Amazon's New App To Swipe Sales From Brick & Mortar Stores

IT Management

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In what looks like an attempt to capitalize on shoppers' use of their smartphones when buying Christmas gifts this season, the Grinch Amazon has introduced a free new app that will give consumers a 5% discount (but only up to $5) on certain electronics, toys, sports, music, and DVDs - in other words, some of the coolest, most popular gifts. All you have to do is go to a "brick and mortar" store, browse around until you find an item you'd like to purchase, and then enter its barcode into the app via scan, photo, text, or speech. Once the price is entered, you'll receive the discount on the item when you buy it from Amazon.

Did you see what Amazon just did there?

When you see something you want in a store and instead of buying it in the store you are already in, Amazon wants you to use their app and buy it from them and, as a reward, Amazon will give you a discount. Understandably, the Retail Industry Leaders Association, an advocacy organization that watches out some of the top retailers in the U.S., is calling shenanigans on Amazon's latest attempt to snatch up business from brick-and-mortar retailers with a press release they issued this afternoon:

Arlington, VA –The Retail Industry Leaders Association (RILA) reacted to a new smartphone App from 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.

“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,” said Katherine Lugar, executive vice president of public affairs.

“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, a subsidy that distorts the free market and puts jobs on Main Street at risk,” said Lugar.

RILA supports bipartisan legislation introduced in the House and in the Senate that would level the playing field and force all retailers to compete under the same rules. In a hearing last week before the House Judiciary Committee, Congressman Mike Pence (R-IN) summed up the need for Congressional action by saying:

“I don’t think Congress should be in the business of picking winners and losers. Inaction by Congress today results in a system today that does pick winners and losers.”

Gruenwald, Juliana, “Congress Urged to Close Online Sales-Tax Loophole,” National Journal, 11/30/11

“Main Street retailers have been forced to compete on an uneven playing field for too long. Retailers cannot afford another holiday season where they are forced to compete on an uneven playing field,” added Lugar.

Even if Amazon's underhanded scheme should have some appeal with consumers, luckily for brick-and-mortar retailers the discount-offering app is only good from 9PM December 9th to 11:59PM December 10th and customers can only use the app up to three times. Still, it's hard not to agree with the accusations RILA has stamped onto Amazon.

Do you think the RILA's on the right track here? Or should Amazon be permitted to do this? Chime in below with your comments.