Daily Dose of iQ: With Price Check App, Amazon Looks to Undersell Brick-and-Mortar Retailers Yet Again

Dec 07, 2011 — Katherine Simaluk

As if it weren’t enough that Amazon was selling high-end smartphones for a penny on Black Friday, the company is now promising to undersell brick-and-mortar retailers on virtually anything –- and undersell them by 5 bucks too.

"Starting this Saturday, users of Amazon's Price Check app will be able to score up to $5 off a purchase of any product if they use the app in-store," wrote Chris Velazco of TechCrunch.com (Dec. 6).

Consumers are increasingly using their smartphones to assist them while shopping and retailers should be concerned by the growth of price comparison apps.

B&M retailers are not only competing against other B&M stores; they are going to have to look at ways to diversify themselves from online retailers. And nowadays, when the margins are so small, the $5 discount Amazon is promoting can go a long way.

Ironically, wireless retailers are providing a service to the consumer that benefits Amazon: allowing people to touch and try the product, etc. The threat of online retailers is not new, but it's certainly becoming more menacing with apps like these.

Some would argue this promotion is less about generating sales and more about getting consumers in the habit of using the Amazon Price Check app.

One of the biggest weaknesses Amazon (or any online retailer, for that matter) currently faces is giving the customer the opportunity to "experience the product."

By infiltrating B&M stores via their Price Check app, Amazon can offset their weakness with the strength (product display, employee interaction and service) of their competitors. Amazon's strength, after all, is the ability to undersell everybody. Sounds familiar, doesn't it? (See Walmart.)

Even if consumers don’t end up purchasing from the site, Amazon has increased its brand awareness in the marketplace -- and gotten people using its Price Check app. 

So, what can B&M retailers do to compete with the Amazon Price Check app?

Retailers are going to have to make some changes to stay competitive and maintain market share. They need to focus on delivering a superior in-store experience (demonstrate value, convenience, service, etc.) because, as we've learned with the Apple Store, customers are willing to pay more for a better experience.

Retailers must ask themselves "what is missing" in Amazon's model. How much are elements of the in-store experience worth? Is the convenience of personalized service, face-to-face product knowledge and advice, and walking out of the store with product in hand worth $5? Your challenge as a retailer is to prove to the customer that yes, it is definitely worth the extra 5 bucks.

Topics: Retail Operations, Wireless Trends, Mobile Industry, Customer Experience, e-Commerce

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