Amazon Inc. Hits a New Low: Recruits Customers to Spy on Competitors

A collection of tactical responses from retailers follows our commentary.

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.

Even for critics of Amazon.com's corporate practices, and we're certainly among them, it's jolting to see the corporation announce a promotion overtly encouraging people to spy on local stores while turning those businesses into showrooms for Amazon's profit. Lest this sound like exaggeration, on December 10, Amazon offered up to $15 in discounts ($5 per product) to anyone willing to scan UPC codes using Amazon's Price Check App at a local retailer and then purchase the product from Amazon.

For Amazon, it's a scheme to get more people downloading its bar code scanning application, collect intelligence on what local stores are charge for a wide range of products and drive up sales. Amazon asks users to input the product prices while their location tracking is enabled, stating, “With every in-store price you share, you help ensure our prices remain competitive for our customers.” Actually, 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. The promotion comes just as two leading legal scholars published an article for Sales Tax Notes opining that Amazon's tax-avoidance deals with the States of S. Carolina and Tennessee may be unconstitutional (pdf).

Ideas for Retailer Response

• From 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.) 

• Learning Express, an indie toy store in Hillsborough, NJ, initiated “Cell Phone Saturday,” and will offer a 10% discount on any one item, sending coupons via email and making it available via an in-store QR code for any price-scanning consumers.   

• via Shelf Awareness‎, 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 AMIBA's long-time favorites: offer a discount that exceeds Amazon's to customers who show a receipt from another independent business in your town that day.
  
  
• An Occupy Amazon Facebook page has launched and is gaining followers, as is an online petition by Heidi Pickman of the California Association for Micro Enterprise Opportunity. Also, 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 lose you a customer permanently than alter their thinking. Also, consider 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.

Thanks to all who've contributed to this resource! We'll include a follow up report and further ideas in AMIBA's December newsletter.  

Commentary by Jeff Milchen, co-founder of the American Independent Business Alliance. Hat tip to Tricia Duryee for bringing this issue to our attention. Image via Moby Lives blog. AMIBA also hosts a large library of resources on Amazon and the sales tax equity battle.

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