Retail association pissed about Amazon.com’s Price Check app

The Retail Industry Leaders Association isn’t too happy about Amazon.com’s Price Check app and a new promotion that the Seattle online retailer is unveiling this Saturday.

The company announced this week that shoppers who perform a “price check” using the bar-code scanning iPhone or Android app while considering in-store purchases will receive $5 discounts on Amazon. (Shoppers can do up to three price checks for a total of $15).

We imagined retailers wouldn’t like the idea too much, given that it allows Amazon to poach shoppers at the point of sale. And, guess what? They don’t.

Here’s a statement that the Retail Industry Leaders Association’s Katherine Lugar issued today about the 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 6-10 percent perceived price advantage over their competitors on Main Street.

Amazon’s aggressive promotion of its Price Check App shows the lengths they are willing to go to exploit this tax loophole, and is a stark reminder of why Congress needs to act to protect retailers on Main Street.  A failure to act is an implicit endorsement of a subsidy of Amazon, a subsidy that distorts the free market and puts jobs on Main Street at risk.”

And the retail association isn’t the only one taking shots at Amazon.com this holiday season over the app. In a post titled “Amazon’s latest dick move,” The Stranger used some colorful language to encourage shoppers not to use the Price Check app.

Writes Paul Constant:

“An online retailer convinces customers to do product research for them while simultaneously using small businesses as unpaid showrooms. Someone must have had a huge laugh in the South Lake Union conference room where that idea was brought up.”

Previously on GeekWire: Amazon will offer $5 discounts to shoppers who use its Price Check app

 

  • Guest

    Paul Constant spent 8 years as a book buyer for the Elliott Bay Book Company, a fact he conveniently leaves out of all the 200-word articles he writes to bash Amazon. http://www.linkedin.com/pub/paul-constant/9/1a6/ab2

    Anecdotally, having shopped at both Amazon and Elliott Bay, shoppers at the latter don’t make their decisions based on price.

    • http://blog.daryn.net daryn

      “Anecdotally, having shopped at both Amazon and Elliott Bay, shoppers at the latter don’t make their decisions based on price.”

      That’s definitely true at a lot of local businesses, but I’m not sure if people are paying a premium (or accepting an unknown premium/discount) for the sake of supporting local businesses and the shopping experience, or because they have no choice if they want the product right then and there. 

      Price Check may suck for businesses that aren’t competitively priced (and there are plenty of valid reasons why retailers price the way that they do, and the sales tax loophole definitely skews things even further ) but it is a customer empowerment tool, and in that regard, I’m all for it. 

      • Mike Mathieu

        At some point people will realize that there’s value in curating/editorial selection, or even in being in a nice environment with other people around. Today that price is bundled into the cost of things you buy. In the future it might not be.

        • http://blog.daryn.net daryn

          Absolutely agree with you Mike, and think a side effect of this is that consumers will get more “special” experiences when retail shopping that make the premium worthwhile. The retailers who will be hurt are those that leverage the consumer’s lack of competitive pricing and cost information to charge high margins without additional added value. 

          I think, regardless of Jason’s history here in Seattle, Fab.com is doing a great job of balancing price with a strong focus on curation and user experience – and obviously some really smart people just invested another 40M behind that thesis. 

        • http://twitter.com/dougeckhart doug eckhart

          Apple seems to have realized that some time ago…and they’re going gangbusters

  • Jonah

    Note that the retail association wants Congress to act to protect retailers, NOT consumers.

    • Eric

      Amazon isn’t playing by the same rules. I’m a consumer, but I can spot a cheater in the marketplace when I see one. The statement above from the Retail Industry Leaders Association is spot on. Either tax Amazon fairly or tax no one.

      • Guest

        Amazon is playing by the same rules as every retailer is. If a state wants to receive use tax from customers who make out-of-state purchases, that’s a dispute between the state and the taxpayer. Amazon exists to serve me, the customer, not the tax collector (unless the tax collector wishes to pay for such a service).

      • Anonymous

        Right now Amazon.com is playing by the rules.  They are being taxed fairly per Quill vs. N.Dak (look it up).  Let’s face it, even without the sales tax perk, it’s far cheaper at Amazon.com for most items AND most things ship free.

        I save on GAS and COST … and I don’t have to wonder if the store I am going to has everything I want. It’s not just about price. For me, it’s also convenience.

        • LoBam

          Agreed.  I live in the city, and while that makes small shops and boutiques easily accessible and the nightlife just out of this world, it makes running to my local big box store for vacuum filters, toilet paper, and bread crumbs a hassle.  Stores like Amazon.com, Alice.com, Soap.com–they serve a subset of the population that almost needs them.  

          And just because they have the cheapest price (often by margins so low, they’re not even statistically recognizable), doesn’t mean it is really the best deal.  I can only order things on Amazon I don’t mind waiting for.  In our society, where everything revolves around instant gratification, I have a hard time seeing any internet-only consumer company taking over the world.

        • Mythicalme

          Has anyone even stopped to consider the full cost of just relying on price as a guide to where to shop? In my lifetime I have seen the US go from manufacturing to service with lots of jobs shipped overseas. Why because companies are trying to remain competitive price-wise. Walmart is built on the mantra of “Pay less, live better”. How is it living better when you don’t have a job because everything you buy is made in China?

          In North America, if you don’t have a decent college education your choice of job is very limited now. To get a decent paying you have get a gigantic loan to pay for the escalating college costs. Why are the costs escalating? More demand for limited space.

          I’m a small business owner, which fortunately doesn’t need to compete with the internet directly. However, it always annoys me when I have a potential customer come into the store and tell me that they can get what I sell cheaper on the internet.I employ a part time employee, I buy goods used in the store locally. I pay taxes. I rent storefront property. I might not be a big player in the local economy, but my part time employee feeds her children using the wages I pay her.

          Go ahead, buy on-line. Go ahead, buy from Wal-mart. Just don’t complain about the loss of jobs, perhaps your own.

  • http://twitter.com/matttillotson Matt Tillotson

    Fighting technology-enabled information flow is always a losing strategy. Just having shelf space isn’t enough anymore. I think small retailers are going to have to tightly specialize and/or wrap services around their products to survive. Real-time price checking and promotions will accelerate. The government should not stem this tide.

  • Anonymous

    lol, oh I have a feeling they will jsut have to get over it lol.
    http://www.Ultimate-PrivacydotNet

  • JasonF

    The Price Check app provides superior value to consumers.  Period.  And you can’t get mad at any company for providing superior value to consumers. 

    Disruption sometimes sucks for the disrupted, but disruption is almost always fueled by delivering superior value to users.

  • http://blog.offbeatmammal.com Offbeatmammal

    While I feel sorry for a lot of retails the whole tax argument is disingenuous…  given that most retailers show a pre-tax price on the shelf and expect consumers to do the math to add State and Federal taxes as required… 

    Amazon also has a hidden cost… shipping (though Prime and the $5 bonuses sure help make that go away)

    So this leaves retailers with one more avenue … up-level the service you offer. Get to know your customer, up-sell appropriately, build rapport and loyalty, add convenience, be part of the community and emphasis the personal touch… don’t just drive to the lowest cost operation selling the highest profit margin item

    that said… a world with just Amazon and Costco does rather scare me

  • http://twitter.com/ih8tt I Hate ATT

    stop bitchin’ and start competing using price

  • http://twitter.com/j2sw Justin Wilson

    treat the customer better. have friendlier staff. Recent visits to Target, Best Buy, and some others have all resulted in products not being in stock, unhelpful/uneducated sales staff, and a general annoyance toward the customer.

    And Katherine Lugar is shoving the term “main street” down our throats a little too much.  

  • Ally

    In the interest of accuracy, it’s 5% off the purchase price up to $5 off. And it’s only on Dec 10, according to their website and app.

  • http://www.dogwalkblog.com/ Rufus Dogg

    There is no such thing as the “sale tax loophole” in many states. States such as Ohio have a Sales and Use tax, which means even if the retailer doesn’t collect the tax at POS, the consumer still owes it. Eventually, the states’ Attorneys General will be successful in cracking open Amazon’s customer list and they will be sending letters; they will be collecting back taxes. You can pay now or pay later, but you will pay sales and use tax.  

    BTW, Ohio is already sending letters to all businesses asking that they fess up to online purchases for which they did not pay taxes. They will get their money. Ohio is shameless about clawing back overpaid welfare payment; they will have even less of a heart when it comes to evaded sales and use tax.

    • stopwhining

      Rufus, you are correct.  Every sales tax state has a use tax provision that is routinely ignored by citizens (most don’t know about it) and states have been notoriously weak about informing citiznes of their use tax obligations, favoring instead beating up on innovators like Amazon.  In WA state, it is moot since Amazon has a physical presence and collects sales tax from WA customers.  In WA, dept. of revenue audits businesses to collect use tax but does nothing to collect it from citizens.  Most states prefer bashing the online retailers who do not have a physical presence, with Amazon being the most prominent. 

      If states want this to be different, Congress has to overturn Quill.

  • guest

    It doesn’t matter to me what Amazon does at this point. Come Dec. 31, it may be my choice to remove my books from Amazon’s catalog, and I go knowing that in the 5 years I have dealt with Amazon there was never a meaningful return on my investment. This is lower than anything I have seen. True, there have always been price checkers. What is insulting is Amazon’s proudly made offer to customers IN PUBLIC. It proves that Amazon is telling booksellers that if they don’t like it they can eat cake.

  • Dan Weld

    Actually, I’ve checked Amazon reviews on a product before buying it in a physical store. There’s more to a product purchase besides holding it and besides price. It’s not like Amazon isn’t bringing some additional value to the consumer making a purchasing decision.

    • Sigh

      How are the brick and mortar stores compensating Amazon and other online sources of product information after I buy a product in their locations after I research them online?  This is a two way street, competition is challenging, now that everyone knows the rules, move on.

  • Duane

    Amazon’s tool is not mostly about benefiting the consumer.  Amazon is using consumers to gather data so that it can adjust its own pricing.

  • Sl3889

    Just to be up front, I am a specialty retailer with both a store front and a good sized web presence. That said, Amazon’s app will do more harm to the Best Buys and Wal-Marts of the world than independents like me. Why? In stores like mine we don’t keep the product boxes out on the sales floor – there is noting for the app to scan. My store will be affected, we simply won’t be the source of information.

    Several comments mention that as a store front I should be more price competitive. I sell cameras and photo gear which has a 5% to 20% profit margin after all dealer rebates and incentives. This is typical of consumer electronics, soft goods on the other hand have a 50% or greater margin. 

    What I cannot do is match Amazon’s pricing when they decide to sell goods at a substantial loss. Amazon does this on over half of their product line in this category. You can prove it to yourself – if a dozen known retailers from big to small are all priced within 10% of each other and Amazon (or any other web store) is well below that price they are selling the product as a loss leader.

    I pay taxes into the state’s coffers, I employee a couple of dozen people who make a better than minimum wage living which means that they can buy the stuff that YOUR company sells. I include a notice with my web sales referring the purchaser to their state’s Use Tax requirements. I would welcome an ‘internet sales tax’ because I’m tired of our states losing revenue and going broke. I demand better schools and better infrastructure, sales taxes pay for that.

     I am responsible, community-centric, pro-internet, competitive and value oriented. However I will be out of business inside of six months and it isn’t about internet competition. It’s smart phones that will be my undoing. But I must say that I am appalled by the sheer glee or  I sense in some comments when it comes to local retailers taking it on the chin. Other than saving you 15%, what has Amazon done for you or your neighbor recently?

    • stopwhining

      The state is “going broke” because it spent too much when times were good, spending every last penny of real estate excise tax that came in the state’s coffers on unsustainable programs.  If you want better schools, tell your lawmaker to spend less on social and health programs that have no return and to institute reasonable reforms in K12 to improve student achievement.

      Amazon pays lots of B&O–probably a little more than your company.  Trying to tie Amazon’s business practices to quality schools is tenuous at best.  Requiring retailers to collect and remit sales tax to state of the buyer is easier said than done.  Especially for smaller ones.

  • Ethellucile

    It’s not just the Retail Association that doesn’t like this. I, and many of my friends, have had enough of the greedy-I-want-it-all-NOW-at-the-expense-of-everyone-else companies like WalMart and Amazon. We ALL used to shop at Amazon and we have pledged to boycott them from today forward. As a matter of fact, I recently bought 2 books from them but will return both and cancel my account ASAP. I have a couple of friends who aren’t going to close their accounts and will still buy textbooks from Amazon as there are few other options but even those people have agreed that they will buy textbooks and nothing else. We are really fed up with the insatiable greed….

  • Needing This

    Needs a WP7 client, or can I do via a browser as well?