Monday, January 23, 2012

Is Internet Shopping Unfair To The Retail Economy?

Smartphones and the web have been a consumer's friend when it comes to comparison shopping. It no longer requires a shopper to schlep from one store to another before settling on where to buy an item. Now that same shopper can read the tag on the item off their smartphone and find out if there is a better price. Others can do their shopping online from the comfort of their home before deciding whether to purchase right there or venture out to the store to pick up the item. But is some of it unfair and will it ultimately kill the retailer?

In regard to the unfair charge, retailers continue to argue that online immediately benefits by a discount know as the sales tax. Stores are required to charge this amount, but depending on the state, online does not. And depending on where you are from, that discount could be 7% or higher. With online stores offering free shipping, the only drawback may be the immediacy to receive an item.

For those consumers that are happy to buy in a store, they use online tactics to compare pricing on items. Is it cheaper to buy that item at Target or Walmart, Best Buy or PC Richards? Mass produced items available in many stores are most affected. And with information at a consumer's fingertips, there is no need to be over-charged again.

So how do retailers fight back? Certainly the push is on by them to convince both States and Congress to legislate sales tax for online purchases. Amazon has been fighting back for years. In the retail comparison fight, stores seek exclusivity of brands to differentiate. Mattress companies love to "create" lines that are exclusive to their store; you never see the same Serta model in Sleepy's vs. Mattress Discounters. Some do it with the creation of store brands. Costco loves to push their own Kirkland brand. And Target is pushing their own vendors too. "Target asked the suppliers to help it match rivals' prices. It also said it might create a subscription service that would give shoppers a discount on regularly purchased merchandise."

Change is forcing businesses to innovate and compete. While the sales tax example can be argued as an unfair playing field, comparison shopping has always existed. That it has become less burdensome for consmers to compare and contrast before purchase shouldn't be an issue. Consumers shop at certain stores for a number of reasons and price is not the only factor. Service, availability, specials, ease of returns, convenience and other factors all play into a successful retail business. Price is always one factor in sales, it just isn't always the only factor.

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