Showrooming and the Internet Sales Tax
"Showrooming" is the practice where someone looks at a product in a brick and mortar store and then buys the product online. Retailers supporting the MFA say it is the "no sales tax paid online" that is causing people to "showroom". They hope to convince lawmakers that sales tax rules are driving "showrooming" and therefore the MFA can be a "tool" to remedy their struggles.
Only there's a problem for proponents of the Internet Sales Tax or Marketplace Fairness Act (MFA) - solid survey data shows showrooming rarely occurs.
Proponents of the MFA use a lot of anecdote about showrooming but very little data. These anecdotes are often very emotional and, therefore, persuasive. However, just because an event occurs a few times does not mean it is occurring frequently. Let's look at the data.
Two important surveys released in 2013 specifically address showrooming - one by PricewaterhouseCoopers, the other by Bizrate..
Some of the most vociferous claims about showrooming come from the Consumer Electronics Retailers, including Best Buy. PwC's Global Multichannel Consumer Survey specifically looked at retail electronics consumption and determined that this notion that showrooming is a threat to these - and all - retailers is a "myth". They found a very low percentage of customers "show-roomed" for consumer electronics - only two percent (2%). However, in a blow to the "unfairness" claims of the Pro-MFA crowd, what they did find was that that 11x that amount (23%) actually *reverse-showroom*, researching consumer electronics online and then going to a physical store to buy the product.
Bizrate's study had some selection bias because it was a poll conducted on consumers right after they finished purchasing online, so it ignores all of the people who don't shop online - meaning their figures are likely high. Nonetheless, there was an interesting finding in the study. It found that 80% of customers who purchased an item online had never seen the product in a physical store before purchase and of the 20% that had seen the product, most of them (54%) bought it from the same chain where they first saw the product (i.e. see a product in Target, buy from Target.com). So when people are doing in-store product research but deferring their purchase, they are more often than not buying from that store's own website.
Some retail industry experts have reviewed this data and are encouraging retailers with problems to look elsewhere for the cause their problems. Showrooming appears to not be the bogeyman some have asserted (and, unfortunately, continue to assert despite evidence running counter to their claims).
Lastly, in those rare events where showrooming is happening, it is likely happening with Amazon.com and because of Amazon. However, in a few short years Amazon will have nexus in every state and will no longer have the so-called "sales tax discount". If the MFA were to pass, all other small online businesses will be stuck paying for Amazon's sins.
What's really interesting is that brick and mortar stores are actually benefiting from online stores. People go online to these stores and use their content, talk to their customer service reps, read their reviews and descriptions, and watch their product videos and then turn around and buy from brick and mortar retailers.
But you don't see eMainStreet businesses whining to Congress about the reverse-showrooming reality. We just go to work. If we can't close the deal when they come to reverse-showroom our websites, we don't deserve the sale. Leave it to Big Retail and its lobbyists to shower millions of dollars on Congress and lobby with mostly-fabricated grievances.