Webrooming Signals Online Retail Decline: UMD Marketing Expert

Nov 20, 2014, 16:32 ET from Robert H. Smith School of Business

COLLEGE PARK, Md., Nov. 20, 2014 /PRNewswire-USNewswire/ -- Post-recession shoppers, some cautious, others shortcutting to bargains, are increasingly webrooming.  

The tactic involves studying prices and products online, then purchasing from brick and mortar stores.  Consequently, "look for mall and store traffic to increase and begin to threaten online sales volume," says P.K. Kannan, Ralph J. Tyser Professor of Marketing Science, at the University of Maryland's Robert H. Smith School of Business.

Contrasting "showrooming's" in-store browsing followed by online purchasing, webrooming has prompted Amazon to open offline stores for the holiday season in New York and San Francisco.

In the following commentary, Kannan says a showrooming decline looms during webrooming's rise.

"In recent years, we've heard a lot about showrooming shifting the sales of big ticket items from offline to online stores. Such items, especially electronics, remain popular with holiday shoppers, so this trend continues. Consequently offline retailers selling branded, standard products will continue to see sales volumes being eaten away by cheaper online stores."

"But look for showrooming's effect to decrease in coming years as webrooming increases, especially for holiday shopping. Offline stores will benefit from a likely sales volume shift from online stores. The reason is two-fold.  The price differential between online and offline purchases – significantly for standard, branded products – will decrease as taxes are levied on online purchases on top of shipping costs that consumers bear. This is further compounded by the tendency for holiday-season consumers to be short of time, plan less, and want immediate possession of the items.

"Secondly, attributes such as quality and fit, besides cost, play a much more important role for non-standard items like dresses or scarves. Also, when prices vary significantly across outlets online, consumers start doubting the quality. These factors make physical inspection of the products even more important. Again, offline stores benefit.

"The pendulum is swinging back, at least for now, to the offline retailers. Consequently, webrooming should be a real concern for online retailers especially during the holiday season."

Kannan serves on multiple academic journal editorial boards, has consulted for various firms, and has taught courses to corporate executives on pricing, customer relationship management, new product development and Internet retailing. His research focuses on new product-service development, design and pricing digital products and product lines, marketing and product development on the Internet, e-service, and customer relationship management and customer loyalty.  

Contact him at pkannan@rhsmith.umd.edu.

Additional contact: Greg Muraski, 301-892-0973 or gmuraski@rhsmith.umd.edu

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SOURCE Robert H. Smith School of Business