Amazon Looking to Turn Every Store Into Its Showroom
Best Buy is often mentioned in connection with the term "Amazon’s showroom." But if Jeff Bezos and company have their way, the description will fit just about every brick and mortar store that opens its doors for business.
The company announced yesterday that its mobile Price Check app is available as a free download from the Amazon Appstore, Android Market and App Store for iPhone. Consumers who use the app while shopping in stores on December 10 will get an additional five percent off qualifying purchases from Amazon in categories including consumer electronics, DVDs, music, sporting goods and toys.
"The ability to check prices on your mobile phone when you’re in a physical retail store is changing the way people shop," said Sam Hall, director of Amazon Mobile, in a press release. "Price transparency means that you can save money on the products you want and that’s a great thing for customers. Price Check in-store deals are another incentive to shop smart this holiday season."
The Price Check app allows consumers to check prices in a variety of ways including using a mobile phone to scan a barcode, take a photo of a product, type a product name or do a verbal search.
Discussion Questions
Discussion Questions: Do you see a sizable number of shoppers making use of Amazon’s Price Check app while in other retailers’ stores? What can stores do to combat Amazon’s strategy and other comparison shopping apps?
While I can applaud their ingenuity in launching this, I can’t help but feel it is one of the worst things I’ve heard. I wrote about the dangers of mobile in a manifesto last year that retailers were going to become nothing but showrooms if serious efforts weren’t put in place.
Now Amazon can scoop up the sale just as the customer decides, “I”ll take it.”
It reinforces this tsunami of marketing hype that retailers are just raking in the dough and you need to be smart and brag about how much you got away with — see Burlington’s holiday commercials and all the deal sites.
Have we so devalued the shopping experience, the people who work there and the vendors who support them that we’ll cede the issue and say this is “just the future”? I hope not.
Amazon’s price check app has been around for a while. The December 10 offer is a great way to draw attention its benefits. If a consumer is solely going to shop on price, and has the time to wait for delivery, the app will be most useful. If a consumer wants to walk out of a store with product in hand, and if that retailer’s price is not that far out of line with Amazon’s, the consumer will choose to buy at the retailer.
Stores can combat Amazon by offering great customer service and by asking for the order. Great customer service includes a welcoming atmosphere, knowledgeable, friendly salespeople and a generous return policy.
The goal should not be to beat Amazon; rather it should be to win loyal customers who will return time and time again.
I recently completed a national study of Mature Millennials, older Generation Y (25 to 34 years of age). I asked several questions dealing with the use of Smartphones related to retail shopping. Over 20% of those surveyed indicated that they use Smartphones for the following tasks: product and price information (31%), comparison shopping (23%), ordering merchandise (21%), and alerts for online sales (23%).
This generation will use such an app. Retailers beware!
This is just accelerating what we saw coming and is a brilliant idea. We keep exhorting retailers to improve their in-store experience. If they don’t, they will find themselves in the same boat as Best Buy.
A race to the bottom is the last resort of a poor customer experience.
I see this as a call to action.
Unfortunately, I do see the number of people using applications like Amazon’s Price Check to make purchase decisions whether it is from other brick and mortar retailers or the internet, solely based on price growing over time. The most likely early users will be younger and tech savvy, but over time the use of this type of app will be by the older, and likely less tech-savvy customer as the apps become easier to use.
While older generations sat and reviewed the deals in the weekly inserts their kids started using the internet to shop. Now internet shopping is common across all age groups.
Easy to say but not to execute is that stores will have to find a way to differentiate themselves based on something other than price.
To Max’s point, retailers must assume complete price transparency and figure out how to use service, selection and shopping environment to their benefit. Lots of traditional techniques — hi/low pricing, loss leaders — need to be rethought. Be right on price (but not necessarily lower than “right”) and work to make the retail experience, availability of inventory, and customer service as good as possible.
Max is right. If the customer is concerned strictly about price and doesn’t mind the wait, apps like this will take business from the 4-wallers, most probably the higher ticket merchandise. However, if the customer is strictly interested in price, why bother going to the store in the first place? In most cases, the 4-wall customer is looking for instant gratification.
This is definitely a competitive threat for 4-wallers relying on low prices on broadly distributed products. The obvious answer for 4-wallers is to have products not available on Amazon.
It is going to get really ugly owning a business like an appliance store, or department store, as the big bad wolf (Amazon) is ready to use the modern technology to disrupt the marketplace. Customer loyalty is already at an all time low, and this will just make it worse, as PRICE is King. Competing for business is going to get really difficult, with the use of this free app, and customer service only can go so far, if the product is $50-$100 dollars cheaper online. Most consumers will use the stores as way to compare, and walk out if the price is that much lower online. The Best Buys of the world will have to have a mobile app Price Guarantee program in order to keep the business, but a local store does not have the financial clout to do so.
This will also mean a loss of jobs in every store, and expansion of brick & mortar businesses will slow down dramatically. This is not a doomsday scenario, but the reality of marketing, by eliminating the middle man (the store), and buying direct online.
Amazon is not the only app that can compare prices and identify outlets with lower prices. It is, however, the only app I am aware of that allows consumers to check prices AND purchase the product at a lower price.
For consumers who are very concerned about price, are willing to take time to do the comparison while shopping, and are willing to wait for delivery, Amazon’s app will be very helpful. For consumers who have conducted a price check before coming to the store, are not willing to take time to do the comparison while shopping, or are not willing to wait for delivery, the app will not be used. Usage is likely to vary by product, by shopper, and by occasion. However, this is one more option providing consumers with the power of choice, forcing retailers to be more consumer-centered.
I agree with Paula’s comments that retailers should view this as a call to action. Retailers have to improve their customer service to entice shoppers to become buyers. Amazon’s app has brought the skill of negotiating to a higher plane. A shopper can absolutely show the competitive price while in the store shopping. Wake up retailers! There is a knock at your door and you better be prepared. There can not be a reliance on Black Friday to carry the year’s sales and profit numbers.
Price transparency. It’s what’s keeping retailers awake at night. Coupled with Amazon’s Prime shipping option, the Price Check app is deadly, particularly for high-ticket items (thus the focus on Best Buy’s vulnerability). The only hedges against this are:
1. Convenience – Small formats in under-penetrated markets; one-stop-shopping/consumables already in the mix (Walmart, Target) or added to (Walgreens, TRU).
2. Brand blur – Proprietary/exclusive and private brand proliferation (JCP, Macy’s, and many others).
3. Extreme customer engagement and closing the sale – Any takers?
Sure do! This will happen in the Apple community first but I don’t think it will necessarily shift tons of business to Amazon initially. Women, especially, like to bring the game home now. They don’t want to wait 2 or 3 days. This application will be used extensively to check pricing and if the difference is horrendous, purchasing might be put off. In any event, Amazon pricing will eventually become “the standard.” Retailers can combat Amazon by agreeing to match Amazon prices. A retailer could say I will give you Amazon prices if you come back in 3 days to pick it up or let you have it today for the Amazon price + 10% or the current store price, whichever is less. Either way I think Amazon is going to eventually force retail to go in either of two directions: high service OR low price.
I suspect this is aimed primarily at Walmart who has specifically excluded online retailers from their price match guarantee. The message Amazon seems to be conveying is “Attention, Walmart shoppers: they won’t match our prices but we will match theirs and give you an extra 5% as well.” It will be interesting to watch as these two behemoths jockey for position over the next few years.
This is the future and it’s exciting! It should not be considered “doomsday” and Amazon is not “the big bad wolf.” Technology evolves and so do we. When store scanners came out, people were concerned that it would cost cashiers their jobs. I’m sure stores use fewer cashiers today, but think of the technology jobs it created.
In 1994 Amazon didn’t even exist. Today they employee over 30,000 people. And I’m sure their average salary is far greater than that of a retail worker.
Retailers have the opportunity to leap into this technology too. I was at Limited Express last weekend. While buying Christmas gifts. they told me that if I downloaded their app, I would get 20% off. The process required me to allow future coupons (which I did). They scanned my coupon and we all benefited.
I believe this is a reprehensible and unethical way to do business. While it’s not illegal, such activities by Amazon or any online retailer will ultimately make brick and mortar retailers think about and possibly install smartphone blocking equipment. Who could blame them for taking steps to protect their business from such predatory practices?
I believe Tesco released a similar app in the UK earlier this year. Tesco ran commercials showing people scanning any product with a barcode using their iPhone and adding the product to their Tesco shopping cart.
I’m not a legal expert, but I do believe there are legal issues and unfair competition matters that can arise out of this, especially with local municipalities that will lose tax dollars as a result of the online sale.
Obviously this feature, and others like it, will see increased use in the future, but HOW much is unclear: would I comparison shop for a new TV or refrigerator? Of course, but for a bottle of Cheer? Probably not.
Not every customer is a price scanning “robotron.” Retailers that provide an enjoyable and memorable store experience, and feature pricing that is reasonably competitive will have market share.
Amazon wants everyone to think that they’re about to dominate retail, but their competition has a lot going for them, including house brands, a compelling customer experience (think Trader Joe’s) and lots of merchandise that doesn’t lend itself to shipping. If retailers get their act together and make the store a fun place to shop, Amazon’s value prop won’t look quite so compelling.
The consumer is king, and clearly benefits from this app. Numerous folks called out that this is not the only app that provides this service. Tesco, ShopSavvy and others do as well.
If the consumer wants the very product they needed to touch and view up close they can show the walled merchant and she/he can either match the deal, come close or watch the sale walk out the door.
Competition is good for all of us, especially the consumer.
I also agree with Paula: This is a call to action for brick-and-mortar retailers. Competing with online retailers is not new, but the fact that shoppers can price compare on their phones in-store is a major threat.
Retailers must do the things Amazon can’t do: offer the in-store experience, product knowledge, personalized customer service, convenience, fast checkout and ability to walk out of the store with the product in hand.
The Apple Store has shown us that consumers will pay more for a better in-store experience. Retailers now have to step up and deliver that desired experience.
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 protect retailers on Main Street. A failure to act is an implicit endorsement of a subsidy of Amazon, a subsidy that distorts the free market and puts jobs on Main Street at risk.
At the risk of boringly sounding like a broken record, all retailers should fear Amazon. Paula is completely right about this and this is only the continuation of Amazon’s dominance. It underscores the value of true loyalty: price desensitization. In reality, very, very few retailers have such loyalty.
The higher the price for the item, the greater the danger to their profitability. Here’s why — what it will do to customer service.