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It doesn't seem like all that many years ago when Amazon.com was touting itself as the "world's biggest bookstore." I remember listening to its radio ads in the morning during my commute; who would've guessed then that it would come so far as to be a threat to brick and mortar retail, including even the mighty Walmart?

Recently Amazon made more news, and raised the ire of traditional retailers once again, when it offered a 5 percent discount to users of its "Price Check" app. The deal was that you could earn 5 percent on a product (up to $5) if you scanned an item in a store but then bought it from Amazon. Not surprisingly, the backlash has been loud and long. There is a general fear that traditional retailers are becoming little more than showrooms for Amazon.

The consensus seems to be that Amazon isn't playing fair: it doesn't have the overhead of brick and mortar; it doesn't have to pay sales taxes (or charge customers for sales taxes); it can offer shoppers lower prices that traditional retailers can't match. Of course the follow up to the recent Amazon development will probably be some attempt at legislating this activity. We've already seen a lot of discussion about sales taxes for online purchases.

Sales tax aside—it does seem unfair that online sellers have that advantage for no good reason—retailers have two options. They can continue to grouse about the advantages of online selling and follow the music and movie industry strategy of trying to lock it down. Good luck with that. I don't know what a Napster for retail would look like, but someone will figure it out. The point is that there is a whole new transparency to shopping, and that's not going to change.

The other response is to look at what Amazon and other online retailers can't offer that brick and mortar does—immediate gratification; a personal touch; a place to go for advice and to compare. They don't have the cost of shipping, and free shipping will soon be a cost-of-entry item for online sellers.

As with most sea change, there is opportunity within. Capitalizing on that opportunity will require thinking differently and being ready to take some risks, but that's a much better use of resources than hiring a lobbyist to get legislation enacted that will be: a) too late, and b) ineffective anyway.

The battle between online and offline retail is just heating up. Make no mistake—this is free enterprise as it was meant to be. Let the games begin.

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User Comments – Give us your opinion!
  • Bob Phibbs
    73568615
    It is not that Amazon has built a better mouse trap, they are buying market share with investor funds. Fair enterprise would be a level playing field - that's why people are upset. I wrote about this at http://bit.ly/vBQgeB.

    Amazon is like the early rappers sampling classic songs to use for their own uses without any credit to the ones who provided the products they got credit for. What it took for the retailer to come up with the location, design, display and other trade dress I believe are intellectual property.

    How someone could just say, its' competition seems grossly understating the very real threat to mom and pops to big-boxes that all of them become Amazon's showroom.

  • Jeff Weidauer
    73567630
    Not sure I agree with your analogy of rappers and music. While artists own what they create, to say that Amazon (or Walmart or whomever) "owes" anything to the mom & pop stores is a stretch, in my view. This is the evolution of retail, right or wrong.

    This has nothing to do with IP; it's about creating a model that consumers find more appealing. The fact that they (consumers) want to shop when and where they want, and be able to get the best price while doing so, just means the game has changed. Retail needs to change with it.

    As for fair enterprise, no one ever said a free market was fair. Ultimately the consumer rules, which is what free enterprise is all about. To do anything other than let the market rule would be counter to the good of the consumer.
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Latest posts by Jeff Weidauer
Jeff Weidauer
Jeff Weidauer is vice president of marketing and strategy for Vestcom, a provider of integrated shopper marketing solutions. With over 30 years of retail experience, Jeff is a prominent speaker, writer and expert source to retailers, brands and media on shopper marketing and the evolving retail industry.
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