February 02, 2010
OpEd Guest Post By Robert Farago, E-Commerce Consultant
In an editorial in today’s Wall Street Journal, Amazon’s retail vice president for Europe launched a blistering attack on the European Commission. Greg Greely excoriates the European Union (EU) for contemplating new rules which would allow manufacturers to restrict sales to distributors with bricks and mortar stores; retailers who sell a minimum value and/or volume of goods. The proposed laws are designed to protect Europe’s “high street” retailers, who see “pure play” e-tailers like Amazon as a growing threat to their dominance. They also have the backing of several prominent, though unnamed, manufacturers who see e-commerce as a threat to margins.
E-commerce consultant Jeff Puthuff says the timing of Greely’s editorial is more important than its substance. “It’s highly unlikely the EU will discriminate against online shopping, especially as established retailers are looking to get into the game. It’s far more likely that Amazon is trying to distract Wall Street from this weekend’s debacle with Macmillan Publishing, which adversely affected their book business.”
“The implications of the proposed rules are clear,” Greely opines. “Less consumer choice and higher prices driven by reduced competition, and less transparency in pricing and information (limiting consumers’ ability to make informed purchasing decisions). Those consumers not near locations serviced by brick and mortar stores—such as people in rural areas—will be especially disadvantaged.”
Greely’s polemic rejects the idea that Amazon and its ilk are hitching a “free ride” on the investment made by Europe’s bricks and mortar stores. The Amazon exec attempts to turn the argument on its head, using John F. Kennedy’s “rising tide lifts all boats” theory. “Increasingly, consumers extensively use the Internet to access online product descriptions, detailed images, technical specifications, and reviews before purchasing offline. In fact, because so many consumers do product research online before buying in physical stores, it can be argued that physical stores are the ones free-riding on online retailers.”
The editorial runs contrary to persistent rumors that Amazon is contemplating establishing an off-line presence. In December, The UK’s Sunday Times reported that Amazon had a “secret plan to open high street shops” in Britain, after learning of talks between Amazon and property landlords.
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