There are so many opportunties today for small businesses to embrace the internet and what it provides. However there is a bad side to this technology. Smartphone apps are freely available to compare prices on Amzon to those in your bricks and mortar store. The customer can then order, at home or on their mobile the same item at a cheaper price.
When small business is already struggling how is this going to further effect the viability of the stores. It’s not only the fact that they can find it cheaper. What if you are in a retail business who provides full service. After spending 20 mins to a hour selling, instructing ( e.g. whiteware) and sometimes fitting a product (e.g. clothes, shoes) the customer can say thanks I’ll be back tomorrow. This is often code for…..I’ll look up online now that I know what I want down to the smallest spec and search online.
It’s true that competition is good, often we are competing with other retailers on price & service. Mostly, this is when there is a level playing field. This is not the case with Amazons new app that rewards customers with disocunts. Here is an extract from an aritice found on ecreditdaily.com.
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.
The above is based on a US example, however retailers and others around the world are having the same issues. Exchange rates go up and down. Sometimes this means that consumers look to the internet with a better price, even taking into account delivery and other costs. These overseas providers do not to account for local sales taxes such as VAT, GST or Income Taxes. The playing field is not level and will continue to be this way. Small businesses will have to adapt to survive….. How is your business coping?
