A woman showing off her new iPhone 4s in NY 311 (R).
(photo credit: REUTERS/Brendan McDermid)
Just a few months ago, The Guardian published an article filled with righteous
indignation at one of England’s largest chain stores. The target of their wrath:
a policy forbidding shoppers to write down prices. The Guardian reporter was
kicked out of a Tesco store when they found him recording prices with a pencil
and paper; the manager told him it is against official store policy.
week, the Guardian published another righteous-indignation piece, one that
perhaps throws a little more light on the previous one. The headline:
“Amazon.com branded ‘Grinch that stole Christmas trade.’” This time, their
target was a very controversial new policy of the online retail giant
Amazon. The company rolled out an application for mobile devices that
allows shoppers to go into a physical store and rapidly compare prices with the
online price. If this threat was not enough, Amazon is harnessing the prices for
its own use. And if all that was not enough, Amazon is actually turning
its customers into its employees by offering steep discounts to customers who
use the application.
This practice raises some serious ethical issues.
The Tesco policy may have sounded strange to the reporter, but in fact, policies
that work to keep prices under wraps are common and in many branches of the
economy, they are the rule, not the exception. Many merchants won’t give you a
price but only a “price quote,” good only for you, only for a limited time, and
only if they are convinced you are a good-faith shopper. Some merchants
make you promise not to divulge prices to competitors. Prices are not strictly
speaking a trade secret, but they are valuable private information and merchants
have a valid interest in controlling access to that information.
kind of information that people get from stores is the look and feel of a
product. Stores invest a fortune in displaying merchandise to showcase its
qualities and even in the selection of a product. Just knowing that a large
chain decided to carry a product says something about the product. Amazon is
taking a free ride on these investments; the local neighborhood stores are in
effect providing a free showroom for their competitors. The Internet
retail giant gets the best of both worlds: the huge savings in cost that come
from an online store and the shopping experience that comes from a
It is only fair to mention that to some extent the free ride
goes both ways. Shoppers are free to browse Amazon’s site at their
leisure and take advantage of the extensive product information and the many
product reviews – not to mention the transparent pricing – and then use that
knowledge to select products at local stores without the wait or the shipping
The issue is not so much the free ride as the deliberate effort to
leverage it and take advantage of competitors. The best analogy would be if a
retail store sprinkled its showrooms with monitors, and encouraged shoppers with
questions to look up details and reviews on Amazon. But Amazon explicitly
forbids this. Their conditions of use forbid “any downloading or copying
of account information for the benefit of another merchant.”
that this loophole will be short-lived; retailers will merely adopt formal
policies to protect their information from Amazon, just as Amazon has a formal
policy to protect its own information from them. Then the use of the application
would be even more ethically challenged, in that it would in effect be daring
customers to de facto trespass in competitors’ showrooms.
on free competition, but they also thrive when the legal and ethical
environments enable merchants to benefit from investments they make in their
product or service. In this context, I see Amazon’s policy as a step back, one
that will probably be email@example.com
Asher Meir is
the research director at the Business Ethics Center of Jerusalem, an independent
institute in the Jerusalem College of Technology (Machon Lev).