On-line retailers need taxing! Do they?

Published on: 9 Jul 2013

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On-line retailers need taxing! Do they?

Tesco and John Lewis have recently complained about the competition. The on-line retailers are apparently at an advantage because they don’t have to pay so much tax because they are ‘off-shore’ and therefore able to charge less for their products.

I seem to recall that for years Amazon was being criticised for not being able to deliver a profit. Year after year they ploughed money into capacity, staff, system and promotion. Described as folly, their business model was derided by industry pundits almost without exception.   Now of course, these new ‘tax dodging’ villains are a target for criticism because not least, they are profitable and taking market share.

So, after heavily investing in infrastructure (building, people, systems etc) they are to be vilified for having an unfair advantage. Nothing to do with anticipating and meeting customer’s needs, profitably! (By the way, that is the official definition of marketing.)

Perhaps holding land that is now losing its value thanks to the reducing need for supermarkets is part of the problem? Perhaps it is the system-cost of high fixed costs associated with lots of retail outlets? These might be driving the market towards the on-line retailer?

Before we all say, well surely its simple for the supermarkets to change the model. Let’s look at history. Twenty-plus years ago, 80% of the population had a door-step milk delivery. That business has now almost disappeared, thanks to the retailers offering a better solution (cheaper too). So, 50,000 milk deliverymen lost their jobs. Could the same cycle repeat its self and the supermarkets get caught-out by the revolution to on-line?

Is the question is more prosaic, is it not about tax, perhaps it is more about what customers want?  Do they want disintermediation or aggregation? On-line can offer both, the customer can buy directly from a producer cutting out the intermediary or equally they can buy from the best aggregator, the company that best articulates their needs and wants, to provide the best assortment. Now, surely that should be the retailers, after all, they have had the practice?  Or perhaps that is where the new on-line retailers have discovered that they can let the customer choose, whereas the supermarkets tried to choose for them and maybe called it wrong? On-line, more taxing that you think? At least taxing on the intellect.

John Taylerson profile

John Taylerson MBA, FCIM, chartered marketer. More importantly is HACCP level III, Food safety level III ihave a forklift and HGV licence. Running two food & drink businesses  (Malmesbury Syrups makes coffee and mulling syrups and Dairystix makes UHT milk portions) means I have a good view of the issues. Food & Drink Ambassador and Chairman of the Chartered Institutes of Marketing in the south west of England. Worked at every stage of the food supply-chain from farming to retailing, with lots of production, processing and product development in-between. This means I have an opinion on almost every aspect of the food supply chain and not shy about sharing it.

This blog Is my personal view, it isn’t the view of any of the companies I work with

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