December 12, 2011
By the ZippyCart Content Team
Many small brick and mortar retailers around the country were less than pleased with Amazon’s promotion of their new Price Check mobile application this past weekend. On Saturday (12/10), Amazon offered customers a 5% discount up to $5 for using the new application. The application, called Price Check, enables shoppers to compare Amazon prices with product prices in physical stores. The information can be relayed through the app by scanning bar codes, photographing the product, speaking the product name or sending a text message. The promotion was eligible for up to three items, which saved some customers a total of $15.
This promotion caused a big huff among small brick and mortar retailers who felt the promotion was encouraging shoppers to come into their stores but leave without buying anything. Another aspect of Saturday’s deal that irked retailers is that Amazon isn’t required to collect state sales tax from online sales. Because of this, products are always cheaper on the ecommerce solution than at physical stores where sales tax is required.
Retailers selling music, DVD’s, electronics, sporting goods and toys were effected the most on Saturday as those were the products Amazon’s promotion focused on.
Although brick and mortar retailers see the purpose of the Price Check application as predatory towards small businesses, Amazon insists it’s purpose is to save shoppers money. Sam Hall, director of Amazon Mobile, said this about the application:
“Price transparency means that you can save money on the products you want and that’s a great thing for customers. Price Check in-store deals are another incentive to shop smart this holiday season.”
A statement on Amazon’s website stated, “By sharing prices, this helps ensure our prices remain competitive for our customers.”
On main point of contention with protesters of Amazon’s promotion was the unfair advantage Amazon has over pricing because they are not required to collect sales tax. Although the government is working on a bill that will require ecommerce solutions that sell more than $1 million a year in the United States and over $100,000 in a particular state to collect state sales tax. Currently, Amazon is not required to collect any sales tax from shoppers making their prices inherently cheaper.
Retail Industry Leaders Association’s executive vice president for public affairs, Katherine Lugar, had this to say about Amazon’s promotion:
“Retailers compete on price 365 days a year, and at no time is that competition hotter than during the make-or-break holiday shopping season.However, by continuing to evade collecting state sales taxes, Amazon’s exploitation of a pre-Internet tax loophole is resulting in a 6 to 10 percent perceived price advantage over their competitors on Main Street.”
Amazon further defended the promotion, insisting that it was meant for price comparisons in “major” retail stores.
Andrea is originally from Vancouver (not Canada), Washington (not D.C.) but currently resides in Seattle, WA as she finishes up her last two quarters at Seattle Pacific University. Majoring in communications and minoring in business administration, Andrea has big dreams of a career in public relations. When not writing for Zippycart or studying for class (hah!) she enjoys the chaos of living in a house with 5 other girls. Follow her adventures on Twitter: @andrea_ruge
What I thought was really interesting was how on Dec 26th Amazon had a custom letter on their homepage pushing Amazon Prime. I think Amazon is really going to take over with that service and other eCommerce websites are going to have a really hard time competing!