Jun
27

Is Amazon’s New Patent Terrible or Brilliant for Customer Loyalty?

Amazon was recently awarded a patent that has caused quite a stir amongst consumers and retailers. The patent, originally applied for way back in 2012, details a method for “redirecting, or otherwise controlling customers’ attempts to comparison shop on their smartphones when using a store’s Wi-Fi network. The system would identify when a customer is trying to access a competitor’s website and take action. According to the patent description, it could block the action outright, redirect it to the retailer’s own website, or distract the customer with a coupon or a salesperson’s attention.”

This has caused much debate as Amazon just recently entered into the physical retail sector with new bookstore locations and the purchase of the Whole Foods grocery chain. There are many opinions out there ranging from those that claim Amazon is hypocritical to those that consider its recent moves outright evil.

Why so much controversy? Because, up until now, Amazon has probably been the largest beneficiary of showrooming. Many consumers visit retail stores then price compare against Amazon. Many use retailers as physical showrooms for products and then turn around and buy the merchandise on Amazon. This has forced retailers such as Best Buy to start price-matching Amazon.

The masses are asking why Amazon would want to utilize price comparison blocking software in their own stores which disallows people from the very activity Amazon itself has benefited from for years. In fact, some people are so incensed that they call Amazon evil for simply owning this patent. Is Amazon threatening to harm their brand loyalty by rolling out this technology in stores? Would consumers get irritated if they were blocked from price shopping other retailers with their smartphones while in Amazon’s stores? Most definitely.

So why does Amazon want this patent?

To answer that, we need to begin by asking the most obvious question:

Why, in 2012 when Amazon was a purely digital retailer, and showrooming wasn’t even a buzzword, would it apply for a patent that prevented in-store consumers from price shopping the competition when Amazon was the primary beneficiary of that activity? Do you think it was because they had this psychic ability to predict that they would be entering the retail space? Even their logo means they sell everything from A to Z and consumers should be happy about it. Has their grand plan always been to dominate the planet?

NO!

They applied for this patent in 2012 to PREVENT ANY OTHER BUSINESS FROM USING THIS TECHNOLOGY to block consumers from price comparison shopping Amazon while in another retailer’s physical location.

They were protecting the most lucrative activity for Amazon — conquesting sales from their physical retail competition.

By owning this technology patent, no retail store can use this technology against Amazon to prevent price comparisons – say on Amazon.com – without violating Amazon’s patent and opening themselves up to a lawsuit.

But they have bookstores now — what about those? First, in 2012, Amazon didn’t even know it was going to open physical bookstores. It was in fact putting those out of business. Second, the bookstores they do have only contain 100 or so of the most purchased books on Amazon, which they maintain at the lowest price on the market. In addition, the bookstores are used more as a showcase for their ancillary products such as the Amazon Fire tablet and Alexa, similar to Microsoft’s retail stores.

When you’re faced with a complicated puzzle, typically the simplest answer is the correct one. In this case, in 2012, technology was getting to the point where competing retailers would soon be able to block price comparisons on Amazon for shoppers in their stores. Amazon was WAY ahead of the game and beat them to the punch.

Evil or Brilliant? It’s all a matter of perspective but, in the end, Amazon wins and, hopefully, consumers do as well.

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