Amazon makes a move which could fundamentally change retail sales
By Mike Hanlon
December 8, 2011
Amazon, one of the companies at the very forefront of online retailing in the United States is to make a compelling offer this coming Saturday for one day only - use its smartphone app (Android or Apple app) to compare prices, and they'll effectively pay you $5 to walk out of the store.
It is an historic move in the evolution of retail sales.
Mobile sales make up around 5% of American retail sales right now, but with the population heading for blanket smart phone penetration, the price comparison app might go mainstream quite quickly from here and retail advertising may never be the same again. Several such apps exist, but none with this level of promotional effort behind them.
The Price Check by Amazon App is designed to let users compare prices with Amazon.com and its merchants when you are standing in front of a real product in a bricks and mortar store. Products are identified by scanning a barcode, taking a picture, speaking the product name or using text search, then compared to Amazon prices. You can then, of course, purchase the product online.
On Saturday December 10 Amazon is sweetening the deal by giving customers who use the app (with geolocation switched on) a discount of 5 percent (up to $5) if they buy the item they price checked through Amazon (within 24 hours) instead of accepting the price in front of them for the convenience of taking immediate possession of their purchase. The offer is valid for up to three items per customer.
The advantages of getting a customer to use a mobile app are obvious from the point of view of the customer, but in grabbing the lion's share of attention on a critical shopping day, Amazon's move seems well calculated.
A mobile app gives online retailers the ability to make a bid on a customer's patronage at the time- and point-of-sale, inside a competitor's bricks and mortar. Offers can be made and thresholds established for changing behaviors with incentives, at the same time as creating a marketing intelligence tool par excellence.
The offer could cost the company a lot of money if everyone downloads the app and plays along, though its move establishes it clearly as an online thought leader and with the news coverage likely to be massive. The stunt offers good value for money, particularly when you consider the price comparison app looks set to go mainstream as a new weapon in the war between bricks-and-mortar retailing and online retailing and Amazon will be leading the charge. The knowledge it gains will enable it to discern patterns on the exact deals their bricks and mortar competitors are prepared to do, and react in real time.
For bricks and mortar retailers, this could be a telling blow, and it is a fact that the industry is very aware of:
"The Retail Industry Leaders Association (RILA) reacted to a new smartphone App from Amazon.com that encourages holiday shoppers to use brick 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." (RILA)
Regardless, it's going to be worth watching the take-up of the app, as the news of this offer will focus enormous attention on Amazon's shopping comparison app and its abilities to tell you where you'll get the best deal. The app is available at the Apple App Store and Android Market.
This is big! Mobile phone retail is about to become a significant factor in purchasing decisions.