In recent years, retailers across the country have taken issue with Amazon and other online stores that don’t collect sales tax in most states, saying it gives e-tailers an unfair advantage and offers consumers an easy way to skirt their sales tax obligations. But recent studies show just how far apart prices at bricks-and-mortar stores — and their websites — are from what consumers will pay on Amazon.
The Wall Street Journal cites a William Blair & Co. study that found Amazon’s prices (including shipping but excluding sales tax) are 9% lower than what you’d pay on Walmart.com. And Walmart’s online prices are about 1% lower than what you’d pay in a Walmart store.
Meanwhile, Amazon’s prices are 14% cheaper than Target.com’s, which are 2% less than the prices in Target retail locations.
Even factoring in sales tax, which Amazon does collect in a handful of states, another study shows that the online giant is still charging 11% less than what you’ll pay at a Wal-Mart store and 8% less than at Best Buy outlets.
Online shopping only accounts for around 8% of total retail sales in the U.S., but Amazon’s position among top retailers is rising quickly. In 2010, it was listed as the 19th largest retailer in the country, but it jumped a whopping six spots to #13 in 2011. The Journal reports that Amazon may crack the top 10 by year’s end, possibly kicking Best Buy of that list.
As the story points out, many big box retailers have been hesitant to point out the savings on their websites for fear of cannibalizing their bricks-and-mortar businesses.
But as they continue to lose share to online-only retailers, these chains will have to not only lower the prices on their website, but will have to let consumers know about the savings.
At the same time, if retailers want to keep their bricks-and-mortar stores going, they will need to give consumers incentives to come in, or provide products and services that you simply can’t purchase online.
Can Retailers Halt ‘Showrooming’? [WSJ.com]