Wednesday, December 01, 2010

Price Comparison Mobile Phone Apps vs. Websites

Sometime early last week I heard or read a news story concerning Amazon offering a free mobile phone shopping application. If I understood it correctly, the online store released the app so that shoppers could take a cell phone picture of an item or its barcode, or type in its name, and Amazon would provide price comparisions from other retailers or sources. The app was available prior to Black Thursday.

I don't use my cell phone for shopping or finance, but I quickly considered how this technological development would affect various web-based comparison shopping services. Again, I don't use them, but I have a pretty good idea what they are. A quick Google of the topic produces results including PriceGrabber, Bizrate, Nextag, Smarter, and more. It doesn't take much intelligence to realize that maintaining such a website is expensive and provides revenues and profits to someone.

Thus, Amazon's new cell phone comparison shopping app represents a Schumpeterian type of technological and retail structural advance which could well doom those websites.

I'm assuming Amazon's app disintermediates those other websites. But even if it used them, as well, Amazon's position as a retailer makes it different. Very much like a financial broker filling orders from its securities inventory before going to the markets. Or the original Sabre airline reservation system.

When a vendor offers a comprehensive service involving comparison shopping, it is slipping customers into a closed system of its own design. That can't be comforting to the owners of those older comparison shopping websites.

Will they gradually lose traffic and value? I haven't seen a business story about this phenomenon. Perhaps it's too early to assess the behavioral changes of shoppers and the effect of those changes on the older comparison sites. But it's hard to believe that they won't now be in some trouble or, at least, have significantly more competition with Amazon's entry into the fray.

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