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According to Wikipedia, the word “showrooming” was coined in the 2010s. The earliest reference I can find is in a Wall Street Journal article dated April 2012, which opens as follows:
“Shoppers who scope out merchandise in stores but buy on rivals’ websites, usually at a lower price, have become the bête noire of many big-box retailers.”
By September 2012, showrooming is being described as a “commonly held belief”, and being dismissed as a falsehood by the CEO of Best Buy.
But the idea of showrooming was mooted many years previously, in discussions between Jeff Bezos and HP. Nick Earle, then an executive with HP, mentioned this in a keynote speech in June 2000.
During his speech, Earle recalled a conversation he had with Jeff Bezos, the founder and chief executive of Amazon.com Inc., an HP client. When Earle asked Bezos to describe a “killer application” from Amazon.com’s perspective, he described a handheld device with a wireless link and a bar-code reader that would enable customers to scan in a book from another retailer, find out how much cheaper it is sold at Amazon.com, and then order it online for next-day delivery. “We will make one,” Earle promised.
I cited this conversation in 2004, as evidence that Bezos got ecosystem thinking. What I hadn’t realised at the time was that he had basically invented the iPhone. And he had had the idea of showrooming, over a decade before the word was coined.
So I asked Nick (via Twitter) whether HP had ever made such a device.
No they didn’t!
— Nick Earle (@nearle) August 2, 2017
David Jastrow, HP Keynote embraces ecosystem thinking (CRN, 15 June 2000). I have corrected the misspelling of Earle’s surname.
Thomas Lee, Best Buy’s new chief is selling from Day 1 (Star Tribune, 8 September 2012)
Ann Zimmerman, Can Retailers Halt ‘Showrooming’? (Wall Street Journal, 11 April 2012) (paywall)
Updated 2 August 2017
Last week was not a good one for the platform business. Uber continues to receive bad publicity on multiple fronts, as noted in my post on Uber’s Defeat Device and Denial of Service (March 2017). And on Tuesday, a fat-fingered system admin at AWS managed to take out a significant chunk of the largest platform on the planet, seriously degrading online retail in the Northern Virginia (US-EAST-1) Region. According to one estimate, performance at over half of the top internet retailers was hit by 20 percent or more, and some websites were completely down.
What have we learned from this? Yahoo Finance tells us not to worry.
“The good news: Amazon has addressed the issue, and is working to ensure nothing similar happens again. … Let’s just hope … that Amazon doesn’t experience any further issues in the near future.”
Other commentators are not so optimistic. For Computer Weekly, this incident
“highlights the risk of running critical systems in the public cloud. Even the most sophisticated cloud IT infrastructure is not infallible.”
So perhaps one lesson is not to trust platforms. Or at least not to practice wilful blindness when your chosen platform or cloud provider represents a single point of failure.
One of the myths of cloud, according to Aidan Finn,
“is that you get disaster recovery by default from your cloud vendor (such as Microsoft and Amazon). Everything in the cloud is a utility, and every utility has a price. If you want it, you need to pay for it and deploy it, and this includes a scenario in which a data center burns down and you need to recover. If you didn’t design in and deploy a disaster recovery solution, you’re as cooked as the servers in the smoky data center.”
Interestingly, Amazon itself was relatively unaffected by Tuesday’s problem. This may have been because they split their deployment across multiple geographical zones. However, as Brian Guy points out, there are significant costs involved in multi-region deployment, as well as data protection issues. He also notes that this question is not (yet) addressed by Amazon’s architectural guidelines for AWS users, known as the Well-Architected Framework.
Amazon recently added another pillar to the Well-Architected Framework, namely operational excellence. This includes such practices as performing operations with code: in other words, automating operations as much as possible. Did someone say Fat Finger?
Abel Avram, The AWS Well-Architected Framework Adds Operational Excellence (InfoQ, 25 Nov 2016)
Julie Bort, The massive AWS outage hurt 54 of the top 100 internet retailers — but not Amazon (Business Insider, 1 March 2017)
Aidan Finn, How to Avoid an AWS-Style Outage in Azure (Petri, 6 March 2017)
Brian Guy, Analysis: Rethinking cloud architecture after the outage of Amazon Web Services (GeekWire, 5 March 2017)
Daniel Howley, Why you should still trust Amazon Web Services even though it took down the internet (Yahoo Finance, 6 March 2017)
Chris Mellor, Tuesday’s AWS S3-izure exposes Amazon-sized internet bottleneck (The Register, 1 March 2017)
Shaun Nichols, Amazon S3-izure cause: Half the web vanished because an AWS bod fat-fingered a command (The Register, 2 March 2017)
Cliff Saran, AWS outage shows vulnerability of cloud disaster recovery (Computer Weekly, 6 March 2017)
Seems a lot of people in the enterprise-architecture space wonder why I don’t toe the ‘party-line’, and push for IT-centric automation-of-everything, like almost everyone else in ‘the trade’. Well, here’s a nice first-hand example as to why… I’ve been doing…
Bezos has a different view — a long view. “Everything we’ve ever done people have said this. People said customer reviews were a bad idea, third-party selling is a bad idea, personalization is a bad idea,” and he does have a point. “In 1994, typing your credit card [info] on the internet is a bad idea. Every single thing that’s new is a bad idea.” And then Bezos repeats one his best rehearsed and most convincing soundbites. “Willingness to be misunderstood is one of our greatest strengths.”
via Tumblr http://bmichelson.tumblr.com/post/62900280822
As a retail phenomenon, #showrooming exposes a conflict of interest between online and traditional retailers. Many shoppers will examine a product in a traditional store, and then buy it from an online retailer or discount warehouse. The first retailer incurs costs – including cashflow, wear and tear on the product, as well as unproductive use of staff time and knowledge – while the second retailer takes the revenue.
To complete the story, there may be another class of customer, who is happy to buy the
ex-demonstration product from the first retailer at a discounted price. Thus there are five
distinct roles in this game: the product supplier, the first and second
retailer, the first and second customer. (In addition, if the customers are using their mobile phones in the stores, we should add the players in the mobile ecosystem.)
The earliest manifestation of this I can remember was buying records. You could listen to an LP in the record store, and then get a pristine copy (without the shop assistant’s fingerprints) by mail order from a company appropriately called “Virgin”.
Many retailers believe they lose out from this phenomenon, and some have attempted to prevent it. (Ever wondered why you don’t get a good cellphone signal inside a large store?) Earlier this year, both Target and Wal-Mart decided to stop stocking Amazon devices, although continuing to stock Apple devices. More recently, Wal-Mart has changed its position, and now claims to embrace showrooming.
By singling out Amazon, Target and Wal-Mart were making it clear that it is Amazon’s role as a retailer that they regard as a competitive threat. Although Apple also sells its devices online, it is presumably not regarded as an equivalent threat. In which case, banning Amazon products looks like a gesture of despair rather than an effective tactic.
Thinking of this as a multi-sided market prompts us to look at the direct and indirect flows of value between the players. It is as if the first retailer is providing an unpaid “service” to the second retailer, and the first customer is providing an unpaid “service” to the second customer. At present these are not genuine services, but it is possible to conceive of an ecosystem in which the product supplier or second retailer paid some form of commission to the first retailer. For all I know, that may already happen in some sectors.
Wal-Mart hopes to control showrooming by encouraging its customers to use its own mobile app, which attempts to steer customers towards its own online store. I wonder how many customers will accept this control, and how many will take the trouble to resist it.
Some large High Street retailers seem to have given up the idea of stocking goods: if you like something on display, you can order it. This has long been true for large furniture items such as beds, but is becoming more common for smaller items, as Simon Heffer complains.
Meanwhile, showrooming can work both ways. Last week I ordered a book from my local bookshop, having previously looked it up on Amazon. It was 5pm Friday when I placed the order, and they phoned me at 11am on Saturday to tell me it had arrived. (If I’d ordered it from Amazon, paying extra for 48 hour delivery, when would it have arrived? Monday, Tuesday?) So that’s showrooming in reverse.
Finally, instead of selling individual products, the showroom itself can become the experience. @KBlazeCarlson sees IKEA as a prime example, and quotes Alan Penn, professor of Architectural and Urban Computing at UCL, describing the IKEA experience as “psychologically disruptive”. “Part of their strategy is to take you past everything,” he says. “They get you to buy stuff you really hadn’t intended on. And
that, I think, is quite a trick.”
Chris Petersen adds, “Instead of product centric merchandising, IKEA’s showroom is perhaps the ultimate place merchandising, where the consumer solution is focused on the most personalized dimension – the consumer’s own lifestyle and living space.” Whether IKEA can replicate this experience online in the virtual world, as suggested in Patrick Nelson’s piece, is another matter.
Kathryn Blaze Carlson, Enter the maze: Ikea, Costco, other retailers know how to get you to buy more (National Post, June 2012)
Simon Heffer, My futile hunt for a lamp in John Lewis reveals why the High Street is doomed (Daily Mail 15 January 2013)
Brett Molina, Is ‘showrooming’ behind Target move to drop Kindle? (USA Today, May 2012)
Chris Petersen, To beat showrooming … change the showroom! (IMS results count, June 2012)
Marcus Wohlsen, Walmart.com CEO: We Embrace Showrooming (Wired, Nov 2012)
Amazon’s Showrooming Effect And Quick Growth Threaten Wal-Mart (Forbes, Sept 2012)
Updated 16 January 2013