You walk into Best Buy, check out the cameras, pick one out, and order it online from Amazon. Best Buy serves as a showroom for Amazon. And Amazon undercuts Best Buy because it doesn't have to maintain its own showroom. This can't last.
There are several possible solutions. The easiest one to implement, I think, is for manufacturers to give physical stores a discount relative to online stores. The discount is essentially a fee for displaying the manufacturer's product. It will have to be big enough to keep brick and mortar retailers competitive with online retailers.
This works only for when a product needs to be displayed in physical stores. That's more true for some products (TVs, sofas, laptops, cameras, mattresses, ovens, etc.) than for others (generic things like cough syrup, milk, printer paper, etc.) Eventually, the generic products will be sold almost exclusively online. The non-generic products will be sold by a mix of physical and online stores, with physical stores staying competitive with online stores through the showroom discount they get from manufacturers.
There are several possible solutions. The easiest one to implement, I think, is for manufacturers to give physical stores a discount relative to online stores. The discount is essentially a fee for displaying the manufacturer's product. It will have to be big enough to keep brick and mortar retailers competitive with online retailers.
This works only for when a product needs to be displayed in physical stores. That's more true for some products (TVs, sofas, laptops, cameras, mattresses, ovens, etc.) than for others (generic things like cough syrup, milk, printer paper, etc.) Eventually, the generic products will be sold almost exclusively online. The non-generic products will be sold by a mix of physical and online stores, with physical stores staying competitive with online stores through the showroom discount they get from manufacturers.
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