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What’s wrong with Amazon?

This week I was on LBC talking about “Amazon remorse”, the feeling of buying on Amazon and then regretting it. In their hearts people want to support independent retailers. However, that isn’t the reality. Because although a certain percentage do feel remorse, they still buy from Amazon.

During the Covid pandemic we have obviously seen a record number of people buying online. People want the here and now. We have got used to next day delivery and sometimes even same day delivery.

Amazon Prime members feel guilty

In a Sitecore survey of over 2,000 UK consumers, it was found that almost a third (32%) felt guilty after they’ve shopped on Amazon. Despite this, 59% of those people are Amazon Prime members and 46% said they go to Amazon first when shopping online before checking any search engine results.

The younger generation felt the most remorse about their Amazon purchases, with millennials the most likely to feel guilty 44%. This is in stark contrast to 82% of baby boomers who said that after shopping on Amazon they “feel pleased I got what I wanted end of story“

At first glance, the survey would suggest that the younger generation are moving away from Amazon and supporting independent retailers instead. However there is a long way to go from feeling guilty to not doing it at all. How many of us feel guilty for eating chocolate and still carry on?! And where we shop, one could argue, is a far bigger decision when it saves time and money.

Remorseful or indifferent?

Many of us loathe Amazon, questioning its tax affairs, believing it is the killer of small business, treats its staff appallingly and, unless complaining about something simple like faulty goods or a delivery, their customer service can be shocking. But we continue to use them.

When I asked consumers if they felt guilty about shopping at Amazon, there was a mixed reaction. However, this could be because people feel like they couldn’t comment as it isn’t a popularist view when clearly more people are using Amazon more than they say they are! [this last sentence isn’t clear – what are you trying to say?] Those keen to express their dislike of Amazon included Jane Mills, who said “online shopping isn’t my first choice. I live in a small community and try to support local businesses.”

Suzy Jones put it strongly, “I absolutely avoid Amazon like the plague, unless it’s a no-other-last-ditch-do-or-die-absolute-necessity. I can’t remember the last time I bought from them & intend it to stay that way. Small business all the way.”

Is Amazon an ethical choice?

At Christmas last year Ethical Consumer wrote a guest post Christmas shopping in a lockdown – how to avoid the unethical online giants. In it they talked about ways to shop ethically and how and why not to use Amazon. They said in this article that

“Online giants like Amazon are the death of independents. By driving low prices – largely through avoiding tax, and taking a big cut from marketplace sellers – Amazon continues to increase its market share.”

For years, Amazon has been associated with pretty much every kind of alleged unethical business practice, from alleged unfair working conditions in supply chains to alleged tax avoidance schemes. Ethical Consumer has been leading an Amazon boycott since 2012.

By spending money this way are we complicit? Is it a necessary evil?

How are Amazon prices so low?

5 Valuable lessons we can learn from Amazon’s pricing strategy provides an in-depth analysis of how Amazon prices its products and how and why it makes 2.5 million price changes a day. It is very aggressive. Smaller companies just don’t stand a chance.

UK Money bloggers on Amazon

Reducing the Amazon spend

Andy Webb headshot

 

Be Clever with Your Cash blogger Andy Webb wrote a really interesting article about Amazon. He is trying to reduce his spend at Amazon, citing the following reasons which he details in his post

 

 

Reasons not to shop at Amazon:

1) Amazon isn’t always the cheapest

2) Amazon try to lock you into their “eco-system”

3) Prime makes you more likely to spend money

4) Amazon hurts the High Street

5) Amazon is not an ethical company

Of particular interest is the cost of postage stamps! Yes, they are sold on Amazon for far more than the face value for which you can purchase them at the Post Office and other places! Amazon takes advantage of them being an easy filler when you probably don’t know what the actual price is.

Amazon for people with disabilities

“Choice is a luxury and not a privilege that everyone has” says Lisa Kaveney who blogs at Alieshia. She provides an interesting perspective. “As a disabled person, I see massive value in Amazon Prime. The speed of delivery and the fact it has no minimum order limits makes them incredibly accessible. I am acutely aware that the company is perhaps not the most financially ethical; however, I do not have the luxury of choice that people who are able-bodied and in a higher income bracket do.

If I were to run out of an essential item, e.g. toothpaste, it would take a lot of planning and energy to get out to a shop. I would require the assistance of another person. With Amazon Prime, I just click a button, and it is delivered to my doorstep the next day. Complete independence and I have the energy left to do stuff I actually want to do.”

Admiring Amazon

Funding her Freedom blogger, Steph Punfield, has no problem with shopping at Amazon, though. “Personally, whilst I love shopping local and everything it stands for, as an Amazon seller with a couple of private label products listed on the platform, I don’t experience guilt when purchasing through them as there are thousands of UK businesses also selling their own products. They are making the most of the reach they have.”

Amazon as a necessary evil?

However, as an author Amazon for me, it is a necessary evil for selling. I sell both my books on my website and on Amazon. Amazon takes a huge cut and reduces the cost of the book. I therefore cannot sell the books at full price. Why would people pay an extra couple of quid just for my signature?! There just aren’t enough people ready to support small businesses. And, as for not selling a book on Amazon, that’s just never going to happen for any author.

Revive the High Street by shopping locally

Even as we come through Covid and some people don’t want to return to shops yet or have got used to the ease and speed of online delivery there are ways forward. We need to bring creativity to the High Street and Town Centres such as the ideas in The Art of reviving the great British High Street.

In addition, Julie Ashworth founder and director of BroadReach Retail consultants says

“Online doesn’t always have to mean Amazon! It could mean social ownership, shared local websites alongside not for profit communities. Have a heart…think community, think diversity, think about investing in the High Street.”

Dan Ericsson from The Financial Wilderness provides a number of Reasons why not to choose Amazon when shopping online. He even mentions books that you can get cheaper elsewhere!

Do boycotts even work?

Even if individuals do boycott Amazon, does it make a difference? Probably not, in fact, definitely not.

So, for the short-term at least, people will still be buying from Amazon. For both price and convenience, even where people don’t realise they may be paying over the odds. If you want to check if you are paying a good price for an item from Amazon check out Camel Camel Camel. This site tells you all the different prices an item has been at, and when, and will notify you when the price drops.

For businesses there is the opportunity to try and fill the slowly growing market for an alternative to Amazon. However, it will be important for businesses to realise that in order to do this they will need to up their game in terms of personalising shoppers’ experience and providing excellent customer service, as consumer expectations are high.

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Business

Importing goods into the UK – all you need to know

Logistics unlocked

Recently I wrote a post  Buying from Europe? Import changes made it a whole lot more complicated and costlier! I found that complicated to get my head round and that was just for consumers! When it came to importing for businesses it was even more complicated! So I asked Lisa Grove to write a guest post!

Questions about importing charges

The last year has certainly brought its challenges. Brexit has raised many questions in the retail arena. Where the free trade agreement ended, a plethora of questions began. How do I import into the UK? What do I need? What are my legal responsibilities as an importer of goods?

I’d say these are the most frequent questions I’ve been asked in the last six months. Unfortunately, there isn’t a one size fits all answer to this. Obviously, what commodity you are looking to import or export, along with the anticipated volume of product, will be major factors. If you haven’t already, I recommend starting with the government’s Check, Change, Go. While this was part of their prepare for Brexit campaign, it will give you a good indication of where to begin.

So, what do you need?

An EORI

An EORI is an Economic Operator Registration and Identification Number. Essentially, it’s a digital reference ID that is unique to your business for tracking and registering customs information. You will, however, need EORI in place whether you are VAT registered or not. It is very simple to apply for, takes less than 72 hours to come through and is free to get, so don’t let anyone try and charge you!

Incoterms: What are they and what do they mean to your business?

INCOTERMS or International Commercial Terms are a set of pre-defined trade codes, compiled by the International Chamber of Commerce (ICC). They are used as a basis for sales contracts, and clearly establish the ‘point of delivery’ within a contract. This avoids any confusion or misunderstanding for both buyer and seller. The responsibilities and costs associated with shipping globally are clearly defined within the terms.

If you were shipping goods from the EU prior to Brexit, then you’ll need to review your INCOTERMS and re-confirm them with your suppliers. The guidance is currently that DDP is switched to DAP and EXW is switched to FCA. If you’re not sure about the responsibilities of each, then hopefully the diagram below will help.

What’s an HTS?

Home Theatre System? Alas, no. HTS is the Harmonised Tariff System. In plain English, it’s a 10-digit commodity code that classifies your products.

You can search for your HTS code on the HMRC website. There is a search function, however, I warn you it’s not a simple as it sounds. If you’re searching for a ‘dress’, you’ll need to know if it’s women’s or girls? What’s it made from? Is it knitted or woven? You need to be able to drill down to the very detail of the product, to ensure that you correctly classify your goods, and ultimately pay the correct rates of duty & VAT.

It’s worth noting that the first six digits of the HTS code are internationally recognised. So, you may find that the supplier includes the HTS code on their paperwork. Don’t assume that it is correct, but it will give you the right area to look in as a starting point.

Making a declaration to HMRC

Customs declarations will need to be made on all import and export movements. You can complete

the declaration yourself or use a forwarder or broker. You are responsible for the declarations, even if you have a forwarder or agent doing this for you. It is best to provide them with instructions rather than leave them to do their own thing. If they make a mistake, and you have not issued any instruction, you are fully liable for those errors.

What about duty & VAT?

From a retail and business point of view, you need to factor in the potential duty and VAT. There are six different methods for calculating import duty & VAT. However, method one is the most common, and I’ve detailed how you can calculate what you should expect to pay:-

Value of Goods: £1125

 

Cost to Ship: £150*

* Even if there is no cost to you because your terms are pre-paid, if the freight is not show in the build up of the value of goods or the invoice not clearly marked, then an amount will be declared on the customs declaration. I’ve given a rough estimate would of £150 for this ‘order’.

 

Insurance: £3.18**

**Again you might not be paying this charge, but the industry standard calculation is 0.25% of the Cost of Goods + The cost of Shipping (£1125+£150 x 0.25% = £3.18)

VAT Adjustment Fee: £100***

 

*** This also isn’t a payable fee as such, but it makes up part of the dutiable value. This amount will vary depending on the mode of shipping (sea, air, rail etc), and the volume weight of the consignment. For the purpose of this calculation, I have used the airfreight rate, which is: 40p per chargeable kilo or a minimum amount of £100, whichever is the greater. The VAT Adjustment represents the UK proportion of the freight charges (Import clearance, handling, delivery etc), regardless of if they cost more or less than £100.

Duty Rate = 12% (For the purpose of this declaration, we’ve established this dress is cotton, from China and is a woman’s)

VAT Rate = 20%

Duty is calculated: Value of Goods + Shipping costs + Insurance + VAT Adjustment Fee x 12% Duty

£1125 + £150 + £3.18 + £100 = £1378.18 x 12% = £165.38

VAT is calculated: Value of Goods + Shipping costs + Insurance + VAT Adjustment Fee + Duty outlaid x 20%

£1125 + £150 + £3.18 + £100 + £165.38 = £1543.56 x 20% = £308.71

Duty Payable = £165.38

VAT Payable = £308.71

 

You can of course ask your courier/haulier/forwarder for advice and further info, but please remember that it’s your responsibility as an importer/exporter to be compliant. Their advice is just that, and unfortunately in this country there is no such thing as a licenced broker, so that guidance can vary greatly at times.

How can I prepare my business

If you’re not yet importing or exporting, but are planning to do so, then there are some actions that you can take now;

  1. Apply for a GB EORI number (If you’ve already got one, then you’re ahead of the game here!)
  2. Source a Customs Intermediary – either a customs agent, Freight Forwarder or broker. If you know anyone who already purchases from overseas, then start by asking for their recommendation. Suppliers may also nominate a forwarder, but if you’re paying the freight, then you need to specify.
  3. Prepare resources for entry instructions – Know your goods, classify them and ascertain their HTS code. You’ll also need to know the country of origin – don’t assume it’s the same as the country you’re purchasing from.
  4. Monitor changes and updates to trade agreements related to your business or products.

What if I have a higher volume of shipments?

  1. Consider applying for a Duty Deferment Account (DDA): When you are importing goods regularly it can be beneficial to have a duty deferment account (DDA). This enables customs charges, including customs duty, excise duty, and import VAT to be paid once a month through Direct Debit, instead of being paid on individual consignments.
  2. You can also investigate if a SIVA Deferment account might be beneficial (Simplified Import VAT Accounting). This works on a similar basis to a Duty Deferment Account, but only enables payment of VAT on account. You will need to have your customs and VAT records in order, for the last 3 years. It is still possible to apply if you have been VAT registered for less than three years, but you will be subject to more stringent credit reference checks.

Please don’t panic or be overwhelmed by the terminology here. These are both just options, and realistically, they will only be beneficial if you are shipping large volumes of stock, frequently.

In Summary

I wish I could give you a magic wand or at the very least a failsafe list of actions to ensure you have everything covered. Sadly, there are just too many variables and specifics – not to mention my wand broke years ago

The best advice I can give you as business owners, is to work through the action points above, do your research and ensure that you are as prepared as you can be.

Try not to feel overwhelmed. Work out a list that is applicable (or potentially) to your supply chain. Then break it down into manageable chunks. Start with Check, Change, Go, then apply for your EORI, if you haven’t already. Prioritise the rest by urgency and time to implement.

About the Author

Lisa is a Virtual Assistant (VA) and runs Above & Beyond Admin. She’s qualified in International Trade and Service and worked as a global account manager for a large logistics company.

She has extensive experience in logistics, both as a VA and as an account manager. Lisa has co-ordinated end to end logistics solutions for many blue-chip companies, including those in the Military, Aerospace and Retail sectors. She was awarded Runner Up BIFA Young Freight Forwarder of the Year, UKACC Customer Service Agent of the Year and the YRC President’s Award Winner.

If you struggle with organisation or time management, then you might like to download her FREE Essential Digital Toolkit to help manage your task list.

If you’re looking for assistance with classifying your goods, preparing customs declaration instructions, or want to talk through what’s specifically required for your business, then  you can find out more about her logistics unlocked service here.

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The Complaining Cow free support for businesses

Join the Facebook Group Customer Service: Compassion, Care and  Integrity  A private group where you can give and get support, advice and share good practice on how to improve complaint handling and imporve customer service throughout your business.

Free download Customer Service: 5 ways to get rave reviews & referrals a few tweaks to your customer service can help you reduce risk to reputation, finances and impact on customers and increase sales.

Customer Service how to turn customers into superfans raving about your products/services

The Complaining Cow Services

To see how The Complaining Cow can help you improve your customer service see Services.