Crap on the Part of the Economy That's Working? Come on, Man
By Ken Magill
The Internet is one of the few bright spots in the economy and one of my heroes has just said we should kneecap it.
I respectfully disagree.
One of the greatest writers in direct marketing is Denny Hatch. If you haven’t read him yet, you should.
He’s smart, provocative and knows marketing like few others.
But today, Hatch essentially yelled at the Internet.
In a piece headlined “It’s High Time Web Sales Were Taxed,” Hatch begins by decrying the practice of “showrooming,” where shoppers visit bricks-and-mortar stores to check out products but then buy them at home online to save money.
He then recounts an anecdote of a small Pennsylvania bookstore supposedly driven out of business by deep-discount competition from Borders, Barnes & Noble, and ultimately Amazon.com—essentially the anti-Walmart argument repackaged for the 21st century.
The piece then devolves into an anti-Amazon.com screed, calling its CEO Jeff Bezos “rapacious” and focusing solely on price competition.
In the final sentence of the article, Hatch wrote: “Last Tuesday, Jeff Bezos gleefully announced that Amazon’s scorched-earth policy of destroying such industries as book publishing, toys and electronics will be expanded to include women’s high fashion.”
Gleefully? Should Bezos have made the announcement sadly?
Bricks-and-mortar retailers certainly can compete with Amazon.com, just not solely on price.
Case in point: GameStop. The Magill household has every gaming system known to man. We all play video games. My wife’s current favorite is Bejeweled, my son is nuts about Skylanders and I am deep into the medieval fantasy world of Skyrim.
The center of GameStop’s business model is its retail stores. It has great loyalty and used-game exchange programs. But best of all are its employees.
They are all friendly, helpful, super-knowledgeable gamer geeks who make spot-on recommendations based on customers’ stated preferences.
What’s more, they all share another helpful trait: They’ll tell you when a game stinks. One GameStop employee told me they steer customers away from bad games because they don’t want to be stuck with the returns of a bunch of used titles they can’t unload.
When dealing in commodities, bricks-and-mortar retailers must compete on service. GameStop does it.
Hatch also made the usual zero-sum-game taxation arguments.
“While Amazon has some fulfillment centers around the US where it employs people (and temps) and pays real estate fees and sales taxes on sales shipped to those states, in the thousands of communities to which he ships books and a vast range of merchandise, Bezos spends nothing on a local presence—no stores and no jobs for knowledgeable local people to run them,” Hatch wrote. “Nor does he pay real estate taxes or local sales taxes in these thousands of locales to which he ships books and merchandise on the cheap.”
Nowhere does Hatch address the hundreds of thousands of Amazon.com affiliate sellers—in 2011 there were reportedly 25,000 in California alone—who most certainly pay local taxes and buy local goods. Nor does he address the thousands of local used-book sellers who have an international mail-order presence through Amazon.com, who also pay local taxes and buy local goods.
Oh, and um, Denny. Your latest novel “Coldcocked, a novel of seven murders, the media and the law” is available on Amazon.com’s e-book service, the Kindle.