Discussions over the possible implementation of what has been dubbed an 'Amazon tax' on online retail orders, will not address the real reason why people choose to shop online, the CEO of a leading online delivery service has warned.
Santosh Sahu, CEO at On the Dot, which provides third-party logistics services for online retailers, commented, “Amazon is not playing the same game as traditional retailers. Traditional retailers are still using the age old strategies of price, tax, regulation and size. Online shopping is not predominantly about price; it’s about convenience.
"The convenience of a few clicks and same day or next day delivery to whatever location champions driving to a supermarket, finding a parking space, queuing at the till and then driving home."
Sahu was responding to comments by Dave Lewis, Tesco chief executive, last weekend, who told the Mail on Sunday that the government should ensure online-only retailers are taxed accordingly, in order to ensure the health of the traditional bricks and mortar industry.
As Lewis told the paper, “If I were the Chancellor, I’d be saying how do I keep this industry going so I could keep this [tax] take for longer, because if I’m not careful I’m going to kill it."
Bigger Picture
Sahu said that he disagreed with Lewis' position, which he said focused on the cost of doing business, rather than the bigger picture.
“Tesco suggests looking at the cost, but this isn’t going to fix the problem either," Sahu explained.
"Businesses have long been calculating the real cost of a product as the "total cost of ownership" i.e. not just the cost of the product but all associated costs like transport, taxes, etc. Apply the same calculations to a retail shopper, add in their valuable time as well as the cost of owning a car."
Sahu noted that there are "few examples in history" when taxation changed consumer behaviour.
"People still buy petrol, tobacco, sugary foods and drinks regardless of the taxes that have been placed on these items," he said.
“In order to compete, traditional retailers need to put their stores at the heart of their strategy and recognise the value and number of online and brick and mortar customers who live locally to their stores. Merging the experience between their online and in-store businesses will ensure they don’t miss out on another trick. They must act now, before Amazon begins to open more stores and beat them at their own game."
© 2018 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: European Supermarket Magazine.
