The new study by parago, Dynamic Pricing in a Smartphone World: A Shopper Showrooming Study, delves into — and breaks down — the statistics and behavioral trends that are stealing away retailers’ brick-and-mortar customers. We found in this study that showrooming, the practice of comparison shopping on a smartphone while in-store, is up 400% over last year, and this consumer shopping behavioral shift is occurring across all income levels and retail categories. Amazon is the #1 way US consumers compare prices on their smartphones at physical stores. Not only is Amazon #1, but it is used for showrooming twice as often as the #2 option, Google. There is, however, a silver lining: When a retailer matches e-tailer prices with rebates, customers will buy in-store. parago creates engaging solutions that inspire actions & impact results As the most comprehensive single-source provider of incentives and engagement, we deliver $2 billion in rewards to 50 million people worldwide each year using our advanced technology. Our relentless focus on innovation drives better results, making us the smart choice. • consumer rebates & promotions • employee rewards & recognition • sales & channel management • energy efficiency incentives

1. DYNAMIC PRICING IN A SMARTPHONE WORLD
A SHOPPER SHOWROOMING STUDY JULY 2013

2. CONTENTS
introduction
3
methodology
5
key discoveries
6
compare and buy from e-competitors
7
Amazon is #1
8
price is king
9
showrooming price elasticity
traditional retailers can beat Amazon
11
key insights by income
dynamic pricing in a smartphone world
10
12
a shopper showrooming study by parago
2

3. AMAZON
IS WINNING
THE WAR
IN-STORE
dynamic pricing in a smartphone world
a shopper showrooming study by parago
3

4. INTRODUCTION
OUR STUDY UNCOVERS HOW
RETAILERS CAN BEAT AMAZON
Sophisticated e-tailers are using dynamic pricing models, which are real-time
price adjustments based on market demands, consumer behaviors, competitive
insights and other data centric factors, coupled with the explosion of smartphones
to steal customers while they are shopping in store.
We found in this study that showrooming, the practice of comparison shopping on a smartphone
while in-store, is up 400% over last year. Amazon is the #1 way US consumers compare prices
on their smartphones at physical stores. Not only is Amazon #1, but it is used for showrooming
2x more than the next option, Google.
Showrooming is occurring substantially across all income levels and retail categories, even
those often assumed immune from it, such as auto parts. Additionally, a price difference of just
$5 in many cases can sway the purchase decision to Amazon.
56% of adults 18+ now have a smartphone, according to the Pew Internet Study conducted in
May 2013. Our study finds 58% regularly showroom and buy e-tailer products while in brickand-mortar stores from their smartphones or go home and buy them online.
That means at this moment, 1/3 of all adult shoppers regularly showroom. They’re choosing
competitors’ products on their smartphones while in-store. The numbers are quickly growing
as smartphone penetration continues its steady rise.
Customer shopping behaviors have fundamentally changed. The combination of smartphone
use and savvy e-tailer tactics is enabling customers to work around these traditional retail
strategies: special sales, exclusive merchandise, unique SKU numbers, and one-of-a-kind
experiences and services.
That’s because consumers are being trained to look past exclusivity and service by e-tailers
that have the ability to offer similar items at a much better prices with personalized service and
experience that most consumers rate as good as brick-and-mortar stores.
Some good news for brick-and-mortar retailers: a silver lining was uncovered in this study. The
findings clearly show when a retailer matches e-tailer prices with rebates, which provide
healthier margins than instant discounts, the majority of consumers will shop and buy from the
store more often, across all incomes levels and retail categories.
The results of this national study will profoundly change your understanding of the market.
Dynamic pricing models, designed to steal traditional shoppers on their phones while they are
in-store, are getting smarter every day.
Retailers that acknowledge the reality of the situation and find strategies both in-store and online
— such as dynamic price match rebates — will be the ones best prepared to win in the long run.
We invite you to join us in the discussion. Please share your thoughts, insights and questions
as we continue to closely monitor in real-time the most dynamic shift in retail that has ever
occurred. Good shopping!
Rodney Mason, CMO
rodney.mason@parago.com
972.538.7336
http://twitter.com/rodmoose
dynamic pricing in a smartphone world
a shopper showrooming study by parago
4

5. METHODOLOGY
objective
gender
53% female
47% male
Determine how frequently customers showroom,
buy from e-competitors on their smartphones, and
the price differences that sway them to do so.
respondents
1,043
housing situation
smartphone owners surveyed
via a national, online study
conducted in June 2013.
annual household income
66% own
34% rent
age
5%
18–22
5%
$100,000–$199,000 17%
23–29
18%
$50,000–$99,999
39%
30–39
32%
$20,000–$49,999
28%
40–49
22%
$19,999
9%
50–59
16%
did not disclose
3%
60+
$200,000+
marital status
educational background
married
59%
widowed
2%
divorced
9%
separated
2%
never married
28%
geographic region
5%
Mid-Atlantic
17%
East North Central 15%
South Atlantic
less than high school
1%
high school diploma 14%
some college
25%
associates degree
15%
bachelors degree
32%
graduate degree
13%
employment status
New England
West North Central
7%
5%
22%
employed full time
39%
employed part time 36%
not employed,
looking for work
7%
9%
East South Central
4%
not employed,
not looking for work
West South Central
9%
retired
4%
Mountain
5%
disabled/not able to
work
5%
Pacific
20%
dynamic pricing in a smartphone world
a shopper showrooming study by parago
5

6. KEY DISCOVERIES
Amazon is the #1 way customers
compare prices on their smartphones—
2x more than Google
Most smartphone owners
showroom regularly in
$
$5 price difference
every major shopping category,
including automotive and hardware
on a $50 product tips the
scales in Amazon’s favor
56% of smartphone owners
shop in stores and regularly
buy competitive products on
smartphones while there
58% of smartphone owners shop in brick-and-mortar
stores and regularly compare price on their smartphones
while in store and then decide to buy online later
Price is the
most important
smartphone
research factor,
but customer reviews
also rank high
dynamic pricing in a smartphone world
Customers will shop and buy
more often from a store that
matches online competitors’
prices with rebates
a shopper showrooming study by parago
6

7. COMPARE AND BUY FROM E-COMPETITORS
58%
41%
re
rs compa
of shoppe ery product
ev
prices in
how small
o matter
ange, n
r
$20
23% compare prices
on items over $20
of these shoppers
$50
21% compare prices
on items over $50
66%
$100
14% compare prices
on items over $100
of smartphone owners use
their phones to compare
prices while in-store
compare
prices
weekly
26%
compare prices monthly
8% compare prices a few times a year
Retail categories in which customers regularly
check out items in-store, but buy online
often
sometimes
never
apparel
50%
47%
appliances
31%
58%
automotive
20%
56%
58%
Showroomers who regularly buy
an item on their smartphones
while comparing prices in-store
2
9% weekly
2
7% monthly
2
4% a few times a year
20% never
Showroomers who regularly buy an
item online (not on a smartphone)
after comparing prices in-store
2
6% weekly
3
2% monthly
3
6% a few times a year
6% never
dynamic pricing in a smartphone world
47%
building tools supplies
30%
45%
electronics mobile technology
50%
46%
entertainment
54%
40%
housewares
42%
51%
office supplies
39%
50%
a shopper showrooming study by parago
7

8. AMAZON IS #1
Amazon is the number-one way consumers compare prices on their smartphones
Amazon
56%
Google
26%
24%
36%
apps 18%
92%
84%
75%
22%
39%
comparison
websites 13%
total
22%
35%
customer
ratings 15%
social media 11%
freqently
moderately
12%
most
78%
24%
37%
77%
27%
23%
55%
21%
46% are Amazon Prime members with special perks, including free shipping
50%
42%
50% of male
respondents
42% of female
respondents
76%
76% of households
with $200,000+
annual incomes
61%
61% of households with
$100,000–$199,999
annual incomes
Amazon price comparison use by household income
$200,000+
$100,000–
$199,000
$50,000–
$99,999
$20,000–
$49,999
$19,999
most
71%
64%
56%
50%
50%
frequently
20%
23%
28%
22%
16%
moderately
4%
7%
10%
17%
14%
total
95%
94%
94%
89%
80%
Google price comparison use by household income
$200,000+
$100,000–
$199,000
$50,000–
$99,999
$20,000–
$49,999
$19,999
most
26%
28%
24%
24%
39%
frequently
51%
36%
35%
41%
18%
moderately
16%
19%
36%
20%
23%
total
93%
83%
95%
85%
80%
dynamic pricing in a smartphone world
a shopper showrooming study by parago
8

9. PRICE IS KING
PRICE IS KING for comparison
shopping on smartphones
while in-store
PRICE
46%
CUSTOMER
REVIEWS
But CUSTOMER COMMENTS
are also very important
EXPERT
REVIEWS
SOCIAL is not significant
for mobile search, but it can
be a good tool to elevate
customer comments and price
messaging through search
13%
PRODUCT
INFORMATION
28%
11%
3%
SOCIAL MEDIA
PEER COMMENTS
Most important factors when comparing products in-store on smartphones (1 = most important; 5 = least important)
1
2
3
5
4
best price
46%
17%
13%
20%
4%
customer
reviews
28%
30%
24%
14%
4%
expert reviews
13%
22%
27%
29%
8%
product
information
11%
23%
17%
20%
29%
3%
8%
19%
17%
54%
social media
peer comments
Most important smartphone comparison factors by household income
$200,000+
$100,000–
$199,000
$50,000–
$99,999
$20,000–
$49,999
$19,999
best price
31%
43%
51%
47%
39%
customer
reviews
28%
36%
26%
27%
24%
expert reviews
29%
13%
11%
10%
22%
product
information
10%
7%
11%
13%
10%
2%
2%
2%
3%
4%
social media
peer comments
dynamic pricing in a smartphone world
a shopper showrooming study by parago
9

10. SHOWROOMING PRICE ELASTICITY
A $5 difference
tips the scale
for Amazon
63%
would buy from Amazon
if a $50 item in store were
$45 on Amazon
would buy from Amazon
if a $50 item in store were
$40 on Amazon
would buy from Amazon when the price
in store is $100 and an item that is not
an exact match is $80 on Amazon
savings = 20% / $20
would buy from Amazon when the price
in store is $100 and not an exact match
is $90 on Amazon
savings = 10% / $10
would buy from Amazon when the price
in store is $50 and not an exact match
is $40 on Amazon
savings = 20% / $10
55%
54%
dynamic pricing in a smartphone world
in-store
Amazon
82%
The higher the ticket price, the greater the
propensity to jump to Amazon for a similar
item that is not an exact match
79%
$5
76%
91%
would buy from Amazon
if a $100 item in store were
$90 on Amazon
would buy from Amazon
if a $100 item in store were
$80 on Amazon
A 5% discount on an item $500+ that is not an
exact match, but is similar, can switch half of
all shoppers to Amazon
50%
would buy from Amazon when price in
store is $500 and not an exact match is
$475 on Amazon
savings = 5% / $25
would buy from Amazon when price in
store is $500 and not an exact match is
$450 on Amazon
savings = 10% / $50
would buy from Amazon when price in
store is $500 and not an exact match is
$425 on Amazon
savings 15% / $75
78%
88%
a shopper showrooming study by parago 10

11. MATCHING REBATE PREFERRED OVER AMAZON
TRADITIONAL
RETAILERS
67%
CAN
$40 on Amazon
BEAT
AMAZON
$50
– $10 rebate
in-store
will buy at store over Amazon
(female: 71% / male: 62%)
65%
$75 on Amazon
The majority of customers will shop
and buy more often at stores that have
Amazon price-match rebate guarantees
will buy at store over Amazon
(female: 69% / male: 61%)
Consumer propensity to visit and buy more by retail category, when
the retailer offers an in-store rebate that matches an online price
visit
more
buy
more
visit
more
$100
– $25 rebate
in-store
63%
buy
more
$200 on Amazon
apparel
56%
51%
entertainment
50%
$250
– $50 rebate
in-store
48%
appliances
48%
50%
furniture
45%
45%
automotive
42%
42%
housewares
47%
48%
building tools
supplies
40%
43%
office supplies
46%
will buy at store over Amazon
(female: 67% / male: 58%)
47%
62%
$400 on Amazon
electronics
mobile
technology
52%
55%
toys
43%
40%
$500
– $100 rebate
in-store
will buy at store over Amazon
(female: 65% / male: 58%)
dynamic pricing in a smartphone world
a shopper showrooming study by parago 11

12. KEY INSIGHTS BY INCOME
59% of households with
$200,000+ annual incomes
buy on their phones
weekly while in-store
All income levels up to $200,000 buy on their smartphones while
in-store as much or more than on computers or other devices
How often do you visit a store to check out a product and buy it on a smartphone while you’re there?
$200,000+
$100,000–
$199,000
$50,000–
$99,999
$20,000–
$49,999
$19,999
every week
59%
30%
26%
27%
33%
at least once
per month
14%
31%
28%
28%
22%
a few times
per year
24%
21%
27%
24%
19%
How often do you visit a store to check out a product and buy it online (but not on a smartphone) instead?
$200,000+
$100,000–
$199,000
$50,000–
$99,999
$20,000–
$49,999
$19,999
every week
65%
27%
26%
24%
31%
at least once
per month
12%
34%
32%
34%
21%
a few times
per year
20%
35%
38%
38%
34%
dynamic pricing in a smartphone world
a shopper showrooming study by parago 12

13. KEY INSIGHTS BY INCOME
The higher the income, the greater the propensity to switch to Amazon to save $5 on a $50 item
$200,000+
$100,000–
$199,000
$50,000–
$99,999
$20,000–
$49,999
$19,999
SAVE $5 on a
$50 item
73%
66%
62%
62%
51%
$10 on a
$100 item
82%
79%
75%
76%
69%
$50 on a
$500 item
82%
85%
84%
86%
74%
Switch to Amazon to save on a similar item, even though it’s not an exact match
$200,000+
$100,000–
$199,000
$50,000–
$99,999
$20,000–
$49,999
$19,999
SAVE $10 on a
$50 item
61%
49%
44%
45%
49%
$20 on a
$50 item
68%
53%
50%
52%
51%
$20 on a
$100 item
50%
59%
62%
60%
51%
$25 on a
$500 item
49%
50%
49%
53%
44%
$50 on a
$500 item
71%
72%
73%
76%
60%
$75 on a
$500 item
82%
85%
87%
86%
51%
The majority of customers will shop and buy more at stores with Amazon price-match rebate guarantees
Will buy from a brick-and-mortar store with the following Amazon price-match rebate savings
$200,000+
$100,000–
$199,000
$50,000–
$99,999
$20,000–
$49,999
$19,999
SAVE $10 on a
$50 item
57%
64%
68%
70%
63%
$25 on a
$100 item
63%
63%
67%
65%
66%
$50 on a
$200 item
55%
57%
64%
65%
69%
$100 on a
$500 item
61%
55%
62%
64%
67%
dynamic pricing in a smartphone world
a shopper showrooming study by parago 13

14. KEY INSIGHTS BY INCOME
Propensity to visit and buy more by retail category, when retailer matches online price with a rebate
$200,000+
$100,000–
$199,000
$50,000–
$99,999
$20,000–
$49,999
$19,999
visit
more
buy
more
visit
more
buy
more
visit
more
buy
more
visit
more
buy
more
visit
more
buy
more
apparel
59%
47%
55%
60%
57%
50%
57%
51%
57%
49%
appliances
51%
49%
46%
56%
48%
51%
52%
47%
46%
41%
automotive
43%
47%
43%
47%
44%
45%
43%
39%
38%
32%
building tools
supplies
39%
49%
38%
49%
41%
43%
43%
42%
38%
23%
electronics
mobile
technology
57%
47%
53%
60%
54%
56%
51%
56%
56%
39%
entertainment
55%
37%
48%
55%
49%
46%
51%
48%
52%
41%
furniture
33%
57%
48%
49%
46%
47%
46%
42%
44%
32%
housewares
51%
47%
42%
55%
48%
47%
45%
48%
59%
39%
office supplies
53%
47%
49%
54%
45%
46%
44%
47%
44%
47%
toys
63%
37%
45%
43%
42%
41%
43%
39%
41%
38%
dynamic pricing in a smartphone world
a shopper showrooming study by parago 14

15. parago creates engaging solutions that inspire actions impact results.
As the most comprehensive single-source provider for incentives and engagement,
we deliver $2 billion in rewards to 50 million people worldwide each year with advanced technology.
Our relentless focus on innovation drives better results, making us the smart choice.
consumer rebates promotions | employee rewards recognition | sales channel management
CONTACT
Rodney Mason
Chief Marketing Officer
rodney.mason@parago.com
972.538.7336
www.parago.com
© 2013 parago, inc. All rights reserved.