Retailers need to develop new strategies to deal with 'show rooming'

Online retail more complicated than ever, says ChannelAdvisor CEO

Bricks and mortar retailers will need to evolve new strategies to deal with "show rooming", the consumer practice of visiting stores to try out goods – before scanning the barcode and ordering online at a lower price.

That is the advice of Scot Wingo, CEO of e-commerce consultancy ChannelAdvisor.

Major stores in the US are taking action by removing boxes of products featuring bar codes from shop floors, and starting to demand that suppliers offer them the same deals that they offer online retailers.

At the same time, however, major retailers with an online presence are increasingly copying Amazon and Play.com by developing their own marketplaces in which third-party suppliers are invited to join.

"One-third of Amazon sales today are generated by third parties," said Wingo. "The Amazon model has worked so well for Amazon that a lot of retailers are copying that."

Indeed, Amazon makes more money from its marketplaces, said Wingo, than it does from direct sales of its products to customers.

Tesco.com and French shopping giant La Redoute are the latest major established vendors to turn their websites into marketplaces. La Redoute has 11 million active customers worldwide, with more than nine million unique visitors per month alone to its French site.

But the main challenge all online commerce sites face, said Wingo, is attracting and retaining customers.

"You can invest millions of dollars in an e-commerce platform, but people are not going to come unless your web marketing is great," he said.

Search drives just 40 per cent of sales, he added, and online vendors therefore need to have strategies that cover marketplaces, email marketing, price comparison websites and even cross-border commerce if they wish to increase sales.