biggest concerns against eCommerce - 1) shipping cost per shipment - that consumers have a strong aversion for & 2) not being able to plan or rely on when the shipment would arrive. The free Instant Videos made it an even sweeter deal. 

Amazon is also becoming the single destination for all product research with a treasure trove of customer reviews. They seem to be taking it to the next level by offering peer-to-peer crowdsourced customer support for brand manufacturers, as I found out from this email last week.

What retailers seem to be most afraid is 'showrooming' - customers checking out products in a store and buying online for cheaper prices. The mobile apps (Amazon PriceCheck, Red Laser, ShopSavvy etc) make it ridiculously easy. Scanning a barcode in-store is still a bit awkward with the disapproving glances of store associates, but it's here to stay.

However, mobile is a double-edged sword. Just as I can search prices online, I can also do the research on my mobile and buy from the store, as I have done several times. Many customers still prefer to see the items before buying and like the instant gratification. The ease and convenience of returns is another key reason. Shopping in a mall will also continue to be another favorite 'American pastime' :-)

Instead of fighting the inexorable 'showrooming' trend, why don't retailers embrace it? Most retailers seem to focus on deals and coupons for their mobile apps today, but instead of stopping there, they can even make it possible to access Amazon (or other online stores) from their own apps. This might sound crazy, but a motivated consumer will always research prices & reviews online. You might as well make it transparent. If people check out product reviews on Amazon and then buy in-store (if the price difference is not huge), it'll be a sweet revenge! 

Unlike online stores, brick-and-mortar stores simply cannot stock every model, color & size. If the consumer can check out the item in-store (as a 'showroom'), research reviews on mobile (with a bar code scan) and order the needed SKU from the retailer's online store after a real-time availability check avoiding a stockout, 'showrooming' might not be such a dirty word!

Retailers are clearly fighting back with mobile. At NRF, Macy's demonstrated how an intimate mobile loyalty channel can be a 'silent salesperson' even after consumer leaves the storeIt's ironic that while NRF calls Amazon 'Retailer of the Year', Mobile Commerce Daily voted Walmart 'Mobile Retailer of the Year' - showing the blurry boundaries in multichannel retail! It'll be interesting to see what role mobile plays in this ongoing battle.

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