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Amazon, Target, and Showrooming

by @ 10:47 pm
Filed under: financial,internet,law — Tags: , ,

Last week came the news that Target stores will no longer carry Amazon's Kindle readers. The bold move was basically a retaliatory reaction by Target to what is known as showrooming.

Showrooming is how Amazon encourages its users to visit various physical stores, check out or even try out various merchandize and then go back to Amazon to order them for cheaper prices. In a sense Amazon uses the physical stores as showrooms for free and that creates an unfair advantage in favor of Amazon.

Sure, people can visit Amazon's site too to shop around but a page visit costs Amazon a tiny fraction of a penny while a shopper roaming the isles of a store, and specially inspecting and trying various items could cost the stores multiple dollars.

Target may feel good about removing Kindles from its shelves but that maneuver will be but a blip on Amazon's bottom line. Making the playing field fair will be tall order but for starters Amazon should be required to collect sales taxes on all items sold. If there's heavy resistance, then stores should be exempt from collecting sales taxes as Amazon is.

Paying sales taxes on Amazon purchases will not be popular, but if Amazon is allowed to push physical stores out of business through the unfair loopholes, that will result in a monopoly and there's little doubt that its pricing policy will not favorable by any measure once the competition is wiped out.

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