Waterstones m.d. James Daunt has said Amazon is undercutting his business because of the “unconscionable” way it exploits the tax system.
Speaking to ITV last night, (6th June) Daunt said the way Amazon runs its tax affairs means Waterstones finds it hard to compete. Amazon has its European base in Luxembourg, so pays less corporation tax than UK-based businesses. The company only began booking sales made to customers in the UK through the UK branch, instead of diverting sales through Luxembourg, last May following pressure from politicians and to avoid paying the diverted profits tax, known commonly as the Google Tax, which came into force on 1st April 2015.
“They’re able to undercut us because of how they run their business,” Daunt said. “We give jobs in communities and on high street, really good and proper important parts of the fabrics of our communities.
“A big warehouse stuck in the middle of nowhere, employing temporary labour on a part-time, hours-only basis is not the same quality. The fact they give cheap goods, efficiently to people is a positive thing in some ways, but it’s counter-balanced by a number of negative ones, not least they exploit tax in a way that is unconscionable.”
However, he also told ITV News that Waterstones is doing well because of the power of print books.
"I think we've reached a new equilibrium, this is not a blip,” he said. "Digital books are not quite the same as a real book, they don't sit on your bookshelf and give you that sense of ongoing pleasure".
In April, Daunt told delegates at London Book Fair’s Quantum Conference that competition from Amazon kept him up at night.
“I don’t think we have the ability to respond wholly effectively to Amazon", he explained. "The investment needed to match the logistics and pricing would be enormous; the idea that as an online retailer idea we can match Amazon is complete fantasy.”
He continued: “Amazon is our competition. If you know what you want to read you’ll go online and buy it - it’s efficient and easy.”