The Internet is a great business tool. It allows retailers of all shapes and sizes — from Target to Grandma Betty who sells her homemade jams — to sell to the entire (Internet accessible) world. While Grandma and her jellies will likely be ok, a Supreme Court decision could threaten retailers who sell other manufacturers’ products by allowing the companies to more strongly enforce minimum retail prices on their products.
If you’ve ever had to add a product to your cart on a website in order to see the price, you’ve experienced minimum retail price enforcement in action. Apple is a company well known for such enforcement. This is why an iPod almost always costs the same at the online Apple store or at Amazon.com Similarly, your iPhone cost the same at Best Buy or the AT&T store.
However, some online stores can offer better prices on some of these products, mostly because the overhead costs are so much lower with online retail. Costs for hosting and being able to stock product limited only on the size of your warehouse for an online store will always be less than paying a lease and utility bills on a physical store in which shelf space is limited.
Now, some online retailers are arguing that online stores have an unfair advantage. An oft-cited example of these unfair practices is how consumers will visit a brick and mortar store, play with product displays, use the employees’ time to ask questions, and then go home and order the product cheaper online because it’s cheaper. The physical store has lost time and money, the online store gets a sale.
In Leegin Creative Leather Products, Inc. v. PSKS, the Supreme Court decided (and I’m paraphrasing here with my decidedly non-legal background) to allow for a new standard of stricter enforcement of minimum retail prices to which both online stores and individual people — eBay sellers included — will be held. In fact, some retailers use tools that comb through eBay listings to find products going for below the minimum retail price and then threaten legal action on these sellers. For the most part, individuals selling on eBay don’t have the legal clout to challenge the suit either.
Of course, these anti-trust challenges have to move through the court system, so it will take time for the decision to filter through the market; indeed time will tell what effect this will have on the prices the consumer will pay, but the days of getting a good deal online could very well be numbered.
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