November 25, 2014

Amazon Price Check App: Small Business Threat or Sign of the Times?

U.S. Senator Olympia Snowe is up in arms against Amazon since the online retailer released its Price-Check app for Android just in time for the 2011 holiday season. Amazon’s iPhone version was released a year ago, so the uproar now seems less about the app itself and more about Amazon’s poorly timed limited promotion of the app.  Amazon gave users a $5 credit for inputting prices of items sold in brick and mortar stores, when they bought the same item through Amazon.  Snowe said in a statement:

“Small businesses are fighting everyday to compete with giant retailers, such as Amazon, and incentivizing consumers to spy on local shops is a bridge too far.”

Amazon Price Check App

The Internet meme machine has been working overtime on this, with some portraying Amazon as the Grinch for launching this during the one season of the year that smaller retailers can get ahead in terms of sales.

For instance, a group on Change.org has a petition to get Amazon to stop price comparison. They believe that Amazon doesn’t pay taxes or contribute to local economies in the way small businesses do, and, they say, doesn’t have the right to  this kind of data from small businesses.

But is Amazon really evil for coming out with both the app and the promotion?  Secret shoppers and price comparison services have been around for years.  Is having a way to digitally compare prices such a sin?

We’re all Price Sensitive

Many complain that people will walk into a small business, look at an item, then leave when they find out they can get it cheaper on Amazon.

To my point: of course you can get it cheaper on Amazon. You knew that already! If you’re a consumer, and shopping based on price alone,  that small company never had your business to begin with.

What I’d be more inclined to use the app for is when I’m shopping in a big box store. (‘Is this Spongebob Lego set cheaper at Wal-Mart or Toys R Us than it is at Target?’) In this scenario, small businesses aren’t hurt.

And what about all the small businesses that sell through Amazon? The app isn’t hurting their business.

Market Forces, not Amazon, are to Blame

This app and others like it came out over a year ago (in some cases longer).  They haven’t killed off small business yet. While it’s clear that Amazon is competing hard, and could have timed its promotion better in the eyes of some, that hardly proves it’s out to kill American small businesses.

Also, remember that it’s your customers who are buying online — not only because of price but because of convenience and selection.   Every year the online sales volume grows.  You can’t change this trend by trying to keep customers from getting information.

We’re all small businesses here at Small Business Trends — we’re sympathetic, but realistic too. If you’re worried about Amazon as a retailer, that means you may have to face some unfortunate realities: start selling your product online, or offer the lowest price.  Or take a page out of an industry that has had cut-throat competition for years, grocery stores.   Shower customers with service.   But don’t blame Amazon.  They’re not the only ones competing.  And much as we may be tempted by the idea, trying to stifle the competition is never a long term solution. If it’s not Amazon today, tomorrow it will be another retailer.

11 Comments ▼

Susan Payton - Awards Communication Mgr.


Susan Payton Susan Payton is the Communications Manager for the Small Business Trends Awards programs. She is the President of Egg Marketing & Communications, an Internet marketing firm specializing in content marketing, social media management and press releases. She is also the Founder of How to Create a Press Release, a free resource for business owners who want to generate their own PR.

11 Reactions

  1. You make a good point about price sensitive consumers: they aren’t good customers. Let them buy from Amazon. Differentiate on service.

  2. Hi Susan, this is an age-old issue — the only difference is, the players change.

    I can remember in the late 1980s or early 1990s, how small retailers were up in arms about mail order companies and the competition they brought. Then the “big box” stores that seem to have crept into every nook and cranny of every town, started making it hard for small businesses to compete. And then the Internet and eCommerce vendors made it hard to compete.

    It’s not just retail. Look around at nearly any industry, and you will find tough competition today. Often it is from big players or those outside our local areas, encroaching on territory that we small businesses formerly “owned.” Doctors and dentists now have to contend with clinics and managed coverage from insurers. Web designers and graphics designers have to deal with tools that make it easy for DIYers. Copywriters have to deal with offshore, cut-rate competition. Even publishing companies like mine have to deal with low-end scraper sites, and “made for AdSense” content.

    If we start protecting one industry against one competitive threat, where do we stop?

    – Anita

  3. I think it’s easy to make Amazon the big, bad wolf. But a lot of the products sold on Amazon come from small business sellers.

    Susan

  4. Whether or not any of us think this is good or bad is somewhat irrelevant. This horse has left the barn.

    Our data-driven world is making information of all kinds (not just pricing) increasingly transparent.

    I think we’re just at the beginnings of the trend towards increased transparency. This is a powerful trend that’s already having a big impact, and that impact will grow in the coming years.

    Businesses built around information asymmetry (which includes a lot of businesses big and small) do not have a bright future.

  5. @Steve–
    Like anything, this is new. No one likes change. But in a few years, we’ll all wonder why anyone made a stink about it. It will be second nature.

    Susan

  6. Susan: I agree. As consumers we’ll quickly adopt and like things like Amazon price check and similar products that increase transaction transparency. They will save us money and time by creating more efficiency in the economy.

    Unfortunatley, a lot of small businesses and small business jobs exist because of a lack of transparency.

    We’ve thought a lot about the likely impacts of data-driven increases in business transparency. We think higher levels of transparency will benefit larger firms at the expense of smaller firms, at least in the near to medium term.

    Economists have several nice phrases to describe what’s going to happen. “Economic dislocation” is a good one, as is “creative destruction”. And, of course, economic theory tells us in the long run increased economic efficiency will benefit everyone.

    I just wouldn’t want to own or work for any of the small businesses that are going to be creatively destroyed by the new, higher levels of business transparency.

  7. Amazon is becoming the Walmart of the internet, I’m not the biggest fan of groupon, but I support what companies like that and Taap.it are doing with the $10 off to support small businesses

Leave a Reply

Your email address will not be published. Required fields are marked *

*

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>



Compare your business to the industry - Try our new tool


X