Sunday, 14 February 2016

Economic Myths: Amazon and Business Rates are crushing bricks and mortar retailers.

From The Guardian:

The former boss of Sainsbury’s has waded into the row over the tax paid by multinationals such as Amazon and eBay, saying it was unfair that that traditional retailers must pay huge rates bills for services such as roads and waste collection, while their online rivals paid little but received the same benefits…

Amazon, which raked in sales of more than £6bn in sales from UK shoppers, is estimated to pay only about £10m in business rates. Marks & Spencer, which has UK sales of just less than £10bn, last year faced a rates bill of £177m. Tesco’s UK sales last year were nearly £44bn, more than seven times those of Amazon, but its business rates bill is 60 times higher.

From ONS, total UK retail sales, year to September 2015: £375 billion. The largest single retailer is Tesco, with annual sales of £62 billion (two-thirds of which is UK).

From The Bookseller, total UK Amazon sale: £5.3 billion. Or £6 billion if you believe the Guardian.

To sum up and actually reflect facts:

1. Amazon have got a modest 1.6% share of the market. They do not compete on food, petrol or diesel, which make up half of retail sales by value.

2. Amazon pay more than enough for the roads they use via fuel duty for their delivery vans, which covers the cost of road maintenance three times over. And most councils charge separately for business waste, so Amazon will be paying its fair share of that as well.

3. Amazon clearly do not get the same benefits, they have a few large out of town warehouses in places where the location value and hence business rates are very low.

4. In terms of Business Rates per £1 of turnover, Amazon pay 0.2p, Tesco pay 1.4p and M&S, with smaller stores in even better locations pay 1.8p. Don't tell me that Tesco or M&S can't afford that, if not, then they are free to shut down all their stores in prime locations and just do home deliveries from their warehouses.

5. UK retailers are all building up their online sales and UK supermarkets are pushing their internet/home delivery sales quite heavily - if you shop at Sainsbury's or Tesco, you usually get given vouchers offering you extra points if you shop online, or money back on your first order after signing up etc.


Bayard said...

"From The Bookseller, total UK Amazon sale: £5.3 billion."

I think that may be just books.

Mark Wadsworth said...

B, nope, the Guardian said £6 billion sales and that means total. Think about it, £5.3 billion = about £200 per household per year on average. Clearly, UK households don't spend £200 a year on books on average, let alone from Amazon.

Bayard said...

Ah, yes, that makes sense. Mind you I have had it said to me that Amazon pay no VAT, because there is no VAT on books.....