March 02, 2012
We’ve long looked at the online-offline gap. This comes down to the challenge in connecting the dots between increasing levels of online research and the sheer volume of offline spending (95 percent of U.S. retail). This is ROBO: research online to buy offline.
Now we’re not only seeing things like retail inventory feeds (i.e., Milo), and mobile shopping and payments start to connect those dots, but they’re even starting to reverse the flow. In other words, flipping ROBO on its head: using offline research to facilitate online buying.
This is also known as “showrooming,” essentially using physical stores as showrooms for product research before buying from a more price-competitive online marketplace like Amazon. And of course smartphones, shopping apps, and cameras (read: barcode scanners) empower this.
Ironically the e-commerce players that were relegated to research tools under ROBO, are now getting their due in this new environment. The tables have turned on their offline counterparts, especially those who haven’t stepped up the challenge.
Amazon has followed this trend more than anyone, going as far as offering discounts on items scanned in stores, using its app that’s made for this very purpose.
See Me, Hear Me, Touch Me, Feel Me
But to what degree is showrooming actually happening? One indication was offered last month through a report from Pew Research. During the holidays, it reported that 52 percent of adult mobile subscribers used their devices in some way, while shopping in physical stores.
Overall, 38 percent called a friend for advice, 24 percent looked up reviews, and 25 percent researched better prices (both online and offline). Segmented by demo, the numbers skewed higher for users 18-49, urban, and college educated.
More importantly, when asked about the outcome, 35 percent said they made a purchase at the same store where they pulled out their phone. Glass half full, that’s good. But if you consider that mobile research drove away about 65 percent of mobile shoppers… not so much.
Breaking down those deserters, 37 percent didn’t purchase at all while 19 purchased the product online and 8 percent did so at another store. That’s a full 27 percent that bought somewhere else, due to the mobile information they were able to summon while in a given store.
Not Getting the Picture
So what does this tell us? As U.S. smartphone penetration reaches 50 percent, mobile shoppers are becoming smarter and more empowered.
In other words, embracing mobile shouldn’t be a choice for retailers if they’re going to beat Amazon et al, at their own game. That means launching apps — or working with retail feed aggregators like Milo – to offer personal recommendations and incentives to in-store shoppers.
But yet retailers continue to show laggard adoption of mobile product innovation. A December survey from AisleBuyer revealed that only 55 percent of retailers have a mobile app or website with m-commerce functionality.
Many provide store locators (87 percent) or product search (74 percent), but transactional features trail behind. Merchant-facing tools are even farther behind, showing little interest in arming clerks with tablets or smartphones to streamline customer service, inventory search or payments.
But its clear from the above Pew data that these tools – on both merchant and user ends – are becoming table stakes. These include inventory search, deals and loyalty, personal shopping, and payments.
We’re starting to see a little of this – albeit anecdotal – from retailers like Home Depot. But most of the innovation is coming from the tech sector, from companies like PayPal (which happens to power Home Depot’s mobile payments).
Another example is Shopkick – bucking the showrooming trend in lots of ways. Last month, it announced that its app drove $110 million in revenue for partner retailers in 2011. To date, it’s also reached 1 billion in-app deals, 5 million store walk-ins and 10 million product scans.
As it often does, this innovation starts at the National-local (chain) level before it moves down market to the local-local segment. But the tools will become more pervasive and democratized over time (just like what happened to SEM). Shopkick has even launched an SMB program.
Meanwhile a huge opportunity awaits whoever can fill this gap. Retailers can no longer afford to wait and see. Those that do will lose customers to e-commerce and bricks and mortar competitors. Milo founder (now with eBay), Jack Abraham perhaps said it best:
“Brick and mortar retailers have to be where their customers are. And where there customers are now, is on their phones.”
source: searchenginewatch.com: Customers are Mobile, Now Retailers Must Follow: by Michael Boland