The Worst Solution Ever for “Show Rooming”

(image courtesy TimesRecordNews)

If you listen to traditional retailers, online websites like Amazon are hurting them through what’s called “show rooming”, where the retail store becomes a place for consumers to check out items, but buy them online instead. There’s a lot of debate over the solutions (Target pulled all their Kindles, for example) but Rich Adin at The Digital Reader has the worst suggestion I have ever seen:

Of course, there is no practical way to prevent such comparison shopping by consumers. A b&m retailer can fight back by no longer carrying any Amazon-branded merchandise, which is the approach Target took, but that will, for the most part, be an exercise in futility — how many Amazon-branded products are there and how many are sold by the b&m retailer? Perhaps a smarter approach would be to assess a “showroom tax” on products sold by Amazon (used here as a euphemism for Internet-only retailers) and passing the tax receipts on to the b&m retailers either directly or indirectly. Such a “tax” (I am using the term tax very loosely; a term such as surcharge or fee or service adjustment or other similar-concept euphemism works just as well) would have Amazon contributing to paying the costs of maintaining a b&m store without chasing customers away because they openly are comparison shopping (which, it has been reported, some independent bookstores have done).

There are a couple of ways that a showroom tax could work. (Although I use Amazon as the example, the idea is for any Internet-only retailer to be charged the tax, not just Amazon.) I think the easiest way it could work would be if the wholesalers/manufacturers of goods that are sold to both Internet-only and b&m retailers charged and collected the tax and either used the proceeds of the tax to lower the wholesale price of the same goods sold to b&m retailers or provided b&m retailers with a rebate equivalent to the amount of tax collected.

Seriously, not to be too harsh, but this is the dumbest idea I have ever heard. First of all, as the commenters on the original article noted, comparison shopping has existed forever. Heck, Borders would have been saved from bankruptcy if they could charge for show rooming! We constantly had customers using us to find books, only to head next door to B&N to purchase them since they got 10% off with their membership cards. Oh, but according to Rich Adin that’s ok…it’s just websites that should be treated as second class businesses.

So let’s pretend that this suggestion is possible. Who does it really hurt? Well, it hurts online commerce, obviously. And it is purely punitive for having a different business model than brick and mortar, which is frankly insane and unfair. It won’t just hurt the Amazons of the world, it will hurt small businesses that operate online as well. Look at a website like Running Warehouse. It’s a small store that operates only online, but under this bizarre proposal, Running Warehouse would owe money to Dick’s Sporting Goods and Sports Authority. How is THAT a fair comparison?

Still, show rooming is an issue. Fixing it requires hard work on the part of brick and mortar stores with a simple concept: being a good salesperson. Humans are naturally social creatures, and connecting with a salesperson makes a big difference. If I walk into a store and have to dig around for what I want, can’t locate an employee, and just have an unpleasant experience, sure, I will fire up my phone and order it online. It is a lot harder to walk out and order online if someone takes their time to educate and sell you a product. Forget competing on price, compete on service!

Luckily for online commerce, there’s no way any excess surcharges will work. More importantly, it’s lucky for consumers, since we are the ones who get punished in Adin’s little thought experiment. Do you have a better idea to help brick and mortar businesses compete with online commerce? Let us know in the comments!


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3 replies

  1. Well, it’s probably not quite as dumb as the mayor of New York City wanting to limit the size of drinks to 16 ounces, but it’s right up there. There’s a word for penalizing businesses for being so successful that another business might lose market share. That word is “communism.”

    • Touche!

      I will say this: I read “Atlas Shrugged” in high school, and while I don’t subscribe to Ayn Rand’s philosophies, I do think it’s a bad sign when these proposals sound like they came from her rough draft!


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