India Clamping Down on Foreign E-commerce; Amazon Tax Coming to UK

RetailTechNews’ weekly roundup brings you up-to-date research findings from around the world. In this week’s edition: India Clamping Down on Foreign E-commerce; Amazon Tax Coming to UK; and Video Ads in Mobile Search.

India Clamping Down on Foreign E-commerce

Apple, Amazon, Google, Facebook, and other U.S. tech titans, are facing major hurdles on selling online in India, thanks to a new e-commerce bill that prioritises homegrown firms.

According to The Wall Street Journal, which has seen a draft of the bill, the new rules would create a hostile environment for foreign tech giants, despite India being relatively open to outside competition. The Economic Times also reported on the proposals at the end of July.

The most drastic changes proposed by the bill include:

– The creation of a ‘level playing field’, which would prioritise Indian startups

– Indian users’ data would need to be stored exclusively in India, potentially denting the tech giants’ online ad businesses

– Clamping down on loopholes that allow the likes of Amazon to skirt government rules around foreign ownership of retail

– Marketplace companies are currently restricted from holding inventory, but those restrictions would no longer apply to Indian-controlled companies selling Indian products

India’s e-commerce sales will rise 31% year-on-year this year, putting it behind only China and Indonesia. Adobe stats peg U.S. e-commerce growth this year at around 18% year-on-year, so far.

That makes India an extremely important focal point for U.S. companies seeing their home markets slowly level off and looking for future growth.

Amazon Tax Coming to UK

The UK government is thinking about introducing a so-called ‘Amazon tax’ to support struggling online retailers, finance minister Philip Hammond said in an interview with Sky News on Friday.

In Britain’s strongest intervention yet on the issue, Hammond told Sky News that the UK wanted to ensure taxation was fair for retail companies doing business the ‘traditional’ way, as well as for those conducting business online.

“If we can’t get international agreement to do this, we may have to look at temporary tax measures to rebalance the playing field until we can get international agreements”, Hammond said.

When asked specifically which kinds of measures, he replied: “The EU has been talking about a tax on online platform businesses based on value generated. […] That’s certainly something we’d be prepared to consider.”

Hammond’s comments come as department store House of Fraser was placed in administration on Friday, shortly before being bought by retailer Sports Direct for USD$115m (£90.53m).

Earlier on Friday, Amazon faced intense criticism after it emerged the tech giant paid less corporation tax in the UK in 2017 than it did the previous year. Amazon refused to comment when contacted by CNBC Friday afternoon.

Video Ads in Mobile Search

Advertisers are pouring money into Amazon’s burgeoning ad business, and Amazon wants more with a new ad product it’s testing: video ads in search results.

The ads are in a limited beta test right now and have come up in discussions between the online behemoth and the ad industry, according to two separate sources who have had those meetings. Those meetings began over a month ago, said one of the sources, but Amazon didn’t publicly announce the product until last week, when they made a post intended to drum up interest in the trial.

The format is called ‘Video in Search’ in the post, which revealed that video ads must be 90 seconds or less and contain audio. Ads are shown below the fold in search results and will either drive shoppers to a product page or directly to an Amazon Store or a custom landing page, according to the post. The ads will only be seen by people searching Amazon on either an iPhone or an iPad.

Some of Amazon’s biggest advertisers, including Procter & Gamble, are already testing the new format, which requires a budget of USD$35k (£28k) or more to get started, according to Amazon. Gillette is running video ads for its Arc 5 razor in search results, per a listing seen by Digiday. Home furnishings company Lamps Plus is also trialing the format, as reported by Digiday.

The ads are sold through Amazon Media Group, the in-house sales team that sells the limited video inventory Amazon has made available. While video ads are sold on IMDB.com, Twitch, the Fire TV platform, Amazon.com, along with Prime Video’s live sports, the formats have trailed those for search and display.

It’s left some advertisers with the opinion that Amazon is a channel for direct-response budgets rather than brand budgets. Brand advertisers like Lego and Pernod Ricard, on the other hand, want to buy more video inventory on Amazon, given it’s essentially become the de facto search engine for shoppers further down the purchase funnel.