The small-business community has enjoyed an anything-but-cordial relationship with Amazon.com since the e-commerce pioneer launched in 1995. Beyond the challenge Amazon poses to traditional bricks-and-mortar stores simply by virtue of its size and presence, many small-business owners assert that Amazon has an unfair advantage in the marketplace because the online retailer presently isn’t required in most states to collect sales tax.
Just when many people thought the relationship couldn’t get any more contentious, Amazon introduced a mobile app in time for the holidays that effectively allowed the e-commerce king to barge into traditional storefronts and promote competitive prices on shoppers’ smartphones.
Amazon on Dec. 6 began a massive promotional push for Price Check, a mobile app (for iOS and Android smartphones) that lets users scan bar codes to find out whether the products on store shelves are available online at a lower price from the e-tailer. For their trouble, customers who purchase scanned items online through Amazon receive a 5 percent discount (up to $5).
In response to the mobile app’s arrival, U.S. Senator Olympia Snowe of Maine — a ranking official on the Small Business and Entrepreneurship Committee — went on the offensive against Amazon on Dec. 8. “Incentivizing consumers to spy on local shops is a bridge too far,” Snowe said in a prepared statement. “During the busiest shopping season of the year, we should remember that our local restaurants, book shops, and hardware stores are the economic engines in our communities.” Snowe then called for an immediate end to the Amazon promotion.
Amazon didn’t pull the plug. “The goal of the Price Check app,” Amazon said in a statement to BusinessWeek, “is to make it as easy as possible for customers to access product information, pricing information, and customer reviews, just as they would on the web.”
A Reality Check for Price Check
Although Amazon has yet to reveal just how many shoppers actually took advantage of the app in 2011, Price Check is believed to have helped the e-commerce giant snatch sales from small businesses during the recent holiday shopping season.
According to the latest data from comScore, the final e-commerce push before Christmas propelled online holiday spending in the U.S. to $35.3 billion, up 15 percent versus last year. But despite the online shopping surge, Amazon doesn’t appear to have cashed in on the e-commerce craze to the extent originally anticipated. In fact, Goldman Sachs is even predicting that Amazon could fall short of overly-optimistic fourth-quarter sales estimates.
All told, Amazon may have little added incentive to pull the app as the post-holiday retail blues begin descending upon businesses nationwide. Consequently, the impassioned complaints by small-business owners will likely continue to pelt Amazon for the remainder of 2012.
Small-business owner Marie Dwyer tells CBS News that she finds the Price Check app “offensive” and wishes Amazon would play fair. “It’s just not the way I’d run my business,” Dwyer says. “We don’t chase our business and we don’t chase other retailers to get the business that we have.”
New Cause for Customer Loyalty
Jason Brewer, vice president of communications and advocacy for The Retail Industry Leaders Association, is no fan of Price Check. According to the small-business advocate, Amazon’s app does little except to encourage shoppers to use retail stores as showrooms before buying online.
“This is an underhanded way to send shoppers online,” Brewer says. “This app allows Amazon to exploit a loophole that allows them to sell the exact same product as bricks-and-mortar stores and not charge sales tax.”
In the big picture, however, Forbes contributor E.D. Kain believes that the mobile app controversy may provide just what many small businesses need during the retail lull of early 2012: a jolt of creative energy.
“Local businesses have to compete by building not just a shop but an experience,” Kain asserts. “Customer loyalty can’t be had simply by the cheapest prices any more. Local booksellers and retailers have to be even more clever than the online giants and big-box stores. But they have something that the big competitors don’t have: Each local outfit is unique. Plenty of customers are willing to pay a premium just for the quirkiness of shopping at a place that’s one of a kind.”