Amazon’s Price Check app is available for iPhone and Android devices. It allows you scan an item’s barcode to simplify searching for it and it will then show you the item’s price on Amazon. You can then buy the item directly from Amazon if you want to. Essentially, Amazon wants you to do your window shopping in brick-and-mortar stores but do your purchasing from Amazon. Amazon is even promoting their Price Check app this Saturday with a special discount for up to three items purchased through the app of 5% off, up to $5 each or a total savings of $15.
This particular promo by Amazon has set off a war of the press releases. Amazon’s announcement was first made in this press release but the Retail Industry Leaders Association fired back. They cited this particular promotion by Amazon as an urgent need for Congress to level the playing field. In their own press release, Katherine Lugar, executive vice president of public affairs is quoted as saying:
“Retailers compete on price 365 days a year, and at no time is that competition hotter than during the make-or-break holiday shopping season. However, by 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,” said Katherine Lugar, executive vice president of public affairs.
“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. 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,” said Lugar.
Ms. Lugar’s statement doesn’t make much sense to me for multiple reasons. She’s attacking the fact that Amazon doesn’t have to charge many customers sales tax. However, if a customer is comparing prices strictly from what they see on the sticker and what Amazon shows, both will be pre-tax. In addition, one of the main benefits to shopping online is not having to go out into the retail madness that is holiday shopping. If you’re already there, you might as well buy what you have in your hands, not have to worry about shipping (though Amazon usually ships anything over $25 for free) or receiving the item in time for Christmas, and just call it a day. If anything, this app is encouraging consumers to physically visit stores, the usual challenge for brick-and-mortar retailers.
Another contradiction to her statement is the fact that Amazon agrees with her and has encouraged federal sales tax bills and testified on their behalf. Other online retailers like Overstock.com have spoken out against the federal sales tax. Several smaller online competitors to Amazon have stated their feelings that they believe Amazon is pushing for the Federal Sales Tax because it would be another hurdle that Amazon could easily clear while the smaller competitors might have a harder time implementing new tax collection rules.