Walmart just kicked out the Kindle in a misguided competitive effort, but to really stop showrooming, retailers need to look a lot deeper at their own organizations. Not selling the competitors products is like putting that Dutch kid putting his finger in the damn — you can’t stop the tide of online shopping, but you can get a whole let better at competing.
Maybe instead of kicking out the Kindle, retailers could stop sending shoppers to the competition via adson their own Web sites.
The hottest topic in retail today is showrooming. Without exception it’s the biggest worry among retail executives and nearly every initiative — from exclusive partnerships to private label development and product selection — is being devised to stop shoppers from using stores to browse, compare and ultimately buy elsewhere online.
But retailers are their own worst enemies and Walmart and Target‘s attempts to stop Amazon.com from using stores as showrooms is a great example. Both pulled the Kindle from stores (no-one but Amazon sells Kindle online) and both made a public display of it. But both run Google ads on most pages, including the electronics department. None go directly to Amazon, but some take shoppers to a dead page that offers up a link to Amazon for that product.
Best Buy is crying fowl louder than any retailer, blaming showrooming for its current plunge in profits and eroding revenue. Not only does Best Buy sell the Kindle in stores, but shoppers can scroll down most pages to find ads with links to rival seller’s. I searched for an LG refrigerator and was rewarded links to LG directly, Sears and Home Depot. Not the Rewards Zone Best Buy likely has in mind.
Toys R Us launched its own tablet for kids this month. Tabeo is designed expressly for Toys R Us core market, kids, and sold exclusively through its stores. At least for now. But Toys R Us also sells the Kindle, in stores only, and it runs Google Ads for online competitors including Apple.
How does this happen? Big, smart, successful multi-billion dollar corporations promoting their competition? Silos.
Enormous retailers divvy up departments and responsibilities. Each is run separately with its own budgets and goals with nary a thought of the bigger entity. As long as the individual department is producing results, things keep clicking along and everyone makes their quotas and gets a bonus.
So if the electronics department at a retailer like Target or Walmart thinks it can make money selling a popular product like the Kindle, then it will sell the Kindle regardless of who else profits along the way or how that sale might ultimately erode profits of the entire organization. If the department that runs the Web sites — and in some cases online operations are wholly-owned subsidiaries or outsourced — can boost the bottom line by running Google ads, they run Google ads directing their shoppers to another retail store for similar or identical items.
In January, Target CEO Gregg Steinhafel sent a now-famous letter to suppliers demanding they help the retailer mitigate the showroom effect either by delivering more differentiated exclusive products or matching prices at online rivals. Four months later it kicked the Kindle to the curb, pulling the product from its stores for that very reason.
I imagine Steinhafel’s letter dovetailed with an internal one, ordering every department to evaluate their role in all this and come up with solutions from within. The consumer electronics team offered up the Kindle as a sacrificial lamb (it has thin margins anyway), a press release was drafted, and that department was left to meet its sales goals without the best selling eReader.
Target.com is like an entirely separate retail operation, itself divided into departments. The one that tries to monetize the Web site in ways other than selling products from Target is happily pulling in revenue from Google ads, even when those ads send readers to Sony, uBids and hsn.com.
Walmart may have kicked out the Kindle, but it’s a long way from stopping shoppers from leaving its stores, physical and virtual.
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