Should retailers feel threatened by Amazon’s new price comparison app?
Retailers are unhappy with Amazon’s price check app because it has the potential to eat into their margins and even funnel off sales. However, shoppers were already actively engaged in comparing prices for products via mobile devices before Amazon joined in and this new shopping behavior is only going to grow as mobile penetration continues to increase.
Mobile users have embraced their devices for a variety of shopping activities, with one of the most popular of these being comparing prices for an item they are interested in while in a store to find the best deal. Most bricks-and-mortar retailers see this as a problem but, instead of resisting the behavior, retailers should accept that the mobile, budget-conscious consumer loves to compare prices.
“Every trend shows that consumers are using smartphones to compare prices more and more frequently,” said Stephen Burke, vice president of the mobile practice at Resource Interactive, Columbus, OH. “For smartphone users, in particular, this is a key behavior with more users comparing pricing than hitting the buy button.
“It is a behavior that is bigger than any single retailer can hope to influence,” he said. “They need to recognize that mobile-driven comparison shopping is something you have to plan for and respond to in order to support your own brand.
“Price comparison apps are a fact of life that retailers have to deal with.”
A cause for worry
Retailers view the Amazon Price Check, in particular, as a cause for worry because the ecommerce giant is using its not insignificant marketing muscle to promote the app.
Amazon recentlhy the app by giving an additional 5 percent discount to shoppers who made a purchase using its Price Check app on Dec. 10.
“It is a very well done app,” Mr. Burke said. “I think it is the flagship price checking app.
“I find that it is the most responsive price check app in part because it is tied into a unified Amazon-controlled database,” he said.
Retailers are also concerned because they have to discount items to be competitive with Amazon.
Another concern is that, as an online retailer, Amazon has a competitive edge in that it does not pay a sales tax.
“Mobile applications focused on bar-code scanning, QR code scanning or price comparison search engines are a growing challenge for retailers who have different geographic pricing within their brand, or different pricing between their online and store channels,” said Kasey Limbaugh, director of consumer and multichannel retail offering at Deloitte, Kansas City, MI.
“Additionally, it is a challenge, because store-based retailers have to compete with the lower cost-structure of pure play retailers,” she said.
The in-store proposition
One of the ways retailers can address the growing use of price comparison apps is to better educate in-store associates about how to handle mobile customers in their stores.
The idea is to create an in-store experience where the value is not around the price of product, it is in the services offers, similar to what Best Buy has tried to do.
“For higher consideration items, there is a still a strong rule for sales associate engagement with the consumer,” Resource Interactive’s Mr. Burke said.
“If you see a consumer in a store take out a smartphone to compare a price, it suggests that the consumer has an active interest in that product,” he said “So why not engage with that consumer to see if you can assist him or her with guidance that goes beyond price.”
Resource Interactive recently worked with a retailer on developing a training session to help store associates respond to customers’ mobile related questions such as why they cannot connect to the Internet in-store and how they can purchase an item that is not in the store.
The company expects more retailers to follow with similar efforts next year with the goal of driving sales online for a retailer’s ecommerce or mobile site and not to a competitor.
“What we will see in 2012 is more store-level training around mobile for the retailer,” Mr. Burke said.
“Retailers should begin to look at store environment as a trigger for reengagement and recognize that shoppers many not make a purchase at that time,” he said. “Can you create an experience that integrates price comparison behavior with other aspects of mobile services so the store shelf becomes a trigger for engagement that extends beyond the store aisle.”
Chantal Tode is associate editor on Mobile Commerce Daily, New York