Showrooming, Webrooming, and Operational Strategies for Competitiveness

Abstract

Showrooming (webrooming) refers to a consumer inspecting a product at a brick-and-mortar/BM (online) retailer before purchasing it from a competing online (BM) retailer. Despite recent adoptions of price-matching and free-shipping policies, show/webrooming remains prevalent. We model different product value information that consumers can learn by visiting a BM retailer and researching an online retailer, and study consumers’ show/webrooming behavior in a unified model. We confirm that consumers can engage in show/webrooming for informational purposes, but webrooming may also be driven by a non-informational purpose. We find that show/webrooming may respectively benefit BM and online retailers; in particular there exist win-win-win outcomes where both retailers and the consumers benefit from show/webrooming. We propose in-store research assistance for BM retailers and customer demonstrator for online retailers and show that these operational strategies may improve the retailers’ competitiveness in the presence of show/webrooming. Our results are found to be robust in several model extensions.