Industry

In other news… Amazon’s tax fine and the Royal Mail strike

• Online giant Amazon [IRDX RAMZ] says it will be considering an appeal against the fine announced this week by the European Commission (EC). The EC wants to recover “illegal aid” given to Amazon by Luxembourg, where Amazon’s European operations are headquartered, to the tune of around €250m.

Margrethe Vestager, the EC’s commissioner for competition policy, said this week: “Luxembourg gave illegal tax benefits to Amazon. As a result, almost three quarters of Amazon’s profits were not taxed. In other words, Amazon was allowed to pay four times less tax than other local companies subject to the same national tax rules. This is illegal under EU State Aid rules.”

An Amazon spokesperson said in response: “We believe that Amazon did not receive any special treatment from Luxembourg and that we paid tax in full accordance with both Luxembourg and international tax law. We will study the Commission’s ruling and consider our legal options, including an appeal. Our 50,000 employees across Europe remain heads-down focused on serving our customers and the hundreds of thousands of small businesses who work with us.”

• Retailers are being advised not to put all their delivery eggs in one basket as news of a Royal Mail strike emerges.

The Communication Workers Union said earlier this week that 89% of Royal Mail workers who voted in its ballot on strike action (turnout 73%) had supported action. Last night it set a date for a 48-hour walkout – from noon on October 19. Reuters is reporting that the Royal Mail plans to challenge that action.

The news, says Niklas Hedin, chief executive of Centiro, means logistics teams should make sure they’re not over-reliant on one carrier. “The news of a Royal Mail strike should set alarm bells ringing for retailers as they head into their busiest time of the year,” he said. “It is a stark reminder to retailers not to put all their eggs into one basket as relying too heavily on one carrier can leave a them high and dry if it is suddenly unable to fulfil an order.”

Andy Hill, director at Sorted, said: “It’s ironic that even though it’s now privatised, Royal Mail’s planned strike action somewhat rings of when it was nationalised and, certainly, not what consumers would have expected from privatisation.

“By striking over four days from 19 October – just as retailers are in final stage preparations for peak – this will not only severely disrupt consumers, with the delay to millions of online orders, but also significantly impact retail businesses and carriers. Indeed, with the Royal Mail delivering 1.5million parcels each day, carriers face overburdening themselves as they struggle to absorb the extra volumes of deliveries.

“Our data shows that failed deliveries already cost retailers an estimated £2.29m on average every month in returned goods and retailers who are over reliant on Royal Mail’s services face even more disruption and risk further failed deliveries, dissatisfied customers and lost sales opportunities.

“This serves to highlight the importance for retailers of not being over reliant on a single carrier and the need for retailers to act now and plan ahead to ensure they have the flexibility and agility to deliver on their fulfilment promises to customers.”

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