That means Amazon’s hot new Kindle e-reader will no longer be found on the shelves of one of the biggest U.S. chain retailers.
The “Showroom Effect” is a phenomenon in which consumers use brick-and-mortar stores to test drive certain products before purchasing them online at a lower price.
This isn’t the first shot fired in the war between the world’s largest online retailer and the second largest discount retailer in the United States.
The Beef with Amazon
Retailers have long complained of Amazon’s unfair competitive advantage because the online retailer is exempt from charging state and local sales taxes.
Last spring, Target, along with Wal-Mart Stores Inc. (NYSE: WMT), Best Buy Co. Inc. (NYSE: BBY), The Home Depot Inc. (NYSE: HD), and other retailers threw their collective weight behind the Alliance for Main Street Fairness, a coalition that is leading efforts to change sales-tax laws in more than a dozen states, including Texas and California.
But the sales tax gap is just part of the problem.
During last year’s holiday shopping season, Amazon offered 5% discounts up to $5 to “show-rooming” consumers who used the online giant’s Price Check mobile app in a physical store-in essence, encouraging the Showroom Effect.
In response, Target sent a letter to its suppliers urging them to help combat the Showroom Effect, either by delivering more in-store exclusive products, or by helping to them to match the prices of Target’s online rivals, including Amazon, TigerDirect, Overstock.com Inc. (NasdaqGM: OSTK), and eBay Inc. (NasdaqGS: EBAY).
Even still, retailers like Target have other issues with online competitors like Amazon – such as what happens after the sale.