Wednesday 22 August 2018

Indian Bicycle Marketing* vs Diagonal Comparisons

From the BBC:

A windfall tax could be levied on tech giants such as Google, Amazon and Facebook to pay for public interest journalism, Jeremy Corbyn is to say.

The Labour leader will call for radical reform of the media landscape in a speech at the Edinburgh TV Festival. He will say digital "monopolies" which "extract huge wealth" could pay for non-profit, investigative reporting.


Well, that's all lovely, but illustrates yet again that May's Tory government and Corbyn's Labour opposition aren't that far apart, they are still nicking each other's ideas.

Wasn't it Tory Chancellor Philip Hammond who mooted an Amazon Tax about two weeks ago "to ensure there is a more level playing field for high street retailers"?

Which gives us a nice diagonal comparison** to complement the Indian Bicycle Marketing.

For some reason, people have succumbed to the Big Numbers Fallacy and think that Amazon et al are the most mightily profitable businesses in the world. Taken in isolation, maybe they are, but those are global profits; the total income of UK buy-to-let landlords vastly outweighs the total profits of Amazon, Facebook, Google. But we all are agreed They Are Evil And Must Be Taxed More Heavily.

So the voters' choice is now narrowed down to this: what should the government do with the revenues from the Amazon Tax. Subsidise 'High Street retailers' or subsidise news outlets? What if we think that both are stupid ideas? The obvious other choices, like don't invent new taxes; or spend the revenues on something else entirely, which could include cutting other taxes or paying off the National Debt, are off the table.

* A political strategy where one party proposes very similar policies to that of the opposition, but gives a diametrically opposite reason for doing so.

** When people (are asked to) make comparisons between two completely different things, in extreme form, the Poor Widow in a Mansion living next door to a millionaire in a small flat.

13 comments:

Bayard said...

All the articles I have seen about Amazon have been very careful not to say what Amazon's profits are. They will quote figures for turnover, and say things like "Amazon's profits have doubled in the past three years" (or whatever) or quote Jeff Bezos's personal fortune, or how Amazon treats its employees, as if this had anything to do with profits, but never give an actual figure. All of which leads me to suspect that Amazon's profits simply aren't that large.

Mark Wadsworth said...

B, their world wide profits are a billion or two. Divide that by dozens or hundreds of countries and it's not much. Their UK profits are a tiny fraction of Tesco's.

Shiney said...

@MW et al

Amazon is a 'platform' - most of its profits come from AWS and hosting things like iCloud for Apple (yes, really) not selling stuff. And a lot of the stuff they do sell allows small businesses to go around the big retailers....

Example - we own a brand in the personal care sector (won't say which one for obvious reasons). Could we get a new variant we'd developed listed with the big retailers? Could we f**k.... despite the requests from customers for said variant, and all the consumer research/testing we'd done. In fact after the review we presented to one of the retailers they ended up delisting part of the existing range and handing the slot to P&G (I guess they offered a bigger listing fee aka 'bribe'). B'stards.

So we went to Amazon, used the marketplace as a reseller and its now our second biggest variant. And we get to keep most of the margin. So as a small business Amamzon is a 'good thing' and if it stuffs 'big retail' my view is.... bring it on.

And finally - everyone focuses on its profits and corp tax. As, I think you outlined last time @MW, what about all the other taxes they pay.... employers NI, UBR, VAT, Fuel duty on all those deliveries etc.

Mark Wadsworth said...

Sh, excellent point. Amazon, eBay and Gumtree are a godsend for many small businesses. And glad to hear it's working for you.

Shiney said...

Another point....

My business partner keeps up with all this stuff (he's the marketeer, I'm just the Ops grunt).

The latest trend among the big brand owning corps (P&G, Unilever, Reckitt Beckiser, Henkel etc) is to invest in brands that are 'digitally native'.... i.e. they will not be listed or sold in traditional retail at all. Bear in mind these are physical products (shampoo, soap, washing powder) which will REALLY shake things up.

Shiney said...

@MW

Yeah, sales via Amazon's platform and OnLine in general are up 40% YoY.

Shiney said...

And finally

Re Corbyn's BDC idea - a state owned SocMed company.... that one's gonna fly - but then we all know he is c*nt of the first order who knows f**k all about f**k all.

Unfortunately he might be the next prime minster.

Mark Wadsworth said...

Sh, good stuff and agreed.

MikeW said...

Mark,

Yes bad from so many perspectives.Both parties are run from their focus groups so they converge and attempt to 'out waffle' the other team on the same waffle core policy response returns, from swing morons. The pollsters should run a cunning experiment where they give Labour polling data to the Tories and vice versa. Wait for the identical 'policy' ideas, then out them both. A gaint 'Total Institution' type experiment that 1970s Sociologists used to under- take on the mental hospital profession without telling them. (Sorry long forgotton the study names. Whole sections of my past life are missing for some reason)

Shiney - nice to have the old Shiney back!

Mark Wadsworth said...

MW, you laugh, but that actually happens!

A lass at work once asked me "What sort of policies do the Conservatives have?" She explained that she had been invited onto a focus group (got paid £50 for the evening) for Conservative voters to road test some policies.

I gave her a quick run down, and she passed herself off as a perfect Tory voter just fine, shouting "hooray" to every mention of hanging, flogging and sending back the darkies.

Round about the same time, my Malaysian wife masqueraded as an Indonesian on a focus group road testing some potential brand names for soap powder which Unilever were going to market there. She's never set foot in Indonesia.

Shiney said...

@MW#2 - Cheers for that.

I never went away, but tend to only comment on things I know about. When somebody talks b*ll*cks about such an issue, like Comrade C does most of the time, I can't help myself ;-D

S

Mark Wadsworth said...

Sh, treat this blog like a pub, feel free to pile in even if you don't know what you are talking about :-)

Bayard said...

"Their UK profits are a tiny fraction of Tesco's."

Mark, thanks for confirming that. It's just the politics of envy, through and through.

"And finally - everyone focuses on its profits and corp tax."

Yes, that's because that's where the figures play well with the Envious.

And yes, Sh, it's always good to hear what it's like from the POV of an actual manufacturer and small business and it's also good to have my suspicions of the supermarkets and Big Retail confirmed first hand, so do contribute as much as you can