Big box brick & mortar retailers are quickly becoming extinct. Every day, I read a new article about a big box retailer from my childhood closing stores and scaling back because of stiff competition from online retailers such as Amazon. These retailers are running into issues that they fundamentally cannot change given their large physical locations – e.g. the sheer overhead of maintaining large stores and warehouses, the logistics challenge of keeping each store properly stocked, and the cost of staffing each store with sales associates, cashiers, warehouse employees, etc. All this translates to higher prices for consumers.
One of the biggest problems facing big box retailers is a concept known as showrooming. Showrooming is when consumers visit physical retailers in order to examine and “play around” with merchandise, but then go home and shop online for the product to find a cheaper price. As you can see from the comScore survey below, the top 2 reasons why people showroom is to “try before you buy” and to get the cheapest price.
So what’s a brick & mortar retailer to do (other than this)?
If you can’t beat them, join them!
How about a physical store that combines the best advantages of online retailers with the best advantages of brick & mortar stores? Introducing TryBeforeYouBuy Stores!
TryBeforeYouBuy stores offer the advantages of online shopping – cheap prices, at-home delivery, access to advice & opinions – with the conveniences of a brick & mortar store – physical product demos & hassle-free returns.
Each TryBeforeYouBuy store should:
- Focus on a single high-priced micro niche.
- E.g. baby strollers, HDTVs, washing machines, etc.
- The higher retail price will result in larger affiliate commissions (discussed below).
- Treat the physical retail space as a showroom only. This means:
- A very small physical footprint, with low fixed costs.
- No warehouse, no storage, no inventory.
- Stock one demo unit / floor sample for each product model.
- The more models carried, the more likely consumers will visit the store to research products.
- The more specific the niche, the fewer models – and physical space – actually needed.
- Staff the store sparingly, and with experts in the niche.
- A small staff keeps fixed costs low.
- Credible experts will entice more consumers to visit the store to research products.
- Help the consumer purchase online once research is complete.
- Find the best price offered online, and allow the consumer to purchase after clicking through an affiliate link.
- By focusing on a high-priced niche, the affiliate payout will be non-trivial.
- Products are shipped directly to the consumer’s home.
- Offer consumers a “No-Hassle Return Policy”. This is key!
- If the consumer is unhappy with their online purchase, they can simply bring the item to the store and the store will handle packing, shipping, and tracking the return. The store will also cover any shipping costs incurred to return the item.
- This policy is key to convincing consumers to complete their purchase at the store once product research is complete.
The TryBeforeYouBuy store is designed to minimize overhead costs – small space, small staff, no inventory, lower insurance requirements, no payment processing, etc. At the same time, the TryBeforeYouBuy store is designed to maximize foot traffic – large variety of product models, expert advice, and better location targeting (e.g. easier to open a small footprint “TryBeforeYouBuy – Baby Strollers” store in a neighborhood known for good schools). Finally, the TryBeforeYouBuy store has special policies to convert foot traffic into sales – automated price comparison, at-home delivery, and no-hassle returns.
This is a win-win-win situation. The consumer makes a well-informed online purchase of a high-priced item at an optimal price. The online merchant gets a steady stream of confident consumers purchasing big ticket items. And the TryBeforeYouBuy store gets an affiliate commission for facilitating the transaction.
But wait – there’s more!
The TryBeforeYouBuy concept is a perfect candidate for a franchise. By consolidating the back office technology, there are additional efficiencies to be gained:
- Create a backend system that – for a given product or SKU – finds the best available online price at supported online retailers.
- Funnel all affiliate transactions through a single affiliate identity (much like Skimlinks and Viglinks do). This results in higher commissions and bonuses from online merchants, who often reward their biggest affiliates. Also, each store does not have to set up its own affiliate relationship with each online merchant.
- The same backend system can simplify the no-hassle return policy. The system can abstract away specific details of each online merchant’s return policy, and provide streamlined return processing & tracking to each TryBeforeYouBuy franchise.
A TryBeforeYouBuy franchise would be attractive for many reasons:
- It is a low-overhead, low-startup cost business. The main startup costs are the small retail space and the cost of floor samples.
- The store’s niche can be chosen to match the franchisee’s passion or expertise.
- The main factors of success are passion and a willingness to help people. The franchisee doesn’t have to worry about pricing, inventory management, logistics, etc. Just help the consumer through the product research phase, then leverage the back office system to find the consumer the best price.
Has this been done before?
- Zappos realized brick & mortar stores had an advantage of no-hassle returns – and made frictionless returns a cornerstone of their customer experience. This is just one creative example of trying to combine the best of both worlds.
- Apple created minimalist retail stores that for all intents and purposes act as showrooms. They also staffed these stores with credible experts in order to increase foot traffic.
- BuildASofa.com is a “showroom” I wandered into some time ago when I was looking for a new couch. It uses small physical retail spaces to allow consumers to see a handful of sofa models – touch them, sit on them, etc. Then when you are ready to buy, the staff helps you choose your model, pick your fabric and colors, and voila – the sofa is delivered direct to your home!
- Mattress stores follow the showroom model. They are often small retail spaces (conveniently located everywhere) that just contain floor models and knowledgeable staff. Purchases are done in store, but delivery of goods is managed by a central warehouse.
I am sure there are many other examples of physical stores that take advantage of the showrooming effect – if you know of any, add them in the comments!
Thanks for reading!