Consumer showrooming with supplier encroachment and omnichannel retailing

Abstract

Consumers with uncertainty about product value often evaluate a product in a physical store but then purchase it online at a lower price. This popular shopping behavior is referred to as “showrooming.” Recent studies find that showrooming adversely affects the retailer. The advance of e-commerce has attracted an increasing number of suppliers to the practice of building an online channel alongside their preexisting traditional retail channel and has encouraged numerous retailers to embark on the practice of omnichannel retailing. We explore the effects of consumer showrooming within a framework of both supplier encroachment and retailer omnichannel retailing where two types of consumer showrooming behaviors exist: intershowrooming and intrashowrooming. Our results show that both the supplier and the retailer can benefit from consumer showrooming when the consumers' hassle costs associated with visiting the retailer and the retailer's additional revenue associated with each visit are intermediate. Moreover, the retailer's omnichannel strategy may shrink this “win-win” range because an extra online channel for the retailer will aggravate the competition effect of showrooming.