The smartphone revolution has proved to be quite a disruptor. While it has opened new opportuities for many new startups, it has brought whole new behaviors into our lives that are making life a bit “hot under the collar” for older, established industries. One of the most impacted industries — retail. With smartphones in our pocket, we are starting to do price matching for pretty much everything, betting there is a cheaper option somewhere else.
It is something I have written about and talked about often, and every day we have more evidence of this concept of show rooming — price matching of products in physical stores on smartphones and looking around for discounts/bargains.
The biggest beneficiary of these searches is Amazon (s AMZN) — twice as much so as Google (s GOOG) — according to a study released by Pargo, a Lewisville, Texas-based commerce and rewards company. The company surveyed 1,043 US smartphone owners (53 percent female, 47 percent male) in June 2013 and summed up the results in Dynamic Pricing in Smartphone World. Here are some of the highlights (and points illustrated with the help of graphics from the study):
58% of adult smartphone users and 1/3 of all US adult shoppers now regularly “showroom.”- A price difference of just $5 can sway shoppers from in-store to Amazon purchasing
- comparison shopping on a smartphone while in-store is up 400% over last year
- Not only is Amazon #1, but it is used for showrooming 2x more than the next option, Google.
- For 46%, price is king when it comes to comparison shopping on smartphones while in-store
- 59% of households with $200,000+ annual incomes buy on their phones weekly while in-store.
- The higher the income, the greater the propensity to switch to Amazon to save $5 on a $50 item.
- A 5% discount on a $500+ item that is not an exact match, but is similar, can switch half of all shoppers to Amazon.
The shocking part of this survey is the relative indifference to Google as a source for price comparison and how far behind they are Amazon. The reason we see Amazon’s name come up so often is because they have done a good job of locking people in with their Amazon Prime service which allows you to get free delivery of as many goods as long as you pay an annual subscription fee — it is a good way for them to keep people buying from them.
In addition, Amazon has done a great job of reducing the time of delivery of goods by opening up warehouses and distribution centers closer to major cities, thus making it easy for people to make the decision to wait for a day or two and save some money.
I’m not sure if I’m the only one that does this, but I compare prices on Amazon, but I don’t ever buy things on there. I’m still a little worried about making purchases off of there, especially when it’s something expensive like electronics.
I use Amazon as a reverse showroom.
I find something in a store, look at the info about it on Amazon and check the reviews about it there, then I buy it at the brick and mortar store that I am at, since I can get it right NOW and not have to wait for a delivery that might get stolen from my doorstep.
In addition to Amazon Prime, the one other feature that keeps me coming back to Amazon is Subscribe and Save. With three young kids, creating a schedule for delivery of diapers, wipes, baby formula, baby food is a god send. You do it once and things just show up – you don’t have to remember to go shopping. You also get a discount to boot.
We’ve now also have other household items on subscribe and save – including toothpaste, laundry detergent, dish washing detergent, soap – etc.
I can see a future where all essentials are pre-programmed to be delivered just in time.
P.S. If Instacart was more transparent in their pricing, I’d set up the same thing for groceries with them.
More competition is badly needed in retail. Walmart and Target dominate retail in most parts of the US. Amazon can keep retail honest in pricing.
Maybe not relevant but Amazon only works in US where as Google works everywhere!
I really like this post, the info-graphics are really good, where did you get them from?
I have been buying from Amazon for over 15 years. I have also been a member of both Costco and Sams Club for over 15 years. As an Amazon Prime member, In the past couple of years my buying patterns have been shopping more on Amazon and less at retail stores. I avoid traffic, parking, and I save money.
One of the things that I like about Costco is the return policy. But Amazon has just as good a policy. They always take back something I don’t want. Another interesting thing is that in all of these (15) years I have *never* had to call and talk with anyone at Amazon. Their online experience is impeccable.
I used to shop at Costco and Sams monthly, but I have not stepped foot in either in months. This year I am giving up both memberships as I don’t find the savings that significant and I don’t enjoy the mobs and lines in their stores. I have been buying packaged foods on Amazon and my fresh foods at Whole Foods, Trader Joe’s and other specialty stores.
I guess I realized when I began buying coffee, razor blades, vitamins, oatmeal and other things from Amazon, that I really enjoy not driving to some crazy mall or big box and wandering around perhaps buying stuff I don’t need on impulse. I save more money by avoiding impulse buying and and waiting a couple of days for something to arrive. It’s like Christmas every day when UPS or On-Trac show up!
The amazing thingI really see the end of the big box and the end of commodity retailing.
Amazon Prime and One-click closing is the formula for showrooming success. Great post.