Is Amazon the New Walmart (in the 'Evil Empire' Sense)?

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Retailers have been fearing Amazon.com's (AMZN) growing power for years. Now the e-tailer is just rubbing it in.

In a potentially ill-advised move to promote its updated comparison-shopping app, Amazon offered a Dec. 10 deal to folks who whipped out their smartphones as they shop.

People who fired up Amazon's Price Check app at a bricks-and-mortar store could scan an item and submit the price the shop was charging. More often than not, the app will reply that it can be had at a cheaper price. However, on Dec. 10 Amazon made things interesting by offering customers an additional 5% off (up to $5) on up to three qualifying items.

In other words, Amazon was providing a financial incentive to folks to discover how out-of-touch retail pricing can be at some stores.

Of course Amazon is going to be cheaper than a mom-and-pop shop. There's no need to taunt local merchants by flaunting the fact. And in response to this tactless move, an "occupy Amazon" rallying cry is starting to gain steam. In one fell swoop, Amazon has made itself the new Walmart (WMT).

Promotion in Motion

It's a shrewd tactic on paper, even if wasn't entirely necessary. Folks downloading Amazon's app are already fully aware of the online giant's pricing advantages. When you can scale a Web business with lean overhead and grow it on razor-thin margins, you'll even give retailing monolith Walmart a run for its money.

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"We'll use your feedback to keep prices competitive for all customers," the app promises. Critics, meanwhile, claim that Amazon's actual intent is to encourage its customers to become a network of spies picking at the carcasses of fading real-world chains.

Again, that also isn't necessary. Amazon is fully aware of what its rivals are charging for stuff. Prices are readily available online, and there are plenty of comparison shopping sites and programs that are doing all of the spy work that Amazon needs to keep its prices competitive. Amazon is just trying to make consumers believe they're making a difference, when all the e-tailer wants to accomplish with the app is convince you you'd be crazy if you pay more elsewhere.

Bullying Cry

These are vulnerable times for Amazon. The company is trying to battle legislation in a number of state's that seeks to force Amazon and its online peers to begin collecting state sales tax, even if the Web-based retailer doesn't have the required physical presence in the state.

Publicly encouraging shoppers to compare Amazon's prices to those of local merchants that have no choice but to collect state sales tax isn't going to sit too well with politicos trying to defend their homegrown proprietors. The move also paints Amazon as a bully.

Sound familiar? It should.

Both Amazon and Walmart use low prices to stretch our buying power, but they're both cast as indie-snuffing behemoths. This episode isn't going to help Amazon's image on that score.

Longtime Motley Fool contributor Rick Munarriz does not own shares in any stocks in this article. The Motley Fool owns shares of Walmart Stores and Amazon.com. Motley Fool newsletter services have recommended buying shares of Amazon.com and Walmart Stores. Motley Fool newsletter services have recommended creating a diagonal call position in Walmart Stores.



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