Techdirt. Stories filed under "retail"

French Politician Wants To Limit How Cheaply Companies Can Sell Goods Online Compared to Physical Shop Prices

Glyn Moody — Fri, 12 Apr 2013 05:45:18 PDT

A couple of weeks ago, Techdirt wrote about a store that was trying to charge customers $5 for "just looking", because it felt that many people were merely inspecting goods there before then buying them online. Guillaume Champeau points us to a French politician who is also worried about the same problem, and has proposed modifying the law governing commerce to deal with it (original in French). Here's the politician's explanation in the preamble of why it is needed:

Currently, regardless of the margin necessary for commercial activity the prices charged by distributors in town centers are often much higher than the prices charged by suppliers on their online sites.

This leads local shops to become mere showcases for products, products that consumers prefer afterwards to buy online at lower prices.

Equally, this decay of urban centers affects other sectors, such as hotels and catering.

Also, the proposal submitted to you aims to prevent suppliers from selling online at a price lower than the price at which they sell to distributors. The prices of products sold online may thus remain lower [than in physical shops], but in a reasonable and acceptable way.

The key problem with this idea is that it won't work. Even if the law were passed, people would just buy from online stores outside France, where prices will still be lower, because they would be unaffected by the new French legislation. Nor can that be stopped, because one of the impulses behind the European Union is to encourage precisely this kind of competition among companies located in different countries in order to bring about lower prices across Europe for the consumer's benefit.

The real solution, as Mike noted in the previous case, is for physical stores to become more attractive, not for governments to pass yet more clueless and ineffectual laws trying to diminish the power of the Internet.

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Dumb Policy: Store Charges $5 Just To Look At Goods, To Keep People From Looking And Then Buying Online

Mike Masnick — Wed, 27 Mar 2013 05:53:49 PDT

It's really incredible how many bad strategies legacy companies come up with in trying to compete with the internet. Rather than increasing their own value and figuring out ways to leverage that value, they often go in the other direction and make the experience worse. Case in point, this store in Australia that is so fed up with people shopping in the store, but then buying online that it's now charging people $5 as they enter just to look around. If you buy something, the $5 counts towards the purchase. If you don't, the store keeps it. In case you can't read it, the sign says:

As of the first of February, this store will be charging people a $5 fee per person for “just looking.”

The $5 fee will be deducted when goods are purchased.

Why has this come about?

There has been high volume of people who use this store as a reference and then purchase goods elsewhere. These people are unaware our prices are almost the same as the other stores plus we have products simply not available anywhere else.

This policy is line with many other clothing, shoe and electronic stores who are also facing the same issue.

This story originally got attention via Reddit, and looking at some other photos it appears the store is called Celiac Supplies, and is a "gluten free grocery store."

I can understand where the thought process to do something like this comes from. For years, of course, we've heard things about how Best Buy has basically become Amazon's showroom. But this is the exact wrong response. Rather than showing ways to add more value to the customer experience so they want to come in, they're taking away value and giving customers reasons to never go in in the first place. That's a stunningly short-sighted way of running a business. The people who were coming in, seeing what was there and then ordering online aren't suddenly going to start paying you for stuff anyway. They'll keep shopping online. But, on top of that, some existing customers who are used to buying will be turned off by this and also switch to buying online.

In fact, this seems to be screaming out "hey, you get better deals online and we know it!" Not smart.

Instead of doing that, why not look for ways to add value? For a specialist store like this, they could create all sorts of additional value, including more support in helping customers find what they need, the ability to offer bundles and recipes, cooking classes and much much more. The focus should be on using the local store to provide more value rather than taking away reasons to shop there.

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One Step Closer To Sales Taxes On All Internet Purchases

Mike Masnick — Tue, 26 Mar 2013 00:08:00 PDT

On Friday, Congress came one step closer to imposing a federal "internet sales tax" on any internet purchases by agreeing to amendment that more or less indicates strong support for a more comprehensive internet sales tax down the road. This kind of tax has been pushed for years mainly by two key constituents: (1) big box offline retailers who think that the online guys are only beating them because they don't have to charge a sales tax for out of state purchases (2) local state governments who think they're being ripped off by not being able to collect such taxes. There are still some hurdles in the way, but it's becoming clear that this kind of tax is inevitable. The amendment passed 75 to 24, so it's got plenty of support. Max Baucus, who heads the Senate Finance Committee which could kill such a bill if it had less support, has already noted that his state, Montana, has no sales tax at all, and he's a bit ticked off that Montana residents may need to start paying sales tax online. Still, as the article above notes, Baucus's ability to block the bill via the Finance Committee is limited due to the size of the support among other Senators. I've yet to see a compelling argument for why such a tax makes sense -- other than random state governments insisting they need the money -- but at this point it seems almost inevitable that it's going to happen.

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Life Imitates Conan O'Brien As Samsung 'Opens Apple Store'

Mike Masnick — Fri, 24 Aug 2012 09:01:45 PDT

Just a few weeks ago, Conan O'Brien did a satire video about the Samsung/Apple lawsuit, in which someone pretending to be a Samsung VP "defended" the company against charges of copying Apple, but everything he did, obviously, made it look like Samsung was copying Apple: In that, there's an amusing part, where the "VP" says "Don't believe me? Then come to our retail stores where you can talk more about our products with a 'Samsung Smart Guy.'" Truth, it seems, often matches fiction. Down in Australia, Samsung has now opened its own retail store that bears such an uncanny resemblance to the design of Apple's stores that the always-funny John Paczkowski brilliantly titled his article about it: Samsung Opens New Apple Store in Australia. Can you tell which picture was from the Conan O'Brien video and which actually came from this store?

Oh, did we mention that the Samsung store is... one block away from an Apple store? And, sounding almost exactly like the faux Apple VP in the O'Brien video, an actual Samsung VP told a reporter that Apple "didn't even come into the equation" when planning the store.

I'm firmly of the belief that the whole legal fight between the two companies is silly, and that they should just compete out in the market, but you have to admit that the resemblance here is a bit uncanny.

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The Coming Fight Over Sales Tax For Online Retailers

Mike Masnick — Thu, 3 Nov 2011 23:34:47 PDT

For years, we've written about the back and forth in various attempts by states to force Amazon to collect sales tax for purchases in states where it doesn't have a presence (or, well, claims it doesn't have a presence). Existing law says that states have no right to force out of state businesses to collect sales tax for transactions in states in which they have no presence. This rule came out of questions concerning the requirements on catalog retailers, but easily carried over to online retailers. For years, two main groups have been very upset about these rules: brick-and-mortar retailers and state governments. The brick and mortar retailers, of course, don't like having to compete with retailers who don't have to charge sales tax, since it puts them at a disadvantage. State governments hate it, of course, because they want more tax revenue anywhere they can find it (even if it harms their constituents).

Of course, there are some good reasons for not forcing out-of-state retailers to collect sales tax in states where they have no presence. There's the general question of the taxing authority of a state to reach cross borders to get a sales tax, for example. Related to this is the massive complication in collecting such a tax. There are so many different local tax rules, requiring any single entity to understand them all seems like a complete compliance nightmare. Separately, there's a question of the purpose behind such a tax. Generally speaking, a sales tax is supposed to cover the public infrastructure that a retailer uses -- e.g., the streets and clean downtown area that make it easy for customers to come to the store. But with the internet, the retailers aren't really getting the benefit of all of that, so why should they be taxed for it? You can argue that they still get some of the benefits in the roads/infrastructure used to deliver the goods, but that seems like a much more limited benefit. Finally, there's a more recent argument: we want to encourage growth in the internet sector, because it creates wonderful efficiencies and positive externalities that we should encourage. The brick-and-mortar folks really hate that one.

Anyway, for years there have been a series of fights and attempts to "deal" with this -- mostly pushed by the brick and mortar guys. Amazon seems resolved to accept having to collect sales tax, but has pushed for rules to simplify such taxes across borders to avoid the compliance nightmare. Unfortunately, it looks like the brick-and-mortar guys may be getting their wish with a new bill that will make it easier for states to force out-of-state retailers to pay up... and without many of the safeguards or requirements for simplified/standardized rules across states. While Amazon has suggested it might be okay with this, it could be a massive pain for any smaller retailer. In an age of micro-retailers -- think the musician selling products off his or her own website -- having to comply with every states' tax laws is going to be huge pain.

Thankfully, it appears there's at least some opposition to this. Senators Ron Wyden and Kelly Ayotte are trying to pre-empt the legislative effort, by getting a resolution through that would say that the Senate won't pass "burdensome or unfair" taxes on internet retailers. The resolution points out that such out-of-state tax requirements could become a massive burden on smaller players, and given today's unemployment situation, it seems like the wrong time to put in place such taxes:

Whereas any Federal legislation that would upset the free and fair Internet marketplace and allow State governments to impose new, onerous and burdensome sales tax-collecting schemes on out-of-State, Internet-enabled small businesses would adversely impact hundreds of thousands of jobs, reduce consumer choice, and impede the growth and development of interstate commerce; and

Whereas at a time when national unemployment numbers are high and businesses across the country are struggling to keep their doors open, the Federal Government should promote pro-growth and pro-business policies instead of enacting legislation that extracts additional taxes from our Nation’s Internet-enabled businesses

For a while now, it's seemed like such taxes were going to be unavoidable, even as they could end up creating significant problems for small businesses and individuals who sell items directly. Hopefully this small bit of opposition helps those on the other side think twice about the unintended consequences of a massive new tax regime for small businesses online.

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Innovation In Retail: The Informed Shopper Is A Happier Shopper

Mike Masnick — Wed, 26 Oct 2011 13:39:27 PDT

This post is part of an Intel-sponsored series of posts we'll be doing here at Techdirt on the topic of innovation. The series consists of a video interview of myself (which you'll see below), the post, and another video interview with an Intel representative and others. That second video, obviously, is content from Intel, but my video and what I've written here was done with complete and total editorial independence. We hope you enjoy the content and take part in the overall discussion.

In some ways, many people think that the world of physical retail is "over." It's been killed off by online retail. In fact, I recently heard someone refer to the challenge faced by a large brick-and-mortar retailer as "having to do more than be Amazon's showroom." But there are some interesting opportunities coming. First up, here's a brief video of me discussing the possibilities: I tend to think that the real opportunities, when it comes to innovation in retail, are in making life easier, better and more efficient for shoppers -- and that applies across both online and offline retail. While many people joke about the end of offline retail, you have to remember that it has a huge benefit in immediacy. You don't have to wait a few days for people to ship things to your door. The problem, however, is people often feel that they have more information online -- reviews, comparisons, videos, etc. But there's no reason that the same sort of information can't be built into the offline retail experience as well.

In some ways, this is already happening via smartphones. The fact that people can access all sorts of content via their smartphones means that some of that information is already there. But the next challenge will be for retailers themselves to provide more value through realtime information as well. The challenge is in making sure that information is really what's useful to the consumer, and not just useful to the retailer. The temptation will be to provide limited and/or biased information to push people into buying as soon as possible (and possibly the most expensive item). But unbiased and fair information can build up trust, and trust can make a buying decision much easier.

Beyond just the obvious stuff of providing the same kind of online information (reviews/specs/videos) to people in a store, let's take things a step further. Imagine a kind of open API that allows for others to provide additional information about a product. If you're buying vegetables, imagine an API that lets you easily find suggested recipes for those vegetables -- which could also check with a listing of what you already have at home and/or the store you're in and other nearby stores, to figure out how to buy whatever else you need.

For years, we've heard of retailers dreaming up the ability to text message you with a coupon as you walked by a store -- but that's an idea that's likely to piss off plenty of people, if they don't want such things. But imagine a system that lets you let stores within a certain area bid for your business. You want a cup of coffee? Set a radius, put the coffee shops you dislike on a blacklist, determine a weighting of price vs. distance vs. taste -- and see who offers the best deal.

As with pretty much anything these days, the real disruption, and the real innovation, come in making the consumers' lives significantly better in ways they didn't expect. The tools that will work and the tools that will wow are the ones that aren't so much focused on just improving retailers, but in making the consumers' lives improve. The end result, of course, for retailers who implement such systems will likely be improved bottom lines as well, but if they're just focused on improving their bottom lines without taking the consumers' viewpoint into account, it's unlikely they'll be all that successful.

Along those lines, the real lasting benefits for retailers may come from something as simple as connecting people to other people. One of the issues I've had with buying things in the past is the uncertainty of whether or not the product is right for what I need. I recently installed a new dishwasher and it required both some new tools and some new materials. I actually ended up watching some videos online before heading down to the store to pick up things, but even then I wasn't entirely sure what I was buying was what I actually needed (turned out, it wasn't, and I ended up making two additional trips that day to the store to buy/return things). While I had asked the one random store employee I found wandering among the aisles, they weren't really sure. But imagine if, from within the store, I could explain the job, take a quick picture of certain items, and reach out to a community of experts on the subject who could let me know if I really had the right tools for the job or not.

Similarly, when I ran into problems with the install, what if various retailers could tell me what I was doing wrong/missing -- and bid for my business with a complete package of everything I needed. Best package deal -- ready and waiting for me next time I came in? Sold!

In the end, what it comes down to is that by providing more information for the consumer, allowing them to better connect and improve the overall process, you improve the whole experience. Taking the guesswork, hassle or inconvenience out of shopping can be a huge win for retailers who want to compete against the online world by offering more immediacy, more information and a better overall experience.

Below you can see a video of Intel helping to enable just that kind of retail innovation

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UK Music Retailers Ask Why They Should Pay Performance Licenses To Play Music When They're Trying To Sell The Music

Mike Masnick — Wed, 28 Sep 2011 02:45:30 PDT

We've had plenty of stories about music collections agencies shaking down various businesses for playing music -- and over in the UK a fight is apparently brewing over whether or not music retailers should have to pay such fees. As you might imagine, the collection agencies say of course such retailers should pay. But the retailers point out that they're trying to sell the music directly and letting them play the music freely will help them do that. Apparently (I had no idea), in the US, record stores have an exemption from paying licensing agencies. But not so in the UK.

"These license fees imposed on record stores are iniquitous and in my view should be abolished," said UK-based Entertainment Retail Association (ERA) president Paul Quirk in a speech to members on Wednesday, while squarely pointing to "industry bodies like PRS and PPL who still pursue record stores for license fees in order to play music, promote music and ultimately to sell music."

Can you imagine running any other business this way? A bakery that wants to sell you cakes, but has to pay a separate "performance rights fee" to the baker? Don't see that working..

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Amazon: A Search Engine With A Warehouse

Mike Masnick — Tue, 23 Jun 2009 09:38:00 PDT

Clay Shirky made an offhand comment on Twitter recently that's way too good to leave to just the Twitterverse and not expand upon (hopefully Shirky himself will expand upon it -- but in the meantime, you're stuck with me). In commenting on a chart showing how Amazon seems to be growing while the rest of retail is shrinking, Shirky notes "AMZN's growth happens because its not a retailer with a web presence, its a search engine with a warehouse."

This needs to be unpacked in a few ways, but it's such a unique insight that it deserves lots of attention. Many people look at Amazon and think that it's just an "online store," but the reason that Amazon works is not because it took the concept of a store and put it online, but because it has always done things that only the internet allows it to do. That is, from its very early days, Amazon was never just about about being a store in a web browser, but in using the web to do interesting and unique things built on top of a commerce core. Things like online user reviews and recommendations may now seem commonplace, but Amazon revolutionized them. And it added so much convenience that many people now use Amazon product pages as default info pages on a product -- I know I do. To me, Amazon isn't just a store, but it's a database of products and reviews -- and that's what Shirky's getting at in saying it's a "search engine with a warehouse." Of course, the cool thing is that when you start thinking about Amazon in those terms is you realize how much more it can do. Those who think they're retailers are going to keep missing where Amazon is heading unless they start thinking the same way.

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Blockbuster Looks At Circuit City's Books; Ditches Acquisition Offer

Mike Masnick — Wed, 2 Jul 2008 17:28:23 PDT

We were one of a very small number of people who actually saw some logic behind Blockbuster bidding for Circuit City -- though, it seemed unlikely that Blockbuster viewed the purchase in the same way we did. Most people assumed (probably correctly) that Blockbuster didn't really have much of a plan at all, other than to merge the two struggling companies and have an even bigger mess on their hands. Blockbuster has now withdrawn the offer to buy Circuit City, gamely claiming that it has to do with "market conditions" and a better understanding of just how awful Circuit City's books appear to be. That's press release talk. What's more likely is that Blockbuster realized that everyone was right: it would screw up the merger and make a bad situation worse.

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Blockbuster In Surprise Bid To Buy Circuit City

Mike Masnick — Mon, 14 Apr 2008 09:06:07 PDT

The news came out early this morning that Blockbuster was making an unsolicited bid to buy Circuit City, which has left many scratching their heads, saying that the synergy isn't all that obvious. Circuit City has been in trouble for a while, and Blockbuster (while a lot healthier than Circuit City) has been facing its own series of challenges. While it's unclear what Blockbuster's plans are, the deal actually could make sense if Blockbuster was really looking distantly into the future about where its market is heading. It knows as well as anybody that video delivery is moving to the internet eventually -- at which point its business model gets a lot trickier. Yet, by owning a retailer selling hardware -- and the rights to content to be distributed to that hardware, things could actually get interesting. Now, I'll say ahead of time that I doubt this is where Blockbuster is heading, but with both movie distribution rights and the ability to sell hardware, it could embrace the economics of infinite goods, by packaging content (infinite) with hardware (scarce), creating a much more compelling offering, than competitors to either firm alone.

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More Music Retailers Learn To Change With The Times

Mike Masnick — Mon, 23 Jul 2007 01:05:00 PDT

While the recording industry continues to insist that its world is dying, the music industry continues to thrive -- even if it's not in the same way it did a decade ago. One of the more interesting things about this trend is watching how music retailers have tried to adapt to the change. Not surprisingly, it involves a lot of experimenting, and quite a bit of failure -- but record store owners seem to have realized that not adapting means certain death. One of the big trends we've seen is for record stores (usually independent ones) to recognize that it's important to become destination sites, rather than just music stores. They're also recognizing that record store employees can provide value by being trusted guides. To that end, a well-known UK music retailer is opening a new larger shop, even as many are insisting that music retailing is over. However, this isn't an ordinary record shop. Instead, it's playing up the relationship between the knowledgeable employees and shoppers, providing a lot of counterspace for visitors to talk with staff about what kind of music they might like. It's also becoming more of a destination site, with free WiFi, workshops and a stage for live performances. This certainly isn't a new idea as we've seen very similar reactions from stores for many years, but it does show how more and more of these stores are learning to adapt and change with the times, while the recording industry stubbornly goes down with its obsolete ship.

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Wal-Mart Is Latest To Offer A Cut-Rate Computer

Joseph Weisenthal — Thu, 19 Jul 2007 09:49:00 PDT

As Wal-Mart continues its push into consumer electronics, the company has announced plans to sell a stripped down Windows PC at a discount price. While it will run Vista, the rest of the software will be open source (Open Office will be pre-installed instead of Microsoft Office), and, perhaps surprisingly, it will be completely free of crapware, an issue that's been getting a lot of attention lately. There are a number of problems, however. The box won't have much processing power, which is really bad news, considering the demands of Vista. Furthermore, this basic concept has been tried many times before. While it seems appealing, in theory, to completely strip down a computer and sell it at a discount, consumers have never really jumped at the idea. Name brand machines can be had so cheaply, much of the time, that there really isn't much value as there would first seem in Wal-Mart's approach.

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