'Showrooming' and the Competition between Store and Online Retailers

  • Mehra A
  • Kumar S
  • Raju J
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Abstract

Customers often evaluate products at brick-and-mortar stores to identify their "best fit" product, but end up buying this product not at the store but at a competing online retailer to take advantage of lower prices. This free-riding behavior by customers is referred to as "showrooming." We analyze three strategies to counter the effect of showrooming that may improve profits for the brick-and-mortar stores: (a) price matching, (b) making product matching harder between the brick-and-mortar store and the online retailer, and (c) charging customers for showrooming. We show that only the last two strategies may improve profits of the brick-and-mortar stores. We also present an analysis to illustrate when a particular strategy, (b) or (c), does better than the other.

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Authors

  • Amit Mehra

  • Subodha Kumar

  • Jagmohan S. Raju

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