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.
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.
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 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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Filed Under: competition, france, internet, online, prices, retail
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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.
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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.
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Response to: Ninja on Apr 12th, 2013 @ 4:54am
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.
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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?
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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.
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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!
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Don't make me go to Walmart. Please!
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.
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It really is that simple.
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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.
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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.
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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.
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There's more to life than economic efficiency.
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.
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Re: There's more to life than economic efficiency.
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.
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Re: Re: There's more to life than economic efficiency.
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.
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Re: Re: There's more to life than economic efficiency.
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.
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Re: Re: Re: There's more to life than economic efficiency.
That's some iron clad logic you've got there.
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Re: Re: Re: Re: Re: There's more to life than economic efficiency.
"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.
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Re: Re: Re: Re: Re: Re: There's more to life than economic efficiency.
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?
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Re: Re: Re: There's more to life than economic efficiency.
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?
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Re: Ninja, economic efficiency.
"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.
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Re: There's more to life than economic efficiency.
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Re: There's more to life than economic efficiency.
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Re: Re: There's more to life than economic efficiency.
Can you elaborate on your thesis? I can't square it with my experience at all.
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Re: Re: Re: There's more to life than economic efficiency.
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.
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Re: Re: Re: Re: There's more to life than economic efficiency.
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.
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Re: Re: Re: Re: Re: There's more to life than economic efficiency.
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.
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Re: There's more to life than economic efficiency.
The same "amoral logic" used by your corporate masters, boy?
Yet, you're content to take their coin, paid for by that "amoral logic".
You fail on two levels...logic and ethics.
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Re: There's more to life than economic efficiency.
This way, bad companies fail, and good companies prosper.
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Re: There's more to life than economic efficiency.
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.
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It's easy to get the impression that certain members of their government are accepting bribes...
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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.
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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.
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The only double taxation is when us poor grunts have to pay VAT on government-mandated duties such as on fuel and alcohol.
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Already happening with computer parts, like hard disks cuz less taxes.
same happening with cigarettes too, but that aint an online matter.
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Am I missing something?
Wouldn't this law be legislating already existing market norms?
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Re: Am I missing something?
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!
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Re: Re: Am I missing something?
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monotony
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It wasn't about "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/articl es/20130326/16500822469/dumb-policy-store-charges-5-just-to-look-goods-to-keep-people-looking-then-b uying-online.shtml#c292
https://www.techdirt.com/articles/20130326/16500822469/dumb-policy-store-ch arges-5-just-to-look-goods-to-keep-people-looking-then-buying-online.shtml#c339
https://www.techdir t.com/articles/20130326/16500822469/dumb-policy-store-charges-5-just-to-look-goods-to-keep-people-lo oking-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.
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Re: It wasn't about "buying them online"
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?
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Price controls always fail.
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Jurrasic Bark
I may schlep across the metroplex to find/get something that's really spectacular. However, for most things that level of effort and fuel expenditure is just not efficient.
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Um...
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I ran an online shore
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.
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Comment
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