Two days ago Amazon.com announced that it will be giving a 5% discount to users of its Price Check app that go into local businesses, scan a product, and then purchase the scanned product on Amazon within 24 hours. While this price checking sounds like a great deal for consumers, it will cost small businesses dearly as they are now turned into show rooms for the online giant.
According to an article run in the LA Times:
The Retail Industry Leaders Assn. said the app unfairly uses bricks-and-mortar stores as “showrooms to then purchase merchandise online from inside the store.”
“Central to this tactic is Amazon’s continued practice of using a pre-Internet loophole to avoid state sales tax collection, a move that gives them an unfair competitive advantage over Main Street retailers,” the group said.
Danny Diaz, a spokesman for the Alliance for Main Street Fairness, echoed that sentiment, saying “no retailer can compete with the special treatment” Amazon has by not collecting sales taxes.
The scenario works out this way: Consumers that have the app installed on their smart phones are instructed to go shopping on the 10th of December. When they find a product they are interested in, they scan the item with their phone, enter the item price, and the phone relays the price information and the user’s geo location to Amazon. Amazon then returns price check information back to the user with at least a 5% incentive to purchase the item direct from Amazon.
Now, I’m not against using price scanning applications in stores. I’ve used them several times in making feature and price comparisons. It comes in real handy when evaluating a product on a shelf that may have a limited product description attached to it. The issue I have with this scanner is that Amazon is collecting price information from the retailer and encouraging customers to shop online instead of at the retail store. Plus all the competitive price intelligence Amazon collects will allow it to custom price items, offering a price that is just low enough to pull you away from the brick and mortar but high enough to keep their margins in line. Local retailers won’t be able to compete on a equal playing field if they have a steady stream of browsers come into their stores and then leaving to order their item online from Amazon.
The Amazon Price Check app will turn small brick and mortar shops into show rooms for the online giant while it pulls customers away with the lure of a small discount in price.
What do you think? Will you be using the Amazon Price Check App? Is this app bad for business? leave a comment below.