Who Should Open Offline Showrooms?: The Brand Owner or E-Tailer

Abstract

The consumption experience is taken seriously by consumers, and increasingly, firms open offline showrooms for this. Showrooms can help to resolve the uncertainty of consumer perceived value and brand preference in online shopping. This paper considers two kinds of showroom investment scenarios for a two-echelon supply chain consisting of a brand owner and e-tailer. The two scenarios are the brand owner opening showrooms (B) or e-tailer opening (E). the authors evaluate the impact of brand spillover, platform spillover, and offline experience spillover effects on the optimal choice to open showrooms. The results indicate that the conditions of brand owners opening showrooms for win-win are richer and more relaxed than the e-tailer. This requirement for spillovers reflects different motivations for opening showrooms. Moreover, regarding the inroad into showrooms, the brand owner and e-tailer should be cognizant of the trade-off between brand and platform spillover and willing to open showrooms in appropriate conditions.