Online Retailer Ups the Stakes for Local Shops (sort of)

Last week, Amazon announced that it was introducing version 1.2.1 of their Price Check mobile app. The principle is simple, find out if you’re getting the best price while you’re out shopping. Simply scan the bar-code for the product in question, or enter the product in the search box and it will tell you what the product cost on Amazon is. The twist is, you also share with Amazon the price you’re looking at in the local store to “…ensure our [Amazon’s] prices remain competitive for our customers.

To encourage your participation, Amazon will pay you up to $5 off your purchase up to 3 times. This is both a brilliant pricing strategy by Amazon, and a terrifying reality for local shops and major retailers alike. And the outrage flowing Amazon’s way is truly impressive.

According to Josh Constine in his article Use PriceCheck and Screw Local Retailers published on TechCrunch,

“The app is designed to get you to visit local shops, try out a product, submit valuable pricing data to Amazon, leave without buying anything, and make your purchase on Amazon instead.”

Constine continues:

“It also promotes show-rooming where users get the benefit of checking out a product in person, but then neglect the shops that pay overhead to offer that service.”

The number of online bloggers and news companies weighing on the topic is staggering, some even calling to “Occupy Amazon”:

As if that wasn’t enough, the Puget Sound Business Journal reports that,

“U.S. Sen. Olympia Snowe (R-Maine). Snowe is angered over the Amazon app, calling it “an attack on Main Street businesses that employ workers in our communities.””

Look, it’s true that this app could be trouble for local shops, but the reality is that most local shops can’t be and don’t try to be the low-price-leader. The even better news here is that while there will some individuals who take advantage of the local store by examining the product in their store and then buying it Amazon, the reality is these people were already participating in this behavior. What’s more, they don’t represent the majority of shoppers in a local business. The reality of living in a smart-phone society is that we all have product pricing at our finger tips 24 hours a day. This app really isn’t anything new, but it does make it easier to comparison shop. 

With this app, Amazon no longer has to spend quite so much time, money, and energy researching what their competitors are pricing products at — but from the local shop and major retailer’s position, they either have to make the conscious decision to NOT be the low-price-leader or to find another way to differentiate themselves. And if there are any local retailers still operating under the delusion that they can be the low-cost provider, it’s past time to start thinking about a very different business strategy. The truth of the matter is, being the low-cost provider went out the window when Walmart came to town, and when Amazon first hit the internet.

Did you enjoy this post?