Amazon Price Check app draws protests from some retailers(chicagotribune.com)
chicagotribune.com
Amazon Price Check app draws protests from some retailers
http://www.chicagotribune.com/business/breaking/chi-amazon-price-check-app-draws-protests-from-some-retailers-20111209,0,1595833.story
8 comments
I think local retailers are given "special treatment" in that they don't have to add a shipping cost on top of the item price.
Yeah, those lucky retailers get to blow off the shipping cost just because they aren't shipping anything. But they do have to pay a fee just for the privilege of doing business, and Amazon gets to do business without paying that fee. And now Amazon is using their dusty old brick and mortar stores as a showroom. I can see why the local retailers are feeling jilted.
Yeah, those lucky retailers get to blow off the shipping cost just because they aren't shipping anything. But they do have to pay a fee just for the privilege of doing business, and Amazon gets to do business without paying that fee. And now Amazon is using their dusty old brick and mortar stores as a showroom. I can see why the local retailers are feeling jilted.
No, they don't pay a fee.
You pay a fee for making a purchase. Local retailers should be arguing that they don't want to be the tax collectors, so their prices would look lower too.
Either way, you, the buyer, are responsible for paying the sales and use tax, regardless of whether you bought from BestBuy or Amazon.
Again, both BestBuy and Amazon "get to do business without paying that fee", as it's not something either of them pays.
To enjoy the competitive advantage of having a local presence, BestBuy does agree to help your local government collect your taxes (and in fact gets to KEEP a percentage of the taxes they collect!), while Amazon, who is not in your local jurisdiction, relies on you to pay the tax you owe.
You pay a fee for making a purchase. Local retailers should be arguing that they don't want to be the tax collectors, so their prices would look lower too.
Either way, you, the buyer, are responsible for paying the sales and use tax, regardless of whether you bought from BestBuy or Amazon.
Again, both BestBuy and Amazon "get to do business without paying that fee", as it's not something either of them pays.
To enjoy the competitive advantage of having a local presence, BestBuy does agree to help your local government collect your taxes (and in fact gets to KEEP a percentage of the taxes they collect!), while Amazon, who is not in your local jurisdiction, relies on you to pay the tax you owe.
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So I assume you willfully pay your tax on all online purchases?
My state had line item on the tax form asking for the amount of goods purchased online so then they can tax them.
Always wondered what people put in there and if the state even did anything about it (audited people).
I guess they could ask Amazon for records (threatening a lawsuit) and cross-reference with all the reported taxes based on name and address. If user bought just from Amazon more than what they reported they they have obviously owe some money + fines & late fees.
(But I suppose I am making gross assumptions about the competence and general technical abilities of my state's tax collecting office).
Always wondered what people put in there and if the state even did anything about it (audited people).
I guess they could ask Amazon for records (threatening a lawsuit) and cross-reference with all the reported taxes based on name and address. If user bought just from Amazon more than what they reported they they have obviously owe some money + fines & late fees.
(But I suppose I am making gross assumptions about the competence and general technical abilities of my state's tax collecting office).
> could ask Amazon for records (threatening a lawsuit)
http://arstechnica.com/tech-policy/news/2010/10/judge-blocks...
http://arstechnica.com/tech-policy/news/2010/10/judge-blocks...
Oh wow. I was thinking of a different state, but this is interesting. It already happened and I missed it.
First it was anonymous purchase data. Then NC demanded user names and addresses but Amazon fought on 1st Amendment grounds and seems to have won:
“The First Amendment protects a buyer from having the expressive content of her purchase of books, music, and audiovisual materials disclosed to the government,”
I wonder if this was Zappos for example. What would have been the ruling.
First it was anonymous purchase data. Then NC demanded user names and addresses but Amazon fought on 1st Amendment grounds and seems to have won:
“The First Amendment protects a buyer from having the expressive content of her purchase of books, music, and audiovisual materials disclosed to the government,”
I wonder if this was Zappos for example. What would have been the ruling.
Yeah, it costs Amazon nothing to run...
Maybe Amazon should be complaining that the retailers don't have to manage huge server farms, or employ hundreds of technical staff, or so on.
They both have costs associated with doing business. Amazon has to pay ongoing infrastructure costs that the retailers don't, they have to take care of sales and other taxes that Amazon might.
Maybe Amazon should be complaining that the retailers don't have to manage huge server farms, or employ hundreds of technical staff, or so on.
They both have costs associated with doing business. Amazon has to pay ongoing infrastructure costs that the retailers don't, they have to take care of sales and other taxes that Amazon might.
Do you really think that matters? Amazon seems to be doing really well (and retailers not so much) even in countries where all retailers have to collect VAT (like Germany).
Online shopping is just more convenient and gives the buyer much more control and information.
Online shopping is just more convenient and gives the buyer much more control and information.
Why wouldn't every penny matter? People are still buying from stores at least some of the time. The greater the price difference, the more business the stores will lose to Amazon, presumably.
My point is that retail won’t be doing that much better if Amazon has to pay VAT. An example for this are countries where Amazon already has to pay VAT and retail isn’t doing that much better.
> But they do have to pay a fee just for the privilege of doing business, and Amazon gets to do business without paying that fee.
They pay that fee in return for services that they get, services that Amazon doesn't get.
They pay that fee in return for services that they get, services that Amazon doesn't get.
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Amazon offers same day shipping in some areas, obviously still not instant gratification but they are getting closer. An awesome company in my opinion.
There's a local article in the Austin Business Journal quoting a guitar dealer who says "Amazon charges $1000 for a guitar, but when I charge $1000 for the same guitar, I have to charge $1082.50 because of sales tax".
What he doesn't consider is that Amazon is more than likely charging $800 for that guitar.
The "locals" make claims about price difference being solely due to sales tax, but overhead is more the reason than anything else.
What he doesn't consider is that Amazon is more than likely charging $800 for that guitar.
The "locals" make claims about price difference being solely due to sales tax, but overhead is more the reason than anything else.
Last year, I needed a backpack for travel/multi-use/etc. Something that would fit my laptop, a small video camera, and misc other stuff.
I went to Best Buy to see what they had, and it wasn't much. They had one bag that looked nice though and the salesman told me how amazing it was.
It's Best Buy. Of course I didn't believe him. So I pulled up the iPhone Amazon app, scanned the product barcode, and saw what the reviews were. Turns out, the salesman was right - this bag was very well reviewed.
And Amazon had it for $20 less. So I left Best Buy, went home, and bought the backpack off Amazon.
There will always be a place for local, brick-and-mortar stores. As others have mentioned here, Amazon can't fulfill instant gratification.
But I think instant gratification is a small percentage of the overall buying experience. Amazon can help with the rest.
(If anybody's interested in the kick ass backpack I got, here's the Amazon link. Looks like it's more expensive now: http://www.amazon.com/Lowepro-CompuDaypack-Camera-Bag-Slate/...)
I went to Best Buy to see what they had, and it wasn't much. They had one bag that looked nice though and the salesman told me how amazing it was.
It's Best Buy. Of course I didn't believe him. So I pulled up the iPhone Amazon app, scanned the product barcode, and saw what the reviews were. Turns out, the salesman was right - this bag was very well reviewed.
And Amazon had it for $20 less. So I left Best Buy, went home, and bought the backpack off Amazon.
There will always be a place for local, brick-and-mortar stores. As others have mentioned here, Amazon can't fulfill instant gratification.
But I think instant gratification is a small percentage of the overall buying experience. Amazon can help with the rest.
(If anybody's interested in the kick ass backpack I got, here's the Amazon link. Looks like it's more expensive now: http://www.amazon.com/Lowepro-CompuDaypack-Camera-Bag-Slate/...)
So what could Best Buy have done for you that this salesman couldn't? He apparently gave you good advice, and you had a chance to touch and feel the product.
I will admit that $20 out of $100 is not an insignificant discount...but how much less of a mark-up would Best Buy have to have so that you would purchase its product?
I will admit that $20 out of $100 is not an insignificant discount...but how much less of a mark-up would Best Buy have to have so that you would purchase its product?
Best Buy simply would have had to match Amazon in order for me to buy it in their store.
Because I didn't need the backpack immediately, I'd rather save $20. The backpack was $80 at Best Buy and $60 on Amazon, so it was a pretty good saving.
Because I didn't need the backpack immediately, I'd rather save $20. The backpack was $80 at Best Buy and $60 on Amazon, so it was a pretty good saving.
I will pay $5-$10 more for something immediately at a B&M store vs waiting for Amazon, but no more.
I think competing on price alone against behemoth like Amazon is a losing strategy for local businesses. For example I could be buying a case of wine online but I go to my local wine store because even though it is a little more expensive the owners are good at recommending wines and they constantly refresh their selection. Which is great for someone like me who isn't a connoisseur.
Although I agree with this for the most part, it goes both ways. A huge use case for this app (for me at least) is to be able to quickly look up product reviews by other consumers. If I'm already in the store, I might well buy the product there if it was given good reviews on amazon. In this case, amazon has spent the money to develop the app but the store gets my money.
Most stores will not match amazon's pre-tax prices today. Why would it be any different if amzn collected tax?
Nice app but to totally circumvent the retailer and shipping fees, they should invest in quantum teleportation technology.
I was thinking that this was a particularly clever idea--given that Amazon seems to very good at "pricing arbitrage", as someone smarter than I said.
Some of the stated objections are that Amazon, who doesn't always collect sales tax, is taking business from local stores.
Some of the stated objections are that Amazon, who doesn't always collect sales tax, is taking business from local stores.
"Amazon [...] is taking business from local stores."
Why is this complaint even taken seriously? If your business model is superseded by someone else who can deliver a product in a manner that customers prefer (in this case, cheaper and delivered to their doorstep) then you either compete or you die. Because that's what competition is.
Why is this complaint even taken seriously? If your business model is superseded by someone else who can deliver a product in a manner that customers prefer (in this case, cheaper and delivered to their doorstep) then you either compete or you die. Because that's what competition is.
Their business model hasn't been superseded. Amazon is free-riding on the stores' display of physical goods. If the shoppers don't value being able to view, handle or browse the physical goods, why are they in the store? So they value having the store there but don't want to pay for it.
Maybe Amazon's plan is to drive these stores out of business and then open its own display stores where people can go to inspect merchandise before ordering it online.
Maybe Amazon's plan is to drive these stores out of business and then open its own display stores where people can go to inspect merchandise before ordering it online.
That is silly.
The store makes it free to see the items and so forth because they believe the customers are more likely to buy then.
Nobody is free-riding anything here. The offer is to view the merc for free. The offer is taken. That is the end of it.
If the stores don't make money this way they will have to change. Maybe they should charge for shoppers who don't buy anything, mayby they should charge for people coming in the door (like a museum or a zoo or a gallary of modern art).
There is no free-riding here.
And please in the future don't use such loaded terms. It does generally not lead to an improved debate and will make some here (me at least) suspect you of astro-turfing.
The store makes it free to see the items and so forth because they believe the customers are more likely to buy then.
Nobody is free-riding anything here. The offer is to view the merc for free. The offer is taken. That is the end of it.
If the stores don't make money this way they will have to change. Maybe they should charge for shoppers who don't buy anything, mayby they should charge for people coming in the door (like a museum or a zoo or a gallary of modern art).
There is no free-riding here.
And please in the future don't use such loaded terms. It does generally not lead to an improved debate and will make some here (me at least) suspect you of astro-turfing.
Or perhaps Amazon, by offering a discount and an improved checkout experience (you're in the store, but don't have to wait in line or carry the item out), is converting people to not go to retail stores.
Or, as I've encountered myself doing, you're price checking because sometimes you run across an interesting item but want to make sure you're not getting ripped off. For a $5 discount, I'm unlikely to change my purchase action on anything - however I've been in situation where the price at the mall is 100% more than Amazon's.
Or, as I've encountered myself doing, you're price checking because sometimes you run across an interesting item but want to make sure you're not getting ripped off. For a $5 discount, I'm unlikely to change my purchase action on anything - however I've been in situation where the price at the mall is 100% more than Amazon's.
I really haven't seen any evidence to back up your claims outside of fear-mongering news articles and general whining from the big box brick-and-mortars.
"Maybe Amazon's plan is to drive these stores out of business and then open its own display stores where people can go to inspect merchandise before ordering it online."
This cannot be a serious conjecture. Opening up quasi-retail locations with all the expenses of retail but no ability to actually making a sale? Didn't Gateway do this in the late 90s?
"Maybe Amazon's plan is to drive these stores out of business and then open its own display stores where people can go to inspect merchandise before ordering it online."
This cannot be a serious conjecture. Opening up quasi-retail locations with all the expenses of retail but no ability to actually making a sale? Didn't Gateway do this in the late 90s?
If it ever got to the point where brick-and-mortar stores for certain things ceased to exist since everyone was buying online, you could have a store that actually charged admission to browse (and to convince people to still come, you could make that admission count toward an online order or toward food at a store restaurant.)
Pretty unlikely, although maybe it would make sense in a less-developed community (third world countries, outer space) that does not already have modern brick and mortar stores.
Pretty unlikely, although maybe it would make sense in a less-developed community (third world countries, outer space) that does not already have modern brick and mortar stores.
Amazon isn't the one free-riding there--it is the customer in the store. If Amazon didn't have a bar-code scanner in their app, or even an app at all, I would still check store items versus Amazon on my phone. It is fair to say that local stores are providing a valuable browsing experience that customers don't necessarily compensate them for, but that was also true well before Amazon existed. I don't see how anyone can blame amazon here. They are just improving the experience for their existing customers.
Then the stores just aren't competitive enough if Amazon is taking business away from them. Tax isn't usually a big enough reason for me to order something online when I'm standing right in front of the product.
I know everyone thinks this is bad for retailers, but it really is only bad for them in the short run. In the long run the biggest negative impact will be felt by retail REITs, and those that have long term debt on retail buildings.
*this is because retailers will on average lower the rent they are willing to pay as they have to compete with online sales channels.
Consumer retail is evolving, as it has been forever, and will continue to do so into the future.
Local retail shops can cater to immediate gratification desires by shoppers. I can't just order up a latte on Amazon and have it NOW. If I need a new HDMI cable to watch a DVD with some friends tonight, then even free overnight shipping won't solve my needs.
But, for many other things... A new pair of shoes, a new coffee pot, a bottle opener, etc., I can wait 2 or 3 or 7 days to get the item. The Internet isn't going away, and even if I had to pay sales tax, I'd probably still continue to buy things on Amazon because it's easier for me than going to a retail store and dealing with potentially limited selection, crowds, etc.
These companies are simply NOT going to beat Amazon into submission. It's far too late for that, and I actively despise any retailers who try to increase my tax burden vs. offering a valuable service to me.