Your Opinion: Dominic Irons on the ‘Amazon tax’

In a Stationery Matters news piece about the Chancellor’s proposed new tax for online retailers, we asked you to share your opinions about whether it would level the playing field between online and physical retailers. Dominic Irons, founder of online stationery retailer Bureau Direct, sent us this reply:

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“In response to your request for comment on the proposed Amazon Tax, I would like to balance the prevailing view of online retailing benefiting from unfair advantages.

 

As with all businesses, larger corporations can unfairly drive sales at the expense of smaller business. Whether it is Amazon online, Tesco offline or almost any business in any sector you choose to look at, you can find examples of this.

 

There is a prevailing ‘myth’ about online retailing being easier, lower cost and so more profitable. Whilst there are advantages, there are also a lot of notable disadvantages that never get reported. These include:

 

  • The costs are different - online requires heavy marketing spend whether in the form of paid searches, SEO, social media or more. Without this you effectively don’t exist.

 

  • There is also the basic cost of getting the goods in the customer’s hands, and fulfilment is certainly the Achilles Heel for online retailing as far as I can see it. Ever increasing delivery costs whilst customers expect free delivery. In the worst case you have people ordering sub £5 or £10 worth of goods expecting free next-day delivery, despite the obvious disconnect between the time and money it would cost them to go to the shops.

 

  • Cut-throat competition - online is essentially a price-driven market even for premium brands. Few are immune to the ease with which customers can browse. If it’s a branded product then why buy from Shop A when Shop B is cheaper and has free delivery? The customer doesn’t care whether Shop B is running an unsustainable loss to get the sale.

 

  • Suppliers - so many suppliers have rules that either give better margins to bricks-and-mortar retailers, or actually cut out pureplay online retailers altogether. There are real penalties to be paid if you are just online.

 

  • Which leads to the final and most telling issue with the proposed tax. We already see competitors get an advantage simply because they have a shop. One assumes they will avoid this new tax as well, yet can compete with pureplay e-tailers. It is not a black-and-white online/offline issue. Many (most?) operate across both online and high street, so how can this tax work? What if Amazon open a single shop - does that make them avoid the tax?

Amazon don’t even pay the basic taxes other businesses have to, so why create a new tax that they won’t pay? Not for nothing is this called the Amazon Tax. It is hard for many businesses, but the line is drawn in the wrong place if you are putting it between online and ‘traditional’ retailers.”

 

Thanks to Dominic for sharing his opinion with our readers. Please feel free to contact Julia at editor@stationerymatters.news if you would like to join the debate.

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