Amazon Price Check app draws protests from some retailers

http://www.chicagotribune.com/business/breaking/chi-amazon-price-check-app-draws-protests-from-some-retailers-20111209,0,1595833.story

by wglb • 15 years ago

26 33 15 years ago

chicagotribune.com

wglb• 15 years ago

I was thinking that this was a particularly clever idea--given that Amazon seems to very good at "pricing arbitrage", as someone smarter than I said.

Some of the stated objections are that Amazon, who doesn't always collect sales tax, is taking business from local stores.

tuppy2• 15 years ago

"Amazon [...] is taking business from local stores."

Why is this complaint even taken seriously? If your business model is superseded by someone else who can deliver a product in a manner that customers prefer (in this case, cheaper and delivered to their doorstep) then you either compete or you die. Because that's what competition is.

mhb• 15 years ago

Their business model hasn't been superseded. Amazon is free-riding on the stores' display of physical goods. If the shoppers don't value being able to view, handle or browse the physical goods, why are they in the store? So they value having the store there but don't want to pay for it.

Maybe Amazon's plan is to drive these stores out of business and then open its own display stores where people can go to inspect merchandise before ordering it online.

brk• 15 years ago

I think local retailers are given "special treatment" in that they don't have to add a shipping cost on top of the item price.

Consumer retail is evolving, as it has been forever, and will continue to do so into the future.

Local retail shops can cater to immediate gratification desires by shoppers. I can't just order up a latte on Amazon and have it NOW. If I need a new HDMI cable to watch a DVD with some friends tonight, then even free overnight shipping won't solve my needs.

But, for many other things... A new pair of shoes, a new coffee pot, a bottle opener, etc., I can wait 2 or 3 or 7 days to get the item. The Internet isn't going away, and even if I had to pay sales tax, I'd probably still continue to buy things on Amazon because it's easier for me than going to a retail store and dealing with potentially limited selection, crowds, etc.

These companies are simply NOT going to beat Amazon into submission. It's far too late for that, and I actively despise any retailers who try to increase my tax burden vs. offering a valuable service to me.

thesis• 15 years ago

Amazon offers same day shipping in some areas, obviously still not instant gratification but they are getting closer. An awesome company in my opinion.

extension2• 15 years ago

I think local retailers are given "special treatment" in that they don't have to add a shipping cost on top of the item price.

Yeah, those lucky retailers get to blow off the shipping cost just because they aren't shipping anything. But they do have to pay a fee just for the privilege of doing business, and Amazon gets to do business without paying that fee. And now Amazon is using their dusty old brick and mortar stores as a showroom. I can see why the local retailers are feeling jilted.

Terretta2• 15 years ago

No, they don't pay a fee.

You pay a fee for making a purchase. Local retailers should be arguing that they don't want to be the tax collectors, so their prices would look lower too.

Either way, you, the buyer, are responsible for paying the sales and use tax, regardless of whether you bought from BestBuy or Amazon.

Again, both BestBuy and Amazon "get to do business without paying that fee", as it's not something either of them pays.

To enjoy the competitive advantage of having a local presence, BestBuy does agree to help your local government collect your taxes (and in fact gets to KEEP a percentage of the taxes they collect!), while Amazon, who is not in your local jurisdiction, relies on you to pay the tax you owe.

ugh2• 15 years ago

Do you really think that matters? Amazon seems to be doing really well (and retailers not so much) even in countries where all retailers have to collect VAT (like Germany).

Online shopping is just more convenient and gives the buyer much more control and information.

FireBeyond• 15 years ago

Yeah, it costs Amazon nothing to run...

Maybe Amazon should be complaining that the retailers don't have to manage huge server farms, or employ hundreds of technical staff, or so on.

They both have costs associated with doing business. Amazon has to pay ongoing infrastructure costs that the retailers don't, they have to take care of sales and other taxes that Amazon might.

anamax• 15 years ago

> But they do have to pay a fee just for the privilege of doing business, and Amazon gets to do business without paying that fee.

They pay that fee in return for services that they get, services that Amazon doesn't get.

bluedevil2k• 15 years ago

There's a local article in the Austin Business Journal quoting a guitar dealer who says "Amazon charges $1000 for a guitar, but when I charge $1000 for the same guitar, I have to charge $1082.50 because of sales tax".

What he doesn't consider is that Amazon is more than likely charging $800 for that guitar.

The "locals" make claims about price difference being solely due to sales tax, but overhead is more the reason than anything else.

cdk• 15 years ago

I think competing on price alone against behemoth like Amazon is a losing strategy for local businesses. For example I could be buying a case of wine online but I go to my local wine store because even though it is a little more expensive the owners are good at recommending wines and they constantly refresh their selection. Which is great for someone like me who isn't a connoisseur.

cmwright• 15 years ago

Although I agree with this for the most part, it goes both ways. A huge use case for this app (for me at least) is to be able to quickly look up product reviews by other consumers. If I'm already in the store, I might well buy the product there if it was given good reviews on amazon. In this case, amazon has spent the money to develop the app but the store gets my money.

iradik• 15 years ago

Most stores will not match amazon's pre-tax prices today. Why would it be any different if amzn collected tax?

timjahn2• 15 years ago

Last year, I needed a backpack for travel/multi-use/etc. Something that would fit my laptop, a small video camera, and misc other stuff.

I went to Best Buy to see what they had, and it wasn't much. They had one bag that looked nice though and the salesman told me how amazing it was.

It's Best Buy. Of course I didn't believe him. So I pulled up the iPhone Amazon app, scanned the product barcode, and saw what the reviews were. Turns out, the salesman was right - this bag was very well reviewed.

And Amazon had it for $20 less. So I left Best Buy, went home, and bought the backpack off Amazon.

There will always be a place for local, brick-and-mortar stores. As others have mentioned here, Amazon can't fulfill instant gratification.

But I think instant gratification is a small percentage of the overall buying experience. Amazon can help with the rest.

(If anybody's interested in the kick ass backpack I got, here's the Amazon link. Looks like it's more expensive now: http://www.amazon.com/Lowepro-CompuDaypack-Camera-Bag-Slate/...)

danso• 15 years ago

So what could Best Buy have done for you that this salesman couldn't? He apparently gave you good advice, and you had a chance to touch and feel the product.

I will admit that $20 out of $100 is not an insignificant discount...but how much less of a mark-up would Best Buy have to have so that you would purchase its product?

codeaholic• 15 years ago

I will pay $5-$10 more for something immediately at a B&M store vs waiting for Amazon, but no more.

timjahn2• 15 years ago

Best Buy simply would have had to match Amazon in order for me to buy it in their store.

Because I didn't need the backpack immediately, I'd rather save $20. The backpack was $80 at Best Buy and $60 on Amazon, so it was a pretty good saving.

dfragnito• 15 years ago

Nice app but to totally circumvent the retailer and shipping fees, they should invest in quantum teleportation technology.

wtvanhest2• 15 years ago

I know everyone thinks this is bad for retailers, but it really is only bad for them in the short run. In the long run the biggest negative impact will be felt by retail REITs, and those that have long term debt on retail buildings.

wtvanhest2• 15 years ago

*this is because retailers will on average lower the rent they are willing to pay as they have to compete with online sales channels.

Amazon Price Check app draws protests from some retailers

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