Amazon Price Check App Criticized By Retailers

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Amazon recently launched a Price Check application for iOS and Android that lets mobile users scan barcodes and compare prices with Amazon’s own. But with an offer to give discounts for items checked when bought through Amazon, retailers are outraged at how the retail giant is undercutting them right during the holidays, when sales revenues can make or break business.

Amazon’s Price Check app for Android smartphones and tablets, and the iPhone, iPad and iPod touch is offering a limited promotion from December 9 through December 10. With the application, users can get discounts of up to $5 per price check (up to $15 for three price checks) when they submit item information from a store along with a price.

Amazon requires that a user have his or her device’s location service turned on. The user will then need to take a picture of the barcode or produdct, and send it back through the app with the price. Amazon then promises to give a 5% discount for each item scanned (up to $5). This system works in the electronics, toys, music, sporting goods and DVD categories. Users can expect up to $15 in savings, and Amazon gets pricing research in return.

Amazon says the system works for customers, since they get to find the best deals. However, retailers are not so happy with the app. Some retailers have ceased adding barcodes to their products, such as Best Buy. Some, like Wal-Mart, have launched their own mobile apps, which offer in-store discounts.

Amazon can afford to offer lower prices due to state tax breaks and low overhead costs. Retailers are not very happy, though. The Retail Industry Leaders Association issued a statement criticizing Amazon for cutthroat competition.

[B]y 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.

Retail organizations say that Amazon is using their establishments as “unpaid showrooms.” Brick and mortar stores still have the advantage of offering items in an instant. But while shopping costs and delivery times shrink, big online retailers like Amazon have the advantage. Has Amazon gone too far by undercutting retail shops with their big discount offers?