In comparison, Amazon’s fortunes continue to grow. Their domination of the market place appears to be going unchallenged in the face of other retailers’ demise.
Currently only 18% of UK retail sales are online, although this figure has been steadily growing over recent years. However, given that 82% of sales still occur on the highstreet, why are stores struggling to survive? This drop in sales alongside tightening margins has been enough to see some large names disappear from our highstreets.
In a digital age the shift to online shopping is not surprising but is it what the public wants and does the convenience it offers come at too high a price?
It seems that the public may like the ease of on-line shopping but are not ready to see the end of highstreet stores just yet. Our recent survey found that if given the choice of only shopping online or on the highstreet, 82% of respondents opted to shop in stores.
Of course Amazon’s ability to undercut store prices is one of they key reasons for their success. But how are they achieving this? By keeping their costs to the minimum at every stage their profits have soared, with Amazon’s owner, Jeff Bezos now alleged to be worth £118 billion. This equates to hourly earnings of almost £2.5m per hour since he started Amazon. Bezos summed up his approach by saying “There are two kinds of companies, those that work to try to charge more and those that work to charge less. We will be the second.” Clearly he has succeed in his aim by finding ways to avoid taxes and paying front line workers at the bare minimum, whilst expecting them to work in highly challenging conditions.
Despite the obvious appeal of Amazon’s offering to customers, 63% of respondents to our survey confirmed that they would stop buying from Amazon if it helped to save the highstreet. Therefore are people starting to see the wider picture and appreciate the negative impact that Amazon has on the UK economy as a whole?
Job losses in the sector won’t be replaced by new roles within Amazon, who are clearly focused on introducing robot and drone technology to further reduce their cost base. Similarly, Amazons’ ability to pay around 20 times less tax than other similar size companies means that further input into the UK economy is lost. Last year they paid just £4.5m in tax against UK pre-tax profits of £72m for Amazon Services UK. By reporting revenue from its UK retail sales through a separate company in Luxembourg, the total level of their tax paid in the UK remains unclear.
What is clear is that whilst our highstreet stores push money back into the economy through staff wages and tax, Amazon is focused on minimising the input back into the UK. Of course everyone has a choice where they spend their money and online shopping has many advantages. However by opting for online options linked to highstreet stores, the income generated will find its way back into the economy.
Whilst the UK economy struggles to generate the growth needed to fund our public services, Amazon’s ability to avoid tax comes at a clear cost to the UK public. What is needed is a radical review of the current tax and business rates systems to level the playing field. Only then will Amazon start to contribute to the economy at a level appropriate to the profits they are making from the UK public.
Find it useful? Please share!
LEAVE A COMMENT
Your email address will not be published.
KIS Bridging Loans is rated 4.94 stars by Reviews.co.uk based on 112 merchant reviews
Last updated: 31 January 2019 | © KIS Finance 2018 |