Shopping applications are said to have increased the urgency by “brick and mortar” retailers to have a federal law requiring collection of sales taxes by internet retailers. A consumer can use one of the many available shopping applications to touch and scan the barcode of an item in a store to a smart phone and then search the web to see if they can obtain a similar product at a cheaper price elsewhere. Further, the buyer can purchase the cheaper item while still standing in the store to the despair of the salesperson.
Physical stores usually compare and match cheaper online prices in a manner similar to how they would match the price from a competing physical store. Price matching and comparison is, for example, done when a consumer comes in with a newspaper advertisement. However, they cannot match the sales tax savings made by the online retail shops mainly, because the Supreme Court ruled that a retailer cannot be forced, by the state, to collect taxes without the go ahead from Congress, and unless the retailer has a physical state presence, which online retailers claim they do not have.
For retailers, shopping applications can be an advantage at times, especially when their prices are cheap, as this assists them to close a sale. If a consumer scans the barcodes on products, searches the web, and ends up finding the same store to be the one with the cheapest prices, then they will end up buying there.
This kind of promotion has generated a lot of outrage from some retailers who term it as an “in your face” promotion. However, their outrage has only ended up giving more publicity to the apps thereby enabling more and more people to learn about them. According to a survey released by Comscore, Inc. 38% of persons with smart phones had used their phones to complete a sale, and only 36% of those had actually completed an online purchase while in a retail shop.
Many physical store retailers are up in arms saying they want the federal government to pass tax legislations to have online retailers collect sales taxes in a bid to even the field better. However, some of the online retailers claim that since they do not have a physical presence in the states where they have established warehouses, and since the warehouses are held in a separate subsidiary, they cannot collect taxes.