Research online; buy offline (ROBO) is the shopping behavior which you might already know where consumers go through online reviews, read educational content from the blogs and videos in Youtube, Once decided, they do not purchase online, they go to a retail store and make the purchase. This is somehow benefiting the physical retail stores without any doubt.
But when it comes to high involvement purchases like smart phones, kitchen and home appliances, the reverse trend is taking place slowly i.e Shoppers research offline and buy online.
The primary reason is the price difference.
I have experienced this first hand, when I went for a shopping with my wife this Sunday to purchase a pressure cooker.
We went to a nearby retail store which is very famous in Chennai and I have observed the following shopping behavior from my wife;
- She evaluated all the pressure cooker brands in the store and thoroughly checked the various sizes, colors, features and the price. Saleswomen in the retail outlet showed her all the varieties of the pressure cookers and my wife grasped everything.
- Then, she checked the price of a particular pressure cooker brand in Amazon and there was a difference of Rs.1100/- between the retail outlet and Amazon.
- We left the retail outlet without purchasing the pressure cooker brand which she liked. When I asked her, she said ‘See the price difference. Let’s buy this online’
When I learnt further, she has made lot of purchases in the similar way – Research offline; buy online.
She cited two reasons for this;
- She wanted to physically see the product to find out whether the cooker and other vessels can be kept properly in the pressure cooker. (experience the product before buying). Online stores cannot provide this experience of see, touch, hear, smell and taste which is crucial in high involvement product categories like home appliances. This is why see researched offline.
- As I said earlier, the primary reason to shop online is the price difference of Rs.1100/-
The interesting thing to notice here is, the retail outlet has charged Rs.50/- as the vehicle parking charge which can be deducted in the billing.
I have pointed out this to my wife, when we came out without purchasing anything. She gave a very obvious answer, “Rs.50/- is fine when compared to the savings of Rs.1100/-“
Retail outlet’s idea of charging Rs.50/- is brilliant to keep the window shoppers at check. But they should also be aware of the fixed costs like real estate (rentals for their shop), salary and other administration expenses. They definitely cannot manage this with Rs.50/- per visitor.
The advantages online stores like Amazon have is they don’t have huge fixed costs like retail outlet and they pass these cost savings to the shoppers to lure them.
In this scenario, only company owned-retail outlets will have advantage (particularly in high involvement product categories like home appliances, smart phones and home furnishings) because even if the shoppers research offline in their stores and purchase online, they don’t lose their business. For them, both the retail outlet and the online store are just a distribution channel. They also have control over the price.
But, this shopping behavior (Shop offline and buy online) will adversely affect the retail outlets which operate under the distribution model (buy from the manufactures and sell with a margin). More particularly, the retail shops which sell high involvement products.
The only solution could be to reduce the fixed costs by reducing the shop space, try to operate with less staff and offer this cost advantage to the shoppers.
Subsequently, local retail businesses can also open online stores to take orders and deliver it to their local customers.