Amazon’s Price Check App Stirs Small Business Outcry

You’re visiting a local retailer and see a product you want, but your smart phone app let’s you know it’s available online at Amazon for 5 percent less.

You jump in your car, go home and purchase it from Amazon.

That scenario is making small business advocates and even lawmakers fume as holiday shopping heats up and attempts at boosting business at Main Street shops are barely getting off the ground.

A furor has erupted over Amazon’s Price Check shopping app that allows users to compare prices with “brick-and-mortar” retailers – the post-Internet jargon for your local store.

The world’s largest online retailer is offering up to a 5 percent discount today to attract users to try the new mobile application.

But a growing voice of critics say it amounts to “showrooming,” where shoppers visit a store to browse products in person, only to purchase them online from Amazon.

“Amazon’s promotion – paying consumers to visit small businesses and leave empty-handed – is an attack on Main Street businesses that employ workers in our communities,” said Sen. Olympia J. Snowe, R-Maine, ranking member on the Senate’s Committee on Small Business and Entrepreneurship. “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. “

Customers who download Amazon’s app and enable the location feature will see the 5 percent discount, or as much as $5 off, on as many as three qualifying products, including electronics, toys, music, sporting goods and DVDs, the company said in a statement this week.

The discount app has added fuel to the Seattle-based online giant’s already mounting opposition from business groups targeting Amazon’s de facto exemption from paying state taxes.

Current proposed legislation, the Marketplace Fairness Act, would overhaul the current system in which taxes only need to be collected from consumers if a retailer has a physical location within the state. It would give states the authority to collect sales taxes on online retailers.

“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,” said Katherine Lugar, executive vice president of public affairs for the Retail Industry Leaders Association. “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.”

The proposed legislation is not exactly friendly to small businesses with an online presence.

Small business advocates argue that the proposed e-commerce law’s $500,000-revenue exemption is simply too low. And they say the law would amount to an accounting nightmare, requiring entrepreneurs and small business owners to collect and remit sales tax to every state where a customer resides.