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Phone-Wielding Shoppers Strike Fear Into Retailers

     
11:10 pm on Dec 16, 2010 (gmt 0)

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Phone-Wielding Shoppers Strike Fear Into Retailers [online.wsj.com]

Tri Tang, a 25-year-old marketer, walked into a Best Buy Co. store in Sunnyvale, Calif., this past weekend and spotted the perfect gift for his girlfriend.

Last year, he might have just dropped the $184.85 Garmin global positioning system into his cart. This time, he took out his Android phone and typed the model number into an app that instantly compared the Best Buy price to those of other retailers. He found that he could get the same item on Amazon.com Inc.'s website for only $106.75, no shipping, no tax.

Mr. Tang bought the Garmin from Amazon right on the spot.
11:20 pm on Dec 16, 2010 (gmt 0)

WebmasterWorld Administrator buckworks is a WebmasterWorld Top Contributor of All Time 10+ Year Member



This is going to get ugly (it already is, in some sectors).

It is simply not sustainable for brick and mortar stores to act as free showrooms for their cut-price, tax-evading competitors.
2:11 am on Dec 17, 2010 (gmt 0)

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This is great news for consumers, I'm starting to do the same thing. Minus the whole going into the store... LOL I bought a TV last week by checking out models and specs online, comparing prices, etc. Then I decided on one, went into the local Sears who matched the lowest price I found online. Spending about a half hour online before I even left the house saved me at least $50-$100.

Bad news for B&M stores with popular products...
10:53 am on Dec 17, 2010 (gmt 0)

WebmasterWorld Senior Member piatkow is a WebmasterWorld Top Contributor of All Time 5+ Year Member



The whole point of using a B&M store is "instant gratification". To me a small premium is worth paying to walk away with the product.
1:29 pm on Dec 17, 2010 (gmt 0)

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This is a good time to be specializing in unique items. Stuff like this doesn't matter if no one else has it.
1:39 pm on Dec 17, 2010 (gmt 0)

WebmasterWorld Senior Member billys is a WebmasterWorld Top Contributor of All Time 10+ Year Member



It is simply not sustainable for brick and mortar stores to act as free showrooms for their cut-price, tax-evading competitors.


I agree, and I think these devices will change that relationship.

I know there are items I will not buy without seeing them firsthand. But if I can go to a BestBuy and inspect the device, I'll go home and buy it online.


As mentioned by buckworks, that cannot go on forever. Definately good for consumers in the short term.
3:42 pm on Dec 17, 2010 (gmt 0)

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I think there are too many impulse buyers and B&M stores should still survive. If you go to a shopping mall, there are always overpriced products that you can get at discount stores for a lot cheaper.

From my personal experience, a dress shirt of the same brand from Macy's is probably $50-$60, but if Marshalls has it, it would be $15-$20. Yet, so many people still pay full price at Macy's. If everyone were smart shoppers, many retail stores would have been out of business already, but not everyone is a smart shopper.

I do feel guilty when I go to Best Buy to look at something then buy online. I feel like I am technically stealing from them when I do that.
3:53 pm on Dec 17, 2010 (gmt 0)



Many people prefer to buy from B&M even at higher prices because returns are easier and customer service/support is more reliable in most cases.

I agree. There is a certain, instant impluse gratification of purchasing something on the spot without having to wait for it that many folks will pay a bit extra for. +1 B&M.

Many big B&M retailers operate ecommerce sites, too.
7:45 pm on Dec 17, 2010 (gmt 0)

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Hasn't this pretty much already been happening for years, but people just didn't do it from their phone on the spot? In the end, I'm not sure it will make that big a difference. Plus, there's things I'm just not going to buy online. I looked at TVs at A recently, and the prices were very close to BB. BB was a little more, but they also offered free delivery, which I knew was going to come from a local store. I noticed A has many people saying their TVs arrived damaged... So there's some stuff that's better locally.
12:15 pm on Dec 18, 2010 (gmt 0)

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If you are a retailer selling for normal market price you do not need to fear much. However especially those big companies that spend a lot on marketing themselves as beeing low price might be defaced as what they are: Not cheap at all. Because usually those big companies advertising products at 30% or 50% of, are comparing their prices not to the market price but to the recommended retail price of the manufacturer. And even if you make a bargain on something like a digital cable receiver this will be swallowed by the price you pay for the HDMI cable.

When I bought a laundry dryer I checked the price at the local "cheap" electronic store belonging to a big chain and local small B&Ms. The prices at the small B&M were nearly always lower.
3:00 pm on Dec 18, 2010 (gmt 0)

WebmasterWorld Senior Member wheel is a WebmasterWorld Top Contributor of All Time 10+ Year Member



I'm not certain this is a widespread phenomena yet, or ever will be. I also suspect the example given is an outlier. I doubt you look at most $200 bestbuy products and find them at $100 somewhere else.

The people that do this are the fatwallet folks, anxious to waste 8 hours of their life in order to save $3. That's not the majority of shoppers. It may not even be a noticeable minority.

The quote is talking about an impulse buy only.
4:16 pm on Dec 18, 2010 (gmt 0)

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It is simply not sustainable for brick and mortar stores to act as free showrooms for their cut-price, tax-evading competitors.

Yes, but they don't have to be a showroom. Retailers have, for years, had the ability to know their competitors prices. If they want to compete and undercut, or match their competitors, they might want to consider lowering their prices.

As wheel noted, most savings probably won't be more than 10%-20%. When it is, it's usually worth it for the consumer. I've used price-checking apps several times while shopping for electronics, and if I can save 10%-20%, I will do it.
4:48 pm on Dec 18, 2010 (gmt 0)

WebmasterWorld Administrator buckworks is a WebmasterWorld Top Contributor of All Time 10+ Year Member



If they want to compete and undercut, or match their competitors, they might want to consider lowering their prices.


That might work in some situations, but in many sectors it's simply not possible for a physical store to pay their bills and survive if they're not selling at normal retail markups.

good for consumers in the short term


Yes, but the longer term is scary.
9:43 pm on Dec 18, 2010 (gmt 0)

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I'm not certain this is a widespread phenomena yet, or ever will be. I also suspect the example given is an outlier. I doubt you look at most $200 bestbuy products and find them at $100 somewhere else.


Really?

Here is a an example from the Best Buy website that took several seconds to price check with a large price saving from purchasing it elsewhere.

Mitsubishi WD-65638 65-Inch 1080p 3D-Ready DLP HDTV

Best Buy Price: $1,299.99 + free shipping

Amazon Price: $1,098.00 + free shipping

Price Savings? = $201.99 for a few seconds of work. Almost pays for the smart phone. I can provide many other examples if you want.
9:58 pm on Dec 18, 2010 (gmt 0)

WebmasterWorld Senior Member 5+ Year Member



I don't know, I just ran a few, and it seemed even at best. A couple were 50-100 less at BB. Plus, in many cases, the A stuff is coming from some third party seller that nobody has heard of before, using who knows what delivery methods. I have a problem with something, I call or walk into the local BB and I'm taken care of. Who knows what's going to happen with a little known third party dealer.
10:49 pm on Dec 18, 2010 (gmt 0)

WebmasterWorld Administrator anallawalla is a WebmasterWorld Top Contributor of All Time 10+ Year Member



During my US trips, I visit a lot of electronics stores, particularly Fry's Electronics in the US western states and the usual shopping mall national brand stores. I can't say I see a lot of people tapping away on their phones to look up prices. As others have said, impulse buying still happens.

Today, my wife is going to an electronics store to buy two cameras for her work. We did the research by saving the junk mail for a few days and comparing prices on the dining table and then going online to check specifics such as the battery type. :)

I am known to have done research on a specific model of monitor, found the best store, yet walk out with something else that was new and attractive. And, sadly, I went home and checked this model, only to find I could have got a better price elsewhere. :)

I do see a few supermarket shoppers in Australia walking around with a competitor pamphlet as if to compare prices. The smart phone isn't useful because our supermarkets have prices set by the store manager. Many of our malls have the two major chains in the same complex and it is possible to take a trolley load to your car and go back to the next supermarket.
11:00 pm on Dec 18, 2010 (gmt 0)

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I'm trying to think like an executive type, which is hard for me to do.

My first inclination would be to put the screws to the manufacturers. If I were Best Buy, I'd tell them that I wouldn't stock any of their products unless they made certain models only available to B&M retailers.

The big retail chains have the power to tell manufacturers what to do.
11:59 pm on Dec 18, 2010 (gmt 0)

WebmasterWorld Administrator anallawalla is a WebmasterWorld Top Contributor of All Time 10+ Year Member



I'd tell them that I wouldn't stock any of their products unless they made certain models only available to B&M retailers.

Do the laws in your country permit this? In Australia you'd trip one or more consumer protection laws.

An in-store shopper can still compare prices with another B&M store, esp electronics items.

B&M stores can compete in certain lines of products by offering something extra (but trivial from their viewpoint), e.g. We'll install your SIM in your new phone; set up a geek desk on a Saturday afternoon to help with your new PC, etc.

I see some of this during a regular ritual during my US visits. I have a $16 T-Mobile phone (from the dear departed Circuit City) with a US number that keeps alive as long as I start with a $100 prepaid deposit and add a $10 credit once a year. This makes it easy for my US contacts to store a fixed number to reach me during my next stay.

Invariably, if I buy the refill at an island outlet in a mall, I am given a printout with a code to type into the phone. If I go to a branded T-Mobile store there are more clerks with time to spare and they invariably punch in the code for me and save me the trouble. Hence I am more likely to go to such a store if I were a non-techy local and needed my next phone.

Of course, my main phone is an iPhone and AFAIK these are only sold in B&M telco stores in Australia with a plan. I can only get an unlocked iPhone from Apple. Apple controls prices very tightly, so comparison shopping isn't possible except for after-market add-ons.

At present Aussie retailers are annoyed that we tend to order online from China and Hong Kong, hence we avoid GST (like VAT in the UK). They want Internet transactions to be taxed. Luckily the politicians aren't buying any of this.

Article: [theaustralian.com.au ]
4:15 am on Dec 19, 2010 (gmt 0)

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I'd tell them that I wouldn't stock any of their products unless they made certain models only available to B&M retailers.


Do the laws in your country permit this? In Australia you'd trip one or more consumer protection laws.


I know of a distributor in Australia that will not sell certain models to online retailers (although I don't know that this is due to pressure/threats from B&M retailers).
2:16 pm on Dec 19, 2010 (gmt 0)

WebmasterWorld Senior Member trillianjedi is a WebmasterWorld Top Contributor of All Time 10+ Year Member



took several seconds to price check with a large price saving from purchasing it elsewhere.


That can be reduced to 1 second with a barcode scanner application. I think there's a huge market for such a "price checker app" which uses barcodes.
2:36 pm on Dec 19, 2010 (gmt 0)

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I know that I checked in store at Best Buy while buying a Nikon DSLR camera and got them to do a price match guarantee.
3:01 pm on Dec 19, 2010 (gmt 0)

WebmasterWorld Senior Member piatkow is a WebmasterWorld Top Contributor of All Time 5+ Year Member




I think there's a huge market for such a "price checker app" which uses barcodes.

A nice little earner for manufacturers charging you for up to date files of barcode values and product names and for suppliers charging you for the SKU to barcode mappings so that you can match the products on their site to the manufacturer lists.
5:42 pm on Dec 19, 2010 (gmt 0)

WebmasterWorld Senior Member 5+ Year Member



IMO, the bottom-line is this: Consumers, now more than ever, have a wealth of tools available to help them find the best prices for any given product. Given the following:

Convenience: ("I'm standing in the electronics store right now, so even though I could save $20 if I purchase it somewhere else, I'll buy it now.")

Impulse: ("Yes, baby! This is the coolest thing ever, and I'm buying it." (without checking alternatives))

Loyalty: ("I've been coming to Widget-Store for years, and even though it may be cheaper elsewhere, I'm sticking with this store.")

Comfort: ("I know the price could be cheaper online, but I prefer the service of a B&M store. I want headache-free, customer service and support when, and if, I need it.)

Branding: ("I know that I can trust the huge, nationally recognized Widget-Store. It's been around for ages and with 10,000 stores, I feel more comfortable buying from them.)

I think all of these can change when/if the price differences are greater than 10%-20%.
9:40 pm on Dec 19, 2010 (gmt 0)

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I doubt if this will ever be a widespread issue, its not like its even a new problem, just a bit more streamlined. Its always the fringe that gets noticed, and the guy who saves $50-$100 on his $1000 purchase will feel the pinch when something goes wrong and he has to either wait 2 weeks for service or repair, versus calling his local store and have a replacement tech come right out.

Not a new problem for B&M for sure... but as stated, it may get us flat-rate Internet Sales Tax discussion going again. (to help level the playing field for local B&M)

I used to work at a place that was often price-shopped against online places. When someone mentioned they saw it cheaper online, we directed them to a terminal, so they could place their order. Minimize the loss, move on. If they had any additional questions about the product, we told them to feel free to ask online. 90% of people know the value in the brick and mortar when you explain the differences. The other 10% are price shoppers and regardless of what you do, will ALWAYS buy the cheapest price!
1:49 am on Dec 20, 2010 (gmt 0)

WebmasterWorld Senior Member 10+ Year Member



Its always the fringe that gets noticed, and the guy who saves $50-$100 on his $1000 purchase will feel the pinch when something goes wrong and he has to either wait 2 weeks for service or repair, versus calling his local store and have a replacement tech come right out.

Smartphones are quickly becoming mainstream so those of us who use them aren't going to be on the fringe much longer.

If I'm buying a TV or other major appliance, I can't see ordering online to save $50-$100 on a $1000 purchase. But for someone like Mr. Tang, saving so much money on a relatively minor appliance is a big deal. And I suspect, with something like his GPS unit, waiting for a replacement won't be all that big an inconvenience. :)
7:24 am on Dec 20, 2010 (gmt 0)

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IMO a lot of these Big Box B&M stores kind of screwed themselves starting years ago. To cut costs & boost profits, they started hiring minimum wage know-nothing employees, using high pressure tactics to sell their 'extended warranties' and other doo-dads.

I don't miss any of that BS when buying online.
10:07 am on Dec 20, 2010 (gmt 0)

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I was literally thinking this just last week:

"I used to love going into malls, the selection you had was amazing."

Now every time I see a product in a mall I think "That's nice, but I could get it online for half the price". And I do.
10:52 am on Dec 20, 2010 (gmt 0)

WebmasterWorld Senior Member 10+ Year Member



Some hotel chains try to keep price parity for all their distribution partners.
Same will happen to goods, too. I already see this in some e-commerce categories in my country in Central Europe.
2:01 pm on Dec 20, 2010 (gmt 0)

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Your example stacks in the online retailers fovour because the price difference mnakes it an easy decision - but generally the shop price in only 10-15% more, then it is not a walk over for the online retailers with impulse purchases and expensive shipping.
2:52 pm on Dec 20, 2010 (gmt 0)

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@ GaryK

Very good points. I re-read the entire article and clearly, I should have done so before commenting! "mouth, meet foot".

MH
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