By Steven B. Schweitzer
Amazon’s Price Check Mobile Phone App Serves as the Newest Threat to All Retailers
Big boxes know how you shop in their stores. They know your buying habits, your favorite store location, your favorite products, the time of day you spend the most money, and the list goes on. Now, Amazon’s new Price Check mobile phone app will know that too.
The app assures you are getting the best price on anything –seriously anything… just by taking a picture of it or scanning the barcode. OK, the price scanning feature isn’t new to mobile commerce, so what’s the rub? Amazon blatantly asks the user to share in-store brick-n-mortar prices with their mobile device. This is yet another foray into guerrilla marketing and pricing intelligence by someone other than a big box. Do you think Big Boxes like this? No. Do small retailers, like the fly shop owner, like this? No. What can you do about it? Nothing really.
Online Retailing Behemoths Are the New King of the Hill
Many retail pundits argue the price app gives the online retailer an unfair advantage over smaller competitors. Besides the obvious intel of price matching, the app can also give über-valuable geo-location pricing data – no other online retailer has this capacity for public and global data mining to-date. Why does the model work? Because the customer gets rewarded by seeing the lowest local price real-time, as the app promises. And, even though the retailing community is speaking out against Amazon, it’s still free press even if it’s bad press, and it all helps Amazon. Remember, savvy shoppers aren’t loyal, which is where Amazon makes bank. Ironically, many of the vocal nay-saying nationwide retailers also sell direct via Amazon. Hmmm.
Who Does This Benefit?
The price-conscious shopper reaps the reward, obviously. And, Amazon builds an exclusive ocean of data to evaluate the invaluable “four P’s” of marketing: Price, Promotion, Placement and Product. The rest of the selling world is under threat. Keep in mind that online retailers don’t pay sales tax unless they have a physical presence in a state. Combine this with the fact they have an assumed lower overhead (little to no real estate costs, no retail staff and management, less inventory, etc) and they become extremely price competitive, talking directly into the pocketbooks of the price-conscious public.
I surmise we will see other online retail behemoths and even smaller retailers and independents to follow suit. The data is free, the retailer just needs to build an app to acquire it – it’s a no-brainer. It also cements the way price-sensitive shoppers spend their money. They’ll go to a brick-n-mortar to touch, feel and try on products. They’ll scan it and gain immediate intel on where to purchase it less expensively, even paying no taxes. They’ll buy it on their mobile device from an online retailer while standing in the brick-n-mortar store, or they’ll go home and fire up the desktop to shop in the comfort of their own home. Either way, consumers are now armed with a necessary shopping tool and brick-n-mortar stores just become showrooms for Amazon.
Don’t be surprised to see these types of apps merge with social media channels either. It’s hard to say how just yet, but word of mouth is the most powerful advertising tool, and social media gives significant viral horsepower to word of mouth endorsement.
And what about the online tax debate? Well, Amazon’s app just upped-the-ante for lawmakers to hasten their efforts to blanket yet another sales channel with a tax. Don’t be surprised to pay a consistent sales tax on online purchases in the future. That’s almost inevitable.
Consumers speak out too. Do a quick Google search on “Occupy Amazon” to see whether the consumer is fed up.
How Can You Compete?
Smaller retailers and local fly shops should continue to offer what Amazon can’t – an in-store experience with personality, education and infallible product knowledge. Visual merchandising tactics can also be employed to deter the use of price grabber apps – but only for so long. Ultimately, it will be the product line-up in your shop that determines if you will be bit by the price-snitching bug. If you carry product lines mostly exclusive to the fly fishing industry, such as popular waders and high-end rods and reels, then you won’t be affected too much. But if you carry more commoditized crossover items that can be found in other brick-n-mortar retailers, then “game on.”
No longer can fly shops sleep thinking they’ve killed the big box dragon – there’s a new fire-breathing threat in town, and it’s on every mobile phone.