Is Amazon Good or Bad For Small Businesses?

Posted December 17th, 2011 by AWS and filed in RSS Feeds

Amazon has pissed off a lot of small businesses. Im not even going to get into all of the Internet tax stuff, but earlier this month, the company launched an app. The app is called Price Check, and it allows users to go into a store, scan a product, find it for a cheaper price through Amazon, and purchase it immediately. Oh, and Amazon gave users discounts of up to 5% when using the app on some items last weekend.

Brick and mortars were and continue to be furious, but Amazon maintains it actually helps small businesses.

What do you think? Does Amazon help or hurt small businesses? Share your thoughts in the comments.

The categories available within Price Check include: Books, Textbooks, Movies, Music, Video Games, CDs, Electronics, Home Garden, Automotive, Baby, Beauty, Camera Photo, Cell Phone Services, Clothing, Computers, Grocery, Health Personal Care, Home Improvement, Industrial Scientific, Jewelry, Kindle, Kitchen Dining, Magazines, Music Instruments, Office Products, Patio Garden, Shoes, Software, Sports Outdoors, Video, Watches.

User reviews in the Android Market are pretty positive. The average rating is 4.3 out of 5. At the time of this writing, it has 120 5-star reviews, 32 4-star reviews, 15 3-star reviews, 9 2-star reviews and 8 1-star reviews.

Heres a sampling of what people who have rated it 5 stars had to say:

Brilliant.

A very simple and easy UI. Allows you to make quick comparisons, so you can make the best decisions when out shopping.

Love this. Love Amazon! What more is there to say, its Amazon.

Awesome app. Works great.

Will definitely find a better price.

Heres a sampling from the 1-star and 2-star reviews:

This doesnt benefit the user any more than any barcode scanner. All it does is turn users into tools of amazon researchers.

Everything it does, the original Amazon app does as well, including barcode camera search, and wishlist account management. Completely redundant.

I hate the limited interface. I am used to reading reviews and comparing similar products. This app feels like a small prison. The bar code scanner is waaaaaay too finicky, unlike other android scanner apps. Overall 2 stars rating from me.

Some other ones indicate there are bugs and crashes.

Again, however, the majority seem to be pretty pleased with it. And why not? Really, whats not to like from the user perspective? Especially in this economy. Consumers want to save a buck wherever they can.

But that doesnt mean small businesses are pleased. There has been outcry about this from businesses since it was introduced.

Republican Senator Olympia Snowe, recently spoke out about the app in favor of small business. She is quoted by Bloomberg BusinessWeek: Amazons promotion paying consumers to visit small businesses and leave empty-handed is an attack on Main Street businesses that employ workers in our communities. Small businesses are fighting everyday to compete with giant retailers, such as Amazon, and incentivizing consumers to spy on local shops is a bridge too far.

As previously reported, the Retail Industry Leaders Associations VP of public affairs, Katherine Lugar, said:

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, Amazons exploitation of a pre-Internet tax loophole is resulting in a 6-10 percent perceived price advantage over their competitors on Main Street.

Amazons 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.

Main Street retailers have been forced to compete on an uneven playing field for too long. Retailers cannot afford another holiday season where they are forced to compete on an uneven playing field.

Obviously, Amazon doesnt think it deserves all of this harsh criticism. The New York Times shared a statement from Amazon spokeswoman Sally Fouts this week, who said the controversial app was primarily intended for customers who are comparing prices in major retail chain stores, and that Amazons third-party sellers, which she says includes more than two million individuals and businesses of all sizes that sell on Amazon benefit from the app as well.

The promotion in question may be old news at this point, but the app is still fresh, and has received a lot of attention. Clearly, based on the reviews above, users like it. Combine that with the brand power of Amazon, and one has to assume that this thing is going to be on a whole lot of smartphones, being used by a whole lot of consumers in a whole lot of stores.

Just because the that promotion is over, doesnt mean people wont be tempted to look for cheaper prices on Amazon. Of course they couldve been doing this already, but having an app specifically for this purpose makes it more convenient than ever. And its not as if Amazon cant launch similar promotions in the future.

Do you run a small business? What is your take on the app and Amazon in general? Share your thoughts.

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