EU Regulation could threaten Smaller Online Businesses
A recent draft regulation being considered by the EU requires all internet retailers to have a physical bricks and mortar shop. This is a regulation drafted to protect the owners of luxury branded goods, looking to stamp out illegal copies and brand fraud. However Ebay and Amazon slam these proposals, saying that it would cut the growth of e-commerce off in it's "teenage" phase, and that the proposals would just let the luxury brands continue with price fixing and discrimination. The lobby group of the brand owners say that the proposals are also there to stop the "free riders", the businesses that benefit off the back of the corporate and other physical business's advertising and marketing, and who, because they don't have to incur the costs associated with staffing and owning a premises are able to offer the goods at discounted prices.
Here at Boxby, many of our customers are these so called "free riders" and we feel that the legislation proposed is not only discriminative but also anti-competitive. It seems to me that the luxury brand owners are simply looking to take out a tranche of competitors that they haven't yet learnt how to effectively compete with. If the issue is simply that of "free riding" then the brand owners have the ultimate ability to control that, or to get the web retailers to contribute to the costs of the global marketing and brand awareness, and it's plain, old fashioned and easy - they simply increase the cost price.
But at Boxby, we are at a bit of loss as to why the brand owners would looking to use anti competitive legislation in order to acheive it. Our theories are that it has less to do with recovering market costs, and more to do with controlling the distribution and selling of their products to a smaller and more controlled selling venue.
When someone is buying a luxury item, £700 on a handbag for instance, the thing at the top of their mind isn't that they've just saved £20 by buying it online. Part of the enjoyment is the purchase itself, the whole retail experience. And if the brand owners want to get people into bricks and mortar shops then the way to do it isn't be regulation, but by better marketing and presentation. Maybe making the shop assistants a little less snooty, and pay a bit more attention - particularly to those customers that don't instantly look like "our type of customer".
Eitherway, the Internet is the greatest leveller in retail, and the way for the EU to address this isn't by bringing in legislation that takes business and marketing and retail backwards a couple of decades.