Friday, December 9, 2011

New Amazon App a Retail Store Killer

Amazon has just launched a smart phone app that will allow customers to shop in a retailer - any retailer -  scan the barcode of a given product, and compare the price of that same product at Amazon.  As added incentive, the online giant is offering customers an additional $5 discount off of their order.  On top of that, Amazon boasts free shipping for orders over $25, and will make the sale without charging sales tax (in most states). 

From the consumers' perspectives, it is a slam dunk.  Simply use the brick-and-mortar retailer as a showroom, break out your phone, and if you can delay your gratification to allow for shipping, ship it to your home for a tidy little discount. 

All is fair in love, war, and retail.  And if I were in Amazon CEO Jeff Bezos' shoes, I'd likely do the same.  It is a brilliant move on his part.  It is only a matter of time before the states get around to charging sales tax, but in the mean time sales tax rules at a state/local level are onerous to navigate, especially for very small retailers.  How is your local fashion store going to be able to understand that, in shipping to an order in Minnesota, she'll need to collect sales tax for a handkerchief, but not for a bandanna?  So Amazon has a window to exploit, and with this app, they're exploiting the hell out of it. 

Until the states can come together, eliminate their socially engineered tax tables, and come up with something that will make charging, collecting, and remitting sales tax easy and efficient, Amazon will win.  And the real losers will be the states themselves, traditional retailers, and especially the mom and pop store.   

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