While this is not a new concept, it will continue to dominate the minds of small business retailers until one of two things happens. Either A) some form of change reduces the competiton on price alone or B)the small business is out of business thus making it a non issue.
The fundamental concept of a free market is to let the market set the fair price. However, that concept is dated as it was written prior to advent of the internet. The internet has created a venue for near perfect competition. That is competition based on price alone.
As an example of what we are up against, ill give some actual product info but change the name to a widget. This widget has a suggested retail price of $39.99. My wholesale cost is somewhere in the range of $21.00. This product is typically available online for $23.99 or 40% off retail. At MSRP my gross margin is about $19.00. To make that same gross margin matching the online price i have sell 6.3 units. (Assumes a cash sale, a credit card sale makes the math worse.)
For the last 10 years, my personal philosophy has been to hold out for MSRP. The argument goes something like this: If i match the online price and only sell five units, of which one was to a customer who was willing to pay MSRP, i just worked harder for less money. Add to that the fact that the products sold in my store require some expertise to sell and now we have a situation where the local retailer is educating the consumer who then takes that knowledge and buys the product online.
Basically, I’m not getting paid for the work I do selling the product.
There are many industries who are susceptable to this, pet stores, camera stores, book stores and hobby shops to name a few. Something needs to be done to protect the value of the knowledgeable local retailer. I’m not sure what the something could be, and i hear the masses screaming “free market”. But what would Amazon do if store like mine no longer were around to educate consumers? Would they hire staff to do that work? More than likely they would just just stop selling that particular widget and move on to something else.
Full disclosure- I do operate an online store within the same industry as my retail store and products are sold below MSRP- i would give it up in a second if all the other online stores went away, but mostly would love to see an online sales venue where products could be sold but not at such deep discounts.