Amazon to erect anti-competitor barrier around its stores

In an ironic twist, retailing behemoth Amazon is reportedly taking measures to ensure customers in its physical retail stores can’t price-check other retailers online.

The practice, known as “showrooming”, has been a major contributor to Amazon’s growth as an online retailer over the past decade.  However, now that Amazon is creating bricks and mortar stores, the shoe is on the other foot.

According to the Washington Post, Amazon has patented an algorithm – “Physical Store Online Shopping Control” – to make mobile window shopping more difficult.  While it can’t to prevent tech-savvy customers from price-checking other retailers on their mobiles, it does inhibit the process for shoppers using in-store wi-fi, and provide a “home store advantage” for Amazon.

The patented algorithm monitors a customer’s mobile browsing.  When it detects them visiting a competitor’s website, it can:

  • block access to the competitor’s site;
  • redirect the customer to Amazon’s own site or to other, Amazon-approved sites;
  • notify an Amazon salesperson to approach the customer;
  • send the customer’s smartphone a text message, coupon or other information designed to lure the customer to purchase in the Amazon store.

Amazon’s patent is especially important give last Friday’s announcement that it plans to buy Whole Foods Market.  If approved, the $13.7B deal would deliver Amazon more than 460 stores across the United States, Canada and Britain.

In a retail environment already under significant margin pressure, this latest attempt by Amazon to imprison customers within its own technical ecosystem is being seen by other retailers as a grim portent of anti-competitive actions to come.



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