Naomi Simson on Amazon: The retail jungle for David and Goliath
Tuesday, June 12, 2018/
Will David have any chance at all in this battle for customers? I would like to believe so.
I ask myself the question why other US retailers have tackled the new Australian GST laws differently, when Amazon has chosen to geo-block Australians from its US and UK sites.
Having purchased from time to time from US retailers, I note they use an outsourced service to manage the cost of compliance. For example, Borderfree.com has been collecting taxes and remitting them for years. I can assume that the change to both New Zealand and Australian tax laws will simply mean a change to the tax threshold in their software and they continue to do what they do. There are other businesses I’m sure that offer similar services.
Just days ago I gave my view in a roundtable piece about Amazon geo-blocking Australian customers:
“Amazon have cited ‘cost of compliance’ as the reason for blocking Australian customers. This is not only ironic (given they are the largest retailer on the planet), it speaks of an arrogance that says ‘we don’t care enough about Australian customers’ to make this investment … Customers will work out a way to be served what they want, when and where they want to have it. I think this move sends a very bad consumer message to all Australians … it also says ‘we don’t respect your tax laws’. I was surprised to see them take this stance and I am curious to see what happens next.”
All of that still stands, but in light of the tax “threat” Amazon are now facing, there is a different issue at hand. I emphasis the word “threat” when referring to taxes, because, as Benjamin Franklin so eloquently put it, “there are only two things certain in life: death and taxes”. So I am still left bewildered as to why Amazon appears to sit as ‘bigger than the government of the jurisdiction’ in which it does business.
It’s worrying when enterprises become so big they appear to operate with a different agenda, instead of as a corporate citizen contributing to the wider wellbeing of the community. And what does this mean for the ability of small businesses to compete? How does David even keep up with Goliath?
Fairfax last week reported: “The real impact of Amazon’s Australian move is the message … that it will resist attempts to impose new turnover taxes and it is prepared to punish governments who pursue them. The stakes are way beyond any problem with paying Australia’s newly legislated 10 per cent GST on online sales.”
Scott Galloway said it best, as he often does, when he pleaded with the big tech companies to “pay your damn taxes”.
Taxing online sales is a way of levelling the playing field for bricks-and-mortar retailers who really felt, and continue to feel, the pinch with the onslaught of online retail. I look to the Myers and David Jones’ of the world who are working overtime to keep up, stay relevant and reinvent themselves (with mixed success). There is a whole other topic here about the often forgotten power of great customer experience in driving and supporting this reinvention, but that’s for another time.
What good is a tax if it’s only the smaller operators who have to pay up? It gives the big guys — who have ways and means of avoiding such levellers — even more of a competitive price advantage.
For me, the issue is bigger than geo-blocking Aussie users. It’s about a shift in how our economy is working and how small businesses can realistically continue to be profitable in the face of global retail giants.
I am looking forward to seeing a statement from Jeff Bezos to reiterate his commitment to customers. He is famous for customer advocacy, but lately the actions of his business are not matching his words. Last week it was reported that Amazon is now blackbanning customers who make too many returns. I understand the commercial cost of this and why it may need to be done, but a statement from the leader would help us all understand a little more about the shift in sentiment at Amazon.