Amazon survived lockdown, but can it beat a new potential sales tax?
The Chancellor of the Exchequer, Rishi Sunak, is considering an online sales tax that would levy 2% on all items purchased online. Could this potential tax spark trouble for Amazon?
The incentive behind the tax is to help brick-and-mortar stores, who are currently penalised under the current business rates system. If the tax is employed, it could benefit the book trade, especially independent bookshops who are currently competing against giants like Amazon.
For many independent booksellers, Amazon is considered the biggest threat to the industry. According to The Guardian, the number of independent bookshops in the UK has halved since Amazon’s launch two decades ago.
Physical bookshops have also been under pressure during the coronavirus pandemic. Customers began purchasing from online retailers while unable to visit non-essential shops for three months. Bookshops have also struggled to entice customers back to their stores after lockdown. According to The Bookseller, a Nielsen survey concluded that 35% of regular bookshop customers are unsure about returning to physical bookstores.
Could the tax be an incentive for customers to buy books at independent books stores? If so, what could this mean for Amazon?
Although the site prioritised essential items throughout the lockdown and delivery times on books were significantly longer than normal, Amazon saw a large boost in its sales and income whilst bookstores were closed.
The company reported a 40% rise in net sales and a staggering rise in operating income of 87% in the second quarter compared to last year. In the UK, sales rose from $16.4 bn to $22.7bn. These figures came despite calls for people to support indie bookstores when ordering books during lockdown.
In a public interview, Founder Jeff Bezos said: “This was another highly unusual quarter, and I couldn’t be more proud of and grateful to our employees around the globe.” With worries around rising unemployment figures, Amazon has been doing its part to provide people affected by the pandemic with employment. “We’ve created over 175,000 new jobs since March and are in the process of bringing 125,000 of these employees into regular, full-time positions. And third-party sales again grew faster this quarter than Amazon’s first-party sales.”
Amazon’s success in a period that has been a time of significant struggle for stores is likely to fuel concerns about the impact of online shopping on physical retailers. For many, the Chancellor’s proposal may come as a relief and a much-needed initiative to level the playing field.
“The people of Zimbabwe are in a chokehold”
This powerful image is conjured by Booker-prize longlisted author Tsitsi Dangarembga, who was arrested in a protest in the Southern African city of Harare on 31 July.
Anger has spread across the country as prices rise at an inflation rate of 700%, public services are inadequate and corruption at the highest levels of President Emmerson Mnangagwa’s government is alleged. This anger was stifled as police, soldiers and helicopters monitored the streets of Harare as part of a crackdown on these protests. In disturbing footage, The Guardian are reported to have witnessed armed soldiers beating residents in a small area in the west of the city.
The President has accused the opposition of using the economic challenges posed by the COVID-19 crisis to topple his government — this being the very same reason that authorities are not allowing demonstrations.
The Booker Prize nominee was born in the north-east of the country and is the writer of Neria — Zimbabwe’s most successful film from 1993. Her critical acclaim continues as her first novel Nervous Conditions is considered a modern classic, having won the African section of the Commonwealth Writers Prize (1989) and was on the school curriculum. Her Booker Prize novel, The Mournable Body is the sequel that “channels the hope and potential of one young girl and a fledgling nation to lead us on a journey to discover where lives go after hope has departed.”
Dangarembga told the BBC that health, education, and the economy were all deteriorating. In a statement of striking honesty, she goes on, “It would be naïve not to be [concerned for my safety] because we have a very repressive regime.” Eleven other people were arrested on the same day that Dangarembga was bundled into the back of a police fan holding placards. She urged herself not to be afraid; they had not done anything wrong.
Live-tweeting her arrest, she named her fellow arrestee as Julie Barnes and informs her followers of the absence of a toilet, water and power.
The magistrates court released Dangarembga and Fadzayi Mahere, lawyer and spokeswoman for the main opposition, the Movement for Demoncratic Change-Alliance (MDC) on Saturday 1 August. Their bail was set at ZA$5000 (US$65). She will return on September 18 and is charged with incitement to commit violence and breaching anti-coronavirus health regulations. To follow the crisis in Zimbabwe, follow #ZimbabweanLivesMatter.
Hachette UK's Financial Results for the First Half of 2020 Are In
Hachette UK, one of the big five, has published its latest financial results, with its parent Lagardère commending the publisher’s “sterling performance” in respect to COVID-19. Revenue slipped by only 2.9% for the first half of the year amid the nationwide bookshop and school closures that took place during the UK’s lockdown.
David Shelley, Group CEO, credited a record number of bestsellers (264 appearances in total in the Sunday Times prestigious bestseller lists) for the publisher’s "extremely strong" performance. Among the publishing group’s successes were the British Book Awards’ Overall Book of the Year, Queenie by Candice Carty-Williams, and Where The Crawdads Sing by Delia Owens, a Richard & Judy Book Club Winter 2020 pick. The Silent Patient by Alex Michaelides and The Witcher, a fantasy series of short stories and novels by Polish author Andrzej Sapkowski, recently adapted into a hit Netflix series, also received a special mention by Shelley.
"Our trade performance also helped to mitigate the challenges faced by our education business, which unsurprisingly has been impacted by the closure of schools during the lockdown," commented Shelley in an article in The Bookseller. He continued by adding, "We continue to diversify our business for the future by launching in-house studios to enable us to publish a greater number of audiobooks, while a new generation of imprint, Hodder Studio, is taking a more innovative approach to storytelling across print, digital and audio. We have also announced plans to open five new regional offices — in Edinburgh, Manchester, Newcastle, Sheffield and Bristol — to help us tap into the wider creative talent pool around the UK.
"In the first half of the year, we focused our charitable efforts on emergency response during the pandemic. We provided financial support for independent booksellers and publishers, by donating to the [Book Trade Charity] BTBS fundraiser and the Inclusive Indies Fund. We also donated nearly 30,000 books, by giving free e-books to NHS workers and partnering with Neighbourly to help charities and local communities who have found it most difficult to access books during the lockdown."
The combination of Hachette UK’s bestsellers, regional new offices, and their charitable focus in response to the Coronavirus pandemic sets up the publishing group for a just as strong second half to 2020.
Elsewhere in the publishing industry, Cambridge University Press reported a slim rise in revenue despite the devastating impact of COVID-19 in the final six weeks of the financial year with sales rising by 2.8% to £336m at the end of April 2020. However, CUP’s operating profits fell by 3.3% to £23.6m, compared to £24.4m of profits in 2019.
What is happening with the Book Fairs?
As the London Book Fair (LBF) faces backlash for its refund policy, the Frankfurt Book Fair sets the template for the industry’s future.
Back in April, Reed Exhibitions, the organiser of LBF announced that they were offering 60% refunds to publishers. This was not a blanket offer: some publishers and organisations received different offers, such as the transferral of the fees to next year. The Force Majeure section of the contract allowed LBF to retain part of the service charge. At the time, The Bookseller reported that agents such as Paul Feldstein were unhappy with the outcome.
The disappointment continues, as the Association of Authors’ Representatives (AAR) and the Professional Association of Canadian Literary Agents (PACLA) have written an open letter criticising the “tone-deaf” response of LBF.
The open letter comes as a public move to voice the fact that they “strongly disapprove” of Reed Exhibitions’ silence when trying to work this out privately. The letter laments that the relationship between North American agenting companies and LBF will be “deeply damaged” by their lack of sensitivity to the issue. This was perhaps amplified to the agencies as the Bologna Children’s fair offered full refunds.
According to The Financial Times, almost 3,000 trade fairs around the world have been negatively affected by the lockdown measures and travel restrictions caused by the pandemic. Frankfurt Book Fair is certainly heading in a more positive direction as they call it the ‘Special Edition’. With fewer than sixty days to go, the fair plans to include a mixture of business meetings in the fairground, a literature festival for the ‘general audience’ in downtown Frankfurt and a plethora of online events; the literary community will be pleased to have an ‘event’ — even in the loosest terms — back up and running.
The digital aspect of the fair is described as a unique, virtual celebration of literature and culture on the Saturday of the fair, which will be broadcast live.
In an effort to replicate the invaluable networking that book fairs offer, Frankfurt introduces a ‘Matchmaking Tool’. By registering for free online, you will receive customised contact recommendations, as well as being able to make targeting searches for contacts of specific areas or regions. This will become available in mid-September.
Could this be a new trend to look towards to increase accessibility to fairs in the future? Is it possible that the long-term effects of COVID-19 will be digital events and networking, accessible to everyone?
Like everything else in the ‘new normal’, time will tell...