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

from the good-luck-with-that dept

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.

Follow me @glynmoody on Twitter or identi.ca, and on Google+

Filed Under: , , , , ,

Rate this comment as insightful
Rate this comment as funny
You have rated this comment as insightful
You have rated this comment as funny
Flag this comment as abusive/trolling/spam
You have flagged this comment
The first word has already been claimed
The last word has already been claimed
Insightful Lightbulb icon Funny Laughing icon Abusive/trolling/spam Flag icon Insightful badge Lightbulb icon Funny badge Laughing icon Comments icon

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

Subscribe: RSS Leave a comment
63 Comments
Ninja (profile) says:

So if people are buying online why not set up smaller, cheaper stores and have an online channel to deliver it? If people are in a hurry to buy they’ll accept slightly higher offline prices other than that they could have a system in place in the stores with QR codes for easy identification (Google Googles integration!) that would automagically bring up an online comparison with the competition and possibly cover the cheaper prices for ONLINE purchases.

Advantages: smaller local storages and larger distribution hubs (smaller stores can and should use those that house several companies in a single hub) cutting costs; the product can be sold to a much larger audience not only the neighborhood; physical store employees can be reallocated (no need for a lot of cashiers and storage keepers for instance) focusing in providing a better experience for the customers and the number of employees can even be trimmed down (I personally don’t think this is the right course of action if it can be avoided while maintaining efficiency thus I’m for proper reallocation of resources).

Disadvantages: very small, local stores may still find it harder to compete. They do have other charms though.

Anonymous Coward says:

Re: Re:

Taking your idea one step further, they could have QR codes for you to purchase the item from the directly from warehouse so you pay a cheaper price but are still buying from them.
This gives you the benefit of being able to see the product in person (and see it in action if applicable) but still order it for cheaper online. Of course you’d still have to pay shipping and wait for normal shipping times, or you could pay the slightly higher price for instant purchase in-store.

But that would require companies like Best Buy and such to offer affordable prices on items instead of 1000% markups like HDMI cables.

Tom (profile) says:

Re: Response to: Ninja on Apr 12th, 2013 @ 4:54am

What I see happening 20 years down the road is basically stores like Wal Mart selling stuff that makes no sense to buy online, along with having some showroom space for online products.

Online distribution is clearly cheaper, but you still can’t eliminate the Human need to try and touch certain types of products, nor can you eliminate the desire for instant gratification.

fogbugzd (profile) says:

Stores whine about customers just using them for window shopping and then going online for purchases. I am sure that happens sometimes. However I tend to do the opposite. I often go online while shopping in stores so that I can read the customer reviews about the products before I buy them in the store. Sometimes I look up items before going to the store. But more often I use either Google Goggles or the Amazon scanner app to scan the item and bring up the product.

Information online is usually much better and more significant than what I can learn reading the box or looking at a display item. Show tradition brick and mortar stores pay online sources when I make a local purchase based on reviews I read online?

Anonymous Coward says:

Re: Re:

I am of the exact same opinion: If you want to sell an item in a normal store, you have to give a lot better information.

The problem is that today many retail stores have absolutely no clue about their product other than what is legally demanded (and even that is going wrong ie. horse meat scandal in EU).

Chains with 5 or 6 middlemen from the primary production to the store is very common. First is a buyer of the original product, next is an exporter, then there is a guy sorting the product in another country and selling in smaller more homogenious qualities, next are packagers, then comes importers who sell it to the store in the destination country. Problem is that the sorting guy and packagers need enough of the product to sell, so they mix as many different sources as possible to get enough of each quality. That is the sad truth today.

If you want a store to have success, make them document where exactly the original product is from and how it is produced. In most cases I am willing to pay more money for that product as opposed to generic product 15332.

Niall (profile) says:

Re: Re:

What was pointed out in the discussion in the UK about the fall and recovery of the camera company Jessops is that there has always been a problem of people coming to (specialist) bricks-and-mortar stores, then getting it cheaper in a store elsewhere, or even by mail order. This has been going on for a long long long time – it’s part of the point of capitalism – you are supposed to be able to shop around for better prices.

What this also doesn’t address is what happens when stores want to lower their own online or offline costs, or what happens when a bricks-and-mortar store is offering cheaper than an online one – or even, which offline costs are the baseline for this stupidity.

Still, you have to remember it’s the French; they are pretty ‘socialist’ (i.e. protectionist) even by European standards, and notoriously averse to ‘free’ trade – just look at the strikes and blockades they throw up constantly when not getting their way economically.

British lamb? Mais non! Laissez-faire capitalism sur l’internet? Zut alors!

JEDIDIAH says:

Re: Don't make me go to Walmart. Please!

I usually resort to online or a competing store like Wal-mart when my first choice merchant has failed to offer what I want to buy at a price I would except. Target is great at presenting only absurdly overpriced options.

Usually, the B&M store simply doesn’t have what I want.

I experienced that just today, about 10 minutes ago. After trying and failing at two B&Ms I just went for Amazon.

Jake says:

Re: Re:

Yes, it is. But the only bricks-and-mortar businesses that are actually adapting are the relative handful of small and relatively new independent ones. The more established chains are just going bust.

Which I would be entirely fine with in better economic times, but every time one of these dinosaurs bites the big one, it dumps another few thousand people into a job-market that’s already saturated. I’m not mad about the idea of propping up a failing business model either, but the alternative is… Well, we saw it in London not so long ago.

Beta (profile) says:

Re: Re: Re:

The trouble with keeping a dinosaur on life support is that it becomes a habit, especially when the dinosaur lobby is strong. And feeding money to a failed business so that people can keep working there doesn’t solve the problem of unemployment, it just hides it– and prolongs it.

If the idea is to stagger the bankruptcies, so that they do less damage, then 1) I’d like to see some clear evidence that that can really bring a net benefit, and 2) if there is a net benefit, I’d like to know why those who enjoy that benefit won’t chip in voluntarily to keep the company alive for the correct amount of time.

Josh in CharlotteNC (profile) says:

Re: Re: Re:

Which I would be entirely fine with in better economic times, but every time one of these dinosaurs bites the big one, it dumps another few thousand people into a job-market that’s already saturated. I’m not mad about the idea of propping up a failing business model either, but the alternative is… Well, we saw it in London not so long ago.

Propping them up is the definition of ‘throwing good money after bad.’

Anything spent on propping that business up and keeping those people employed (doing something the market no longer values) would be far better spent on something the market does value. Retrain the workers. More startup loans to small businesses. Anything but dumping it down a hole of the failed business.

out_of_the_blue says:

There's more to life than economic efficiency.

Economic systems need to be protected for the health of communities. They’re actually fragile and probably can’t be re-built. If we don’t at least make token efforts to preserve what you’ve got, then the amoral logic of the marketplace will ruin civilization. So in general, this IS a good idea, as would be high import tariffs so that domestic workers don’t have to compete with literal slaves in China.

But I guess you kids believe that Wal-Mart has brought prosperity, and that you’ll be happy flipping burgers — those of you with a college degree.

Ninja (profile) says:

Re: There's more to life than economic efficiency.

There’s some wisdom in your comment if you ignore the unnecessary attack in the end (why are you so bitter ootb? did someone molest you when you were a kid?).

However what what TD has reported (the store charging $5 and this French initiative) are not a good way of tackling the problem. And in the end such “tokens” tend to benefit the big brick & mortar players rather than the small entrepreneur (the real job creators unlike Wal-Mart as you point out but that could have been said in a non-aggressive manner). I don’t think there’s a silver bullet to incentive these smaller guys, it’s rather a network of initiatives both in the Governmental sphere AND outside it that would encourage and spark fair competition. And then there are the slave driven countries like China who will compete. In the end the only solution is to heavily tax imports from countries with bad labor and Ruman Rights records.

As a closing point to my comment I challenge you to comment without attacking anyone. Expose your opinion in a civilized way and ponder possible flaws so we can engage in healthy discussions. We’ll all be waiting.

PaulT (profile) says:

Re: Re: There's more to life than economic efficiency.

“There’s some wisdom in your comment if you ignore the unnecessary attack in the end”

Not really, considering that he’s defending against a position nobody has taken. Especially considering that the legislation seems to be targeting those companies who charge vastly different prices on their websites compared to retail stores, so we’re really talking about big box retailers, not small independent stores (although I might be wrong given the vagaries of automatic translation). The stupid attack at the end only proves he’s not interested in discussion, and seems to still be attacking people who only exist in his own imagination.

Of course protecting independent business is important, as is keeping things locally owned if possible. That’s why idiotic tactics like the ones mentioned are criticised. Forcing websites to be more expensive or making browsing more difficult don’t get to the core of the real problems facing the industry. ootb can’t state what’s wrong with the criticised points, so he tilts at windmills and launches insults instead.

Greevar (profile) says:

Re: Re: There's more to life than economic efficiency.

Businesses are not job creators. They only hire people if they absolutely have to. The real job creator is consumer demand. The more people can buy, the more need there is for workers to serve that demand. We currently have a crisis of money distribution. Far too much is at the top and far too little is at the bottom. It looks like an upside-down pyramid. That’s not stable. If you tried to stand a pyramid on its tip, it would fall, for good reason and the same goes for the economy. A more reasonable distribution would be a column. A column is balanced, stable. It has support from the bottom up. When the millions in the bottom 1% has as much as the thousands in the top .1%, things will look better. More jobs will appear when more people are demanding goods and services from businesses, but they have to have the money to afford those goods. If nobody can afford the goods we’re already producing, why would any business hire more people? They already have a surplus of labor and goods. The demand must be able to absorb the current surplus and beyond in order to spur the creation of more jobs.

During the great depression a bunch of idiots thought that supply-side incentives and benefits would encourage the creation of more jobs. It failed. Our wonderful representatives still believe this load of horse crap.

Greevar (profile) says:

Re: Re: Re:2 There's more to life than economic efficiency.

Out of all of what I said, you took a metaphor and interpreted it literally, just so you could take a jab at me? You can’t make a decent counterpoint, so you resort to petty insults. If you don’t have anything relevant or cogent to contribute, why don’t you just keep it to yourself?

Anonymous Coward says:

Re: Re: Re:3 There's more to life than economic efficiency.

No, actually, you took the metaphor and interpreted it literally:

“If you tried to stand a pyramid on its tip, it would fall, for good reason and the same goes for the economy.”

You say ‘a column would be better’ again invoking the metaphor literally “a column is balanced, stable.”

You don’t really make any arguments, you just say things would be different without arguing why they would be different or how to change them. So there’s nothing to counterpoint because you didn’t make any points.

Greevar (profile) says:

Re: Re: Re:4 There's more to life than economic efficiency.

Actually I did, but clearly you didn’t read it. Rather, you gleaned what you could use to distort and discredit my comment. I said, demand creates jobs and to increase demand, consumers need money to actually buy the goods that are produced. With all the money sitting at the top 0.1% and so little left for the remaining 99.9%, there’s little demand for goods that people can’t buy. But you didn’t catch on that, you were too busy trying to make me look stupid and you made yourself look like a fool instead.

That metaphor was clear. An upside down pyramid has no support. Just as putting the majority of the money supply with the top earners. There’s more at the top than at the bottom. How is that so hard to understand? And a society with a balanced money supply between the top earners and the bottom creates a more stable economy because people can continue to participate in the market and create the demand for more workers.

If you can’t comprehend that, then you’re either an idiot or a troll. Maybe both?

Ninja (profile) says:

Re: Re: Re: There's more to life than economic efficiency.

I agree with what you are saying but regardless the physical stores do need to reinvent themselves. What you described is complementary.

However it’d be fairly hard to have the billionaires and millionaires accept to be less rich (but still rich) in order to have more people with acquisitive power eh?

Ellie (profile) says:

Re: Re: Ninja, economic efficiency.

Ninja, don’t talk to him like that! What is your problem? You said:

“why are you so bitter ootb? did someone molest you when you were a kid?”

Say whatever else you want. Call him a an a-hole, or an idiot, or Communist, or unpatriotic, or stupid. DON’T SAY THAT THOUGH. It is cruel, excessive, unnecessary. It made me cry. And no, I’m not him, I’m Ellie Kesselman. I wasn’t “molested when I was a kid”, and I wasn’t fortunate enough to be able to have children.

Ad hominem attacks are facile, but, call me a bad and illogical person, I sometimes find them amusing. Trolls can be amusing too. They usually behave, or leave you unscathed, if you recognize and appreciate the genuine aspects of humor, or sorrow/ bitterness in what they say.

This isn’t about being “politically correct”, or LBGTQ friendly, or feminist or not being racist, or any of that. It transcends all of it. How dare you toss out remarks about being molested as a child as ridicule in a comment thread. Don’t tell me to “lighten up” either. With so many other creative, cruel, clever insults available, you say THAT? You’ve reached the nadir of worthless.

Anonymous Coward says:

Re: There's more to life than economic efficiency.

Except that’s not what high import tariffs actually do. What they actually do is make all goods more expensive which makes all domestic workers, even the ones in the industry you’re supposedly protecting, worse off. Ironically, given your usual classist spiel, their true purpose is to protect the capital investments made in whatever domestic industry is being protected.

dennis deems (profile) says:

Re: Re: There's more to life than economic efficiency.

I’m not an economist, but I’m deeply skeptical of the assertion that import tariffs are making goods more expensive. I know that my domestic car was many thousand dollars cheaper than an import would have been, and for many years the price of that model has increased only as much as I’d expect from inflation. Domestically produced foods are generally a lot cheaper than imported.

Can you elaborate on your thesis? I can’t square it with my experience at all.

Anonymous Coward says:

Re: Re: Re: There's more to life than economic efficiency.

I don’t understand how it is you think import tariffs work if not to increase the cost and therefor the price of selling foreign produced goods? It’s not an assertion that they do that, it’s literally what they do.

Compounding my confusion are the odd anecdotes you’ve elected to include. Like domestic vs. imported cars. First of all, to even matter there would have to be no current intervention on car prices in the US but there obviously are numerous import restrictions as well as domestic subsidies for cars. Your choice of food is equally bizarre because there are even more restrictions and subsides for agriculture in the US.

If the price of an import is $10 and you charge me a 20% import tax well then the price of the product is now $12 and domestic producers can now price their own products to compete with $12 instead of $10. It’s not an assertion or an assumption or some theory I have on how they work that’s literally the mechanism by which they work.

dennis deems (profile) says:

Re: Re: Re:2 There's more to life than economic efficiency.

I don’t understand how it is you think import tariffs work if not to increase the cost and therefor the price of selling foreign produced goods? It’s not an assertion that they do that, it’s literally what they do.

You said they make all goods more expensive.

Compounding my confusion are the odd anecdotes you’ve elected to include.

If it’s true that import tariffs make all goods more expensive, then the particular good used to illustrate shouldn’t matter should it? But feel free to use as an example any good you like.

Anonymous Coward says:

Re: Re: Re:3 There's more to life than economic efficiency.

Yes, they make all goods more expensive because now the domestic goods are priced to compete with more expensive foreign goods which was in the previous post. There’s also a secondary effect of the allocation of resources leading to more expensive goods all around as well but that’s more complex.

I don’t think you’re following at all. Those are odd examples because they prove my point and you’re acting like they do the opposite. There’s tons of subsidies and import restrictions/tariffs in those industries and you point out yourself the international goods are more expensive. So… not sure where you’re going with that really.

Rikuo (profile) says:

Re: There's more to life than economic efficiency.

I’m Irish, hasn’t_got_a_clue, and have never set foot in a Walmart and I don’t flip burgers. Besides, what have you got against those who do flip them when they have a college degree? You do realize it’s called survival? With the economic recession, many people lost their jobs, and took whatever they could get to pay the bills, even if it is McDonalds. No, you’re attacking them because its something you haven’t attacked over before. Quite a few of my own colleagues have specialised skills. One I know has a degree in physics and works in customer services. Another person I know who works on checkouts told me recently he programmed his own search engine, while I myself took the time to learn how to build and repair computers.

Besides…RUINING CIVILIZATION? My god man, you truly are a dinosaur! That’s what every industry throughout history has said whenever a more efficient upstart threatens their hold on the marketplace. I won’t bother repeating how many times the copyright industry went ape-shit over new technologies.

The Real Michael says:

Interesting. The French government is essentially pointing at the internet, saying “You have to adjust your prices in order to help boost physical sales.” Had it been physical stores selling products for less than on the internet, I seriously doubt their government would’ve acted to protect the latter. But then it’s wrong for government to pick and choose the winners and losers in the marketplace.

It’s easy to get the impression that certain members of their government are accepting bribes…

Anonymous Coward says:

Re: Re:

Doesn’t even need to be bribes. The calculus is really simple, local businesses sway local opinion and even if you’re doing something monumentally stupid that won’t work swaying local opinion is how you get votes. A small vocal minority of ‘losers’ in a situation plays on human psychology and prevents democratic societies from making the right choice because the wrong choice makes you looks more sympathetic with voters and that’s all that matters.

Anonymous Coward says:

How would you even determine what a higher price is that online stores need to charge? Stores are constantly changing their prices and having sales.

And perhaps the real reason why their retail stores in France are having a tough time price-wise against online stores is the VAT tax, which requires retail stores to pay the VAT tax on all the goods they buy from their suppliers, and then to charge customers a VAT tax on not just the good but also the VAT tax the retail store previously paid on the product.

Requiring you to charge a tax on a tax you paid for something is just insane, and kills middlemen jobs.

The Real Michael says:

Re: Re:

Very informative post. I wasn’t aware of that. Very stingy to add a tax upon a tax. That should definitely be illegal.

Online shops such as Amazon sell products at a lower price probably because they get a better deal on the wholesale. They serve far more people on a wider scale than a local shop, so they tend to order far more of any given product, resulting in better wholesale prices.

Kurata says:

“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.”

Already happening with computer parts, like hard disks cuz less taxes.
same happening with cigarettes too, but that aint an online matter.

Anonymous Coward says:

Re: Am I missing something?

“Wouldn’t the supplier of goods want to always sell their wares at the same price to everyone, while the retailers in turn mark up the cost to the consumers based on their overhead?”

The supplier already sells to everyone at the same price.
The markups the retailer (whether brick-and-mortar or e-seller) charges are the difference!
As someone else alrready pointed out, if the brick-and-mortars offered the option of internet-ordering from their store locations (with a discount, as opposed to on-site prices), they’d be competing with the e-retailers…and winning!

Tom (profile) says:

Re: Re: Am I missing something?

Sorry, but you’re absolutely incorrect. I used to work in retail, and I did ordering and sales for a computer store. We definitely got different wholesale rates based on our sales figures. In fact, when I started, we payed our wholesaler nearly as much for product as you could get it for online. It wasn’t until we got our sales up that we actually got a decent enough wholesale discount that we could profit on retail sales.

dennis deems (profile) says:

It wasn't about "buying them online"

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.

This wasn’t the motive at all. It wasn’t about buying online. It wasn’t about inspecting goods. It was about using the proprietor’s time, experience and knowledge. This was explained many times in the comments:

https://www.techdirt.com/articles/20130326/16500822469/dumb-policy-store-charges-5-just-to-look-goods-to-keep-people-looking-then-buying-online.shtml#c120
https://www.techdirt.com/articles/20130326/16500822469/dumb-policy-store-charges-5-just-to-look-goods-to-keep-people-looking-then-buying-online.shtml#c292
https://www.techdirt.com/articles/20130326/16500822469/dumb-policy-store-charges-5-just-to-look-goods-to-keep-people-looking-then-buying-online.shtml#c339
https://www.techdirt.com/articles/20130326/16500822469/dumb-policy-store-charges-5-just-to-look-goods-to-keep-people-looking-then-buying-online.shtml#c695

I realize you refer back to that story from the present one in order to create a sense of narrative, but you are simply wrong.

Niall (profile) says:

Re: It wasn't about "buying them online"

And you’re setting up a bit of a straw man. Maybe in one case that’s the issue, but as a general principle, people go into physical stores to look directly at a product and maybe handle it, without automatically needing to ‘pester’ the staff – but it still costs the store to keep products on hand. Of course, getting ‘expert’ advice is another reason, but that’s always been a problem – the internet has just added something else to the list – it could just as easily be the local Wal-Mart that gets the sale.

Any serious store that has to charge people to look at products, unless they have some sort of ‘natural’ monopoly or get a lot of ‘desperate’ custom, are going to find they get a lot less footfalls, and therefore sales. Unless they can somehow steer those customers to their own online offering and make it compelling enough.

So don’t try to derail things with minor (and incomplete) quibbles. How about adding something to the discussion instead of trying to become OotB #2?

dennis deems (profile) says:

Re: Re: It wasn't about "buying them online"

I’m not setting up a straw man. That’s something someone does when they’re trying to win an argument. I’m not arguing anything. I’m just pointing out that the author has misrepresented the truth for the sake of his narrative. That’s something I don’t expect in a Techdirt story. I felt the same way when the original story ran.

Anonymous Coward says:

Charging people $5 to enter your store is perfectly legitimate, you can run your business anyway you want. If people aren’t buying your products, you have to make money somehow as a business. On the other hand government fixing prices is a terrible idea… has bad results every time, no one reads history or understands economics anymore.

Anonymous Coward says:

I ran an online shore

I did run an online store.
I match prices in a physical my prices where market up 20% if I bought in orders of less than $10k a week. After that $10k a week I could start to buy a big customer from the distributors – which lowered the price. If I paid my account right away I got even a better deal. As long as I could order more that $10k a week from my distributor I coud mark things up 40% and be slightly lower than the physical store.

Some distributors had different rules for the price points. Some had $100k a week. The best distributor I ran across would allow for nearly 80% mark-up if I bought in the bulks of millions a week.

Some items it was far cheaper to walk over to the physical store and buy it and ship it out. Even at massive discounts I could never even come close to matching some physical store sale prices. I could not afford to sell items at a loss just to bring people into the on-line store (otherwise they would just buy it and nothing else).

It was a fun business that employeed me and few friends but we could never seem to make it over the big hump on-line. We would open a phsical store over Christmas and make as much money in those two months as we did in the 10 months on-line.

For us it was all about controlling our costs and overhead. Most customers are reasonable and if you gave them a fair price (on-line or in a physical store) they bought from you. It is when you start to have 300% mark-up that you drive customers away.

Anonymous Coward says:

where do these freakin’ idiots get their ideas from? even if they come from an interested party, obviously no thought goes into them first. rather than force on-line prices up to a level nearer to shop prices, why not reduce the overheads for shop sellers so they can drop their prices down to nearer the on-line ones? but i forgot, that would probably mean the government getting less in taxes! silly me!!

Add Your Comment

Your email address will not be published.

Have a Techdirt Account? Sign in now. Want one? Register here

Comment Options:

Make this the or (get credits or sign in to see balance) what's this?

What's this?

Techdirt community members with Techdirt Credits can spotlight a comment as either the "First Word" or "Last Word" on a particular comment thread. Credits can be purchased at the Techdirt Insider Shop »

Follow Techdirt

Techdirt Daily Newsletter

Techdirt Deals
Techdirt Insider Discord
The latest chatter on the Techdirt Insider Discord channel...
Loading...