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Amazon Inc. Recruits Customers to Spy on Competitors While Stores Seek to Counter "Showrooming"

First published December, 2011. A collection of tactical responses from retailers follows our commentary.

Even for critics of Amazon.com's corporate practices, and we're certainly among them, it was startling to see the corporation overtly encourage people to spy on local stores while turning those businesses into showrooms for Amazon's profit. Lest this sound like exaggeration, Amazon offered up to $15 in discounts ($5 per product) last December to anyone willing to scan UPC codes using Amazon's Price Check App at a local retailer and then purchase the product from Amazon.

Amazon's scheme generated much anger, but that also meant much free publicity for its bar code scanning application. The app asks users to input prices "brick and mortar" stores are charging for a wide range of products while their location tracking is enabled, turning app users in to free intelligence agents.

Amazon claims, “With every in-store price you share, you help ensure our prices remain competitive for our customers.” In reality, Amazon could easily use this data to raise prices by ensuring a local user sees a price that is just low enough to make buying from Amazon attractive, without discounting more than necessary to maximize its margin. For storefront merchants, it's an added insult to Amazon's years of avoiding the sales tax collection duties physical stores must fulfill. 

Ideas for Retailer Response

See also Seven Ways Businesses and Communities Can Counter "Showrooming"

  • Melville House in Brooklyn, NY posts shelf stickers for many book that include QR codes that, when scanned via smartphone, will take the customer to the bookseller’s website and an ordering page for the book, allowing anyone to bookmark the page for later purchase, buy for delivery to another as a gift, etc.
  • Lisa Henline of Southwest Trading Company, a furniture merchant in Spruce Pine, NC: "I put short bios about the American companies we deal with, beside groups of items for sale. I include the number of U.S./local jobs that vendor supports. It really seems to hit home, especially since we have one of the highest unemployment rates in our state."

  • Little Independent, an online marketplace for small indie retailers, suggests signs saying "Buy it where you try it." Our "Thank you for choosing our local..." decals and posters serve a similar role.

  • Third Street Books in McMinnville, OR is rewarding people for closing their Amazon accounts. "On Saturday, bring in proof that you have closed your Amazon.com account, and we will give you 15% off one purchase and a $5 gift certificate to be used another day..." (When you close an account on Amazon, you get an email confirmation.)    

  • via Shelf Awareness‎, (a blog for book fans) a sign suggestion: "If you shop at my bookstore, I will not pay you five dollars to spy on my competitors. In fact, I’ll probably recommend them if we can’t get what you need... I will not make you feel bad for reading traditional books, nor will I mock you for choosing an e-reader, e-book or anything else..."

  • One of our long-time favorites: offer a discount that matches Amazon (pre-tax and shipping) to customers who show a receipt from another independent business in your town that day. Obviously, this will be more effective if many merchants participate.
  • Diesel Bookstore is not a fan of Jeff Bezos or Amazon, as evidenced by their coasters and buttons.

  • While some folks have suggested banning cell phones or blocking signals with stores, we advise against this -- it is more likely to alienate your customer than alter their thinking. Alternatively, Casey Woods of Emporia Main Street suggests disguising product codes to make direct price comparisons more challenging for customers. You can add digits to the manufacturers product number that correspond to sizes or suppliers, for example. Costco, Best Buy and other chaoins employ this tactic.
     
  • Also, consider the upside: if a retailer is indeed price-competitive, these cell phone apps may help close a sale by assuring a customer they aren't "overpaying." If you choose to reference Amazon Corporation directly, try doing it with humor, rather a confrontational message.

More ideas for brick and mortar businesses: Seven Ways Businesses and Communities Can Fight "Showrooming."

Image via Moby Lives blog. 


Updates: Melville House publishing company has gathered additional examples of retailer responses; in NY Times, Amazon's Jungle Logic; and Forbes' Janet Novak says Amazon's Price Check Flap Is No Strategic Blunder (we agree). For those who saw the anti-indie bookstore jab in Slate.com, Jarek Steele of Left Bank Books in St. Louis came back with a knockout punch. Lastly, Der Spiegel reported on Amazon scamming Germany's job incentives program.

2.  Amazon is also fast making enemies among publishers. Melville House reports on reactions to the corporation delisting thousands of books sold by independent publishers after they refused to slash their margin as deeply as Amazon executives wanted. Also, authors contracting directly with Amazon are learning the dangers. According to some, they include having agreed-upon royalties cut without the author's consent.

Of related interest: Amazon's Nexus in U.S. States and the Sales Tax Battle

 

 

Amazon’s Jungle Logic