Is Showrooming a Problem For E-tailers?
Similar to showrooming at physical stores, consumers are shopping at some websites, but then going to other sites to make a purchase at a cheaper price.
That’s the view of John McCarvel, president and CEO of Crocs, Inc., in explaining why internet sales in the Americas region fell 32.8 percent in the third quarter to $11.2 million.
"We’re certainly pleased to see that on Amazon.com in July, 23 of the top 100 styles sold were Crocs," Mr. McCarvel said on a conference call with analysts. "However, we believe we’re seeing some of the same showrooming challenges experienced by retailers in electronics and other categories that is impacting Crocs’ direct growth of our own already significant e-commerce business."
Crocs has built a "sizable e-commerce business in the U.S. that was built up years ago ahead of other brands." With increased distribution at Amazon.com, Zappos.com, Shoebuy.com and other websites, a portion of that business is moving away. The offer of prime shipping capabilities on Amazon adds to the incentive to shop elsewhere.
"So we just see it as a shift more than it is actual consumption dissipation," says Mr. McCarvel.
He also implied that price is often lower elsewhere due to algorithms that gauge online pricing. Mr. McCarvel added that the company is "not chasing revenue by giving away margin dollars" to lift sales in its own internet business. Crocs.com over the weekend was offering a 30 percent discount on its classic clog model that seems to be most heavily promoted elsewhere.
Asked whether selling in more promotional e-commerce or retail environments would also impact its physical stores in the U.S., Mr. McCarvel said expansion beyond the Cayman clog to boots, loafers, and other items is helping Crocs own stores offer more limited edition and segregated product to avert direct price competition.
"Is it going to be perfect?" said Mr. McCarvel. "The answer is no, but it is going to take us a little bit of time to work through that. But there’s a clear strategy and plan in place to be able to make it a win-win situation."
Among the majors that have launched price-matching policies due to showrooming concerns is Best Buy and Staples, while Target and Walmart don’t. Apparently a more complicated process, shoppers at bestbuy.com and staples.com have to call a toll-free number to verify a price match.
- Crocs Inc. Reports Third Quarter Financial Results and Announces 15 Million Share Increase in Share Repurchase Authorization – Crocs
- Q3 2013 Crocs, Inc. Earnings Conference Call – Crocs
- Pricing & Promotions – Staples
- Best Buy Low Price Guarantee – Best Buy
- All About Pricing information – Target
- Internet pricing – Walmart
Is showrooming a similar challenge for vendor or retailer websites? Will price-match guarantees and other showrooming defense measures eventually arrive online?