Re: UKNM: Price matching

[Steve Johnston/IMRG]

Nick Sweeney <

nsweeneyjesus [dot] ox [dot] ac [dot] uk

> on 07/10/98 19:52:30

Please respond to

uk-netmarketingchinwag [dot] com

To:     uk-netmarketing <

uk-netmarketingchinwag [dot] com

>

cc: 

Subject:        Re: UKNM: Price matching


>Consider CDNow: their recently-launched European warehouse has, I'd

>suggest, placed them at a marketing disadvantage on this side of the

>Atlantic. What you gain in delivery charges, you lose in having to pay

>local VAT, and from having to deal with local pricing structures. 


> <snip> a risk-assessment on whether the import gets taxed on entry.


>(Recent reports suggest that packages from Amazon, CDNow and others are no

>longer able to pass through Customs so freely. More reason to have friends

>in the US.)


Nick,


Getting away with the non-payment of VAT is hardly a robust model for the 

growth of this marketplace. CDnow realise now that the responsible - 

ignoring the legality for the moment - behaviour is to charge VAT. You may 

be forgetting that the consumer 'knows' of course that they pay VAT, but 

'forget' to think about it, and frankly are ignorant of the requirements of 

international trade and therefore assume that a price includes VAT, as it 

does in the UK. You're right that CDnow are not stupid, they realise that 

their customer's perception of them will be somewhat diminished by the DHL 

bill that arrives a week or so later for the missing VAT and Duty - not to 

mention for DHL's handling charge.


CDnow's other significant benefit from their European distribution will be 

a saving of at least a day in transport time, which doesn't sound like much 

but it matters.


Regards,


Steve Johnston

Director of Development

IMRG ( Interactive Media in Retail Group)

+44 (0)7000 46 46 74