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Amazon makes a move which could fundamentally change retail sales

By

December 8, 2011

The Price Check by Amazon App is creating a storm in the retail industry

The Price Check by Amazon App is creating a storm in the retail industry

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.

About the Author
Mike Hanlon After Editing or Managing over 50 print publications primarily in the role of a Magazine Doctor, Mike embraced the internet full-time in 1995 and became a "start-up all-rounder" – quite a few start-ups later, he founded Gizmag in 2002. Now he can write again.   All articles by Mike Hanlon
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19 Comments

This is such a dick move. It's nasty, it's predatory and it plays to the worst instincts of the shopper. When people talk about the demise of small retailers, who put time, care and expertise into their shops, this is the sort of thing that's killing them.

What's worse is that Amazon is deliberately aiming to rob regular retailers of the one thing Amazon can't provide - actual touch and feel shopping. When you encourage shoppers to take the expensive 90% of their transaction through your competitor's store, and then hijack them at the till, I can't see how that's remotely fair.

People are already aware of online shopping, there's enough of this sort of retail-killing behaviour going on already without Amazon directly encouraging it. Way to destroy more jobs, Bezos! At least give the retailers a reach-around.

Loz
8th December, 2011 @ 08:25 pm PST

This is not going to end well. Honestly, I'd completely understand stores banning anyone caught barcode scanning their merchandise.

Alex Angel
8th December, 2011 @ 08:26 pm PST

The simplest way to stop amazon is to just put up a board in the store saying "NO PHOTOGRAPHY" for security reasons...LOL

chinna
8th December, 2011 @ 08:45 pm PST

I wouldn't get all that excited, unless the Amazon comparison price includes shipping. It doesn't pay to buy an item for $10 less if you have to pay $20 for shipping. I do a lot of internet shopping, especially for items I can't get locally, but I've learned to compare the "price plus shipping" price against the "brick & mortar store.

Of course, any innovation that promises greater efficiency and lower cost is going to be "unfair" competition- except for those retailers who get with the program and operate their own retail websites.

William H Lanteigne
8th December, 2011 @ 09:48 pm PST

This is unlikely to work for Norway (not that our puny population makes us that big of a target). Here, any import gets levied with the 25% VAT anyway as it comes across. Amazingly, they also apply VAT to the cost of shipping, making most any internett purchase (apart from books, which are exempt) shipped from the online retailer as expensive as the crazily priced merch in the shops here.

Alan Belardinelli
9th December, 2011 @ 03:58 am PST

As much as I like to shop at Amazon and save a few bucks. This one is below the belt to the local and perhaps small retailers.

Amazon gets a -C ... Regardless, I bet they'll reap the benefits.

Serge V. Richard
9th December, 2011 @ 05:59 am PST

+1 Loz, I buy A LOT of stuff online. But encouraging customers to actually GO to the store, touch, feel, try on items THEN order them online is just wrong! There have been grumblings in congress about passing internet taxation laws, and this might just be the straw that breaks the camel's back!

@chinna - once I was standing at Target with my smart phone in hand. I was comparing the item I was looking at with the item in Target's sale ad (you know you HAVE to have the EXACT SKU # or it creates a frackus), and a Target Associate asked me to put my phone away. He told me that I couldn't 'take pictures' at the store. I explained what I was doing, and that was OK. I DID want to take him and Target to task on that policy though. I hadn't seen that posted anywhere. But I didn't....

Stlheadake
9th December, 2011 @ 01:41 pm PST

Retailers do provide a valuable service: inventory immediately available, smell, touch and feel products, "shopping" in a real social setting (where else can you sip Starbucks and shop if not at the mall). Large mega malls and stores have killed the mom and pop stores that used to call you by your first name when you entered their store. So long Mayberry, hello computer.

Mark A
9th December, 2011 @ 04:39 pm PST

"The app is available at the Apple App Store and Android Market."

So once again, users of *OTHER* smartphones are SOL! No Windows Phone, no Symbian, no Blackberry, no WebOS...

I guess unless you are one of the annointed few, you don't get to be a part of this elite class of people!

Ed
9th December, 2011 @ 04:48 pm PST

Good luck trying to beat the internet.

Facebook User
9th December, 2011 @ 07:07 pm PST

I use most retailers for hands on examination and prepurchase support. Then I go on line for the best deal. Nearly all retailers will try to beat the price you find on line. If you have money to spend - shop wisely!

donwine
10th December, 2011 @ 11:29 am PST

I try to patronize the local small business. The big boys, though, are going to get price shopped. If I see something I like at malwart or best buy, I look it up on the net. I used to go home and look it up, but nowadays the phone cuts my decision making time considerably. Would the brick and mortars prefer I go home, and maybe never get around to coming back, or stay, check the price, and maybe if they're competitive, I buy the item that day?

Amy Fundenburg
10th December, 2011 @ 12:14 pm PST

Excuse me ... while i go buy stock in a company distributing 'in house' cell-phone blockers ....

This is war!

tkjtkj@gmail.com

tkj
10th December, 2011 @ 04:34 pm PST

This is a slap in the face to California ... we just gave them an extension on when they have to collect sales tax, so it's like we're financing this.

The brick and mortar benefit may be that if you don't know if that price in the store is a good one, Amazon will tell you.

If you're in your pajamas or if it's not in the local market, Amazon may be more convenient. But if you're in the store and you can return it there if it's DOA or you don't like it, are you really going to order it and deal with the delivery and the cardboard?

But the big thing is, Amazon wants your geolocation, along with your credit card ... that's just plain creepy.

Albert Sudonim
10th December, 2011 @ 09:47 pm PST

This one move will break Amazon's back, deservedly. The states will tax Amazon out of existence. This is just plain arrogant and bad, evil move.

Unfortunately, whoever likes shopping at Amazon will thereafter pay premium "to equal out the unfair advantage." Grabbing states/local princes will prevail as usual.

nehopsa
11th December, 2011 @ 12:41 am PST

I hate this. If I were the retail stores, I would sue Amazon. Not as individual places, but as a union. Amazon should have to pay a percentage for every product scanned then purchased. Otherwise it's a couple small steps to a monopoly in the books industry.

Ethan Brush
11th December, 2011 @ 05:17 pm PST

Here in Canada it's the exhorbitant cost of shipping that stops me from buying online from the States, not that U.S. retailers know where Canada is anyway. This idea makes me think of shopping in Mexico using the barter system. I can see it now... Amazon has it cheaper? Just show the store owner and start to haggle. No thanks. I would rather shop in peace and pay a fair price. This is predatory and creepy.

Terri Mason
14th December, 2011 @ 07:55 am PST

...and then there's Best Buy, who has online prices that they WON'T pricematch in their own brick-n-mortar store. Instead they force you to order it on the internet FROM ONE OF THEIR OWN COMPUTERS IN THE STORE, and you wait 30 minutes for the "cheaper" product to come from the back warehouse, not off the shelves.

Crazy!

Matt Rings
15th December, 2011 @ 10:48 am PST

I don't understand this announcement. I've had this Amazon price check app for months now. My main use for it is to check Amazon for reviews on a product. There are several other apps that check prices at multiple online retailers by scanning a barcode that have been out for quite a while. One of them is called "ShopSavvy".

RonC
5th January, 2012 @ 11:43 am PST
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