Amazon’s New App ‘Price Check’ Irks U.S. Retailers with $5 Discount

E-commerce giant Amazon has released a smartphone app that gives shoppers at brick-and-mortar stores a 5 percent discount if they buy the same item from Amazon instead — and retailers aren’t happy.

Jeff Bezos, CEO of Amazon, unveiling the new Amazon tablet, the Kindle Fire, last month. Photo: UBIQUITY PhotoStream/Flickr

Using the free app, called Price Check, shoppers can type, scan, photograph or just say a price they see at a store, and send it to Amazon. If they then buy the product from Amazon any time tomorrow, they’ll get a 5 percent discount, up to $5. Amazon says it’s using the information to keep prices competitive.

The American Retail Industry Leaders’ Association issued the following statement about Amazon’s attempt to poach shoppers at the point of sale: “Retailers compete on price 365 days a year, and at no time is that competition hotter than during the make-or-break holiday shopping season.

However, by continuing to evade collecting state sales taxes, Amazon’s exploitation of a pre-Internet tax loophole is resulting in a 6-10 percent perceived price advantage over their competitors on Main Street.

“Amazon’s aggressive promotion of its Price Check app shows the lengths they are willing to go to exploit this tax loophole, and is a stark reminder of why Congress needs to act to protect retailers on Main Street. A failure to act is an implicit endorsement of a subsidy of Amazon.”

Congress is considering a bill that will require some online retailers to collect state sales taxes when they sell something on the Internet. The measure would affect online sellers who do more than $1 million a year in business in the United States and have more than $100,000 in sales in a state.

Amazon says that the legislation is necessary to create a level playing field for all sellers.

“Congress should not exempt too many sellers from collection, for these sellers will obtain a lasting un-level playing field versus Main Street and other retailers,” Paul Misener, Amazon’s vice president for global public policy, told a congressional committee last month.

 James Daunt, the managing director of Waterstone’s, who only joined Waterstone’s in June and was hired to turn around a pattern of falling sales as online competition grows, said of Amazon earlier this week: “They never struck me as being a sort of business in the consumer’s interest. They’re a ruthless, money-making devil.

“The computer screen is a terrible environment in which to select books. All that ‘If you read this, you’ll like that’ – it’s a dismal way to recommend books. A physical bookshop in which you browse, see, hold, touch and feel books is the environment you want.”

Daunt also said Waterstones was working on its own e-reader.

“You’ll walk into a Waterstone’s and there’ll be a bit of the shop where you can look at e-readers, play with them. We’re inventing one of our own – perhaps we’ll call it the Windle – and we’re working on the Barnes & Noble approach. They’ve embedded their own e-book, called the Nook, within their bookshops and have succeeded in taking market share from the Kindle,” he said.

Jeff Bezos, Amazon’s chief and founder, recently told the US magazine Wired: “There are two ways to build a successful company. One is to work very, very hard to convince customers to pay high margins. The other is to work very very hard to be able to afford to offer customers low margins. They both work. We’re firmly in the second camp.”

“We’d rather have a very large customer base and low margins than a smaller customer base and higher margins,” he added.

In a comment that highlights the difference between Amazon’s approach and Mr Daunt’s plans for Waterstones, Mr Bezos said: “Our vision of a perfect customer experience is one in which our customer doesn’t want to talk to us.”

“It’s, frankly, a slap in the face to Main Street, Massachusetts,” Jon Hurst, president of the Retailers Association of Massachusetts, told the Herald.

“Frankly, I’m somewhat appalled,” he said. “We’ve known for some time that consumers do this, and use local employers, local retailers as a showroom. Yet here you have the behemoth Amazon promoting it with incentives. It’s clearly wrong.”

Hurst says his trade group isn’t anti-technology, but it has started a radio ad campaign to encourage shopping at local retailers.

“Everyone should be equal under the sales tax laws,” he said. “Until that’s fixed, this gives an operation like Amazon, which doesn’t employ anyone in the state, a huge, government-sponsored, unfair advantage.” [via The Telegraph, Boston Herald and PC World]

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