Tuesday, December 24, 2013

What is 'payatrader' on card statement?

This isn't the first time I've posted a blog as the result of trying to figure out what a payment is on my credit card or bank statement (remember Abbey DMO?).  It's now a well-established fact that sometimes the name shown on a statement for a purchase may bear little resemblance (if any) to the name of the business you have purchased from. The most extreme example I know of was Anglia Railways, when I bought tickets from the ticket office in Ipswich the payment would show up on my statement as 'Norwich  Sports Ltd'.

So what is payatrader?

A few days ago I bought something from a small local shop and had a chat with the business-owner about the neat little credit card machine they had.  This little payment system didn't have a printer, instead it was fitted with a sim card and when customers requested a receipt it arrives via SMS on their cellphone.  'Payatrader' is the facilitator of this system, you can find out more about them HERE... You might recognise the look of the card reader.

So if you've seen Payatrader on your statement think back, have you recently bought something at a trade show or craft fayre?  Or have you bought something from a small independent store?

Thursday, December 12, 2013

Are Amazon Kindle books too expensive?

There's a theory going around that Amazon are aware that they might be seen as selling 'thin air' in their Kindle store, which is something you and I both know isn't true.  Art isn't worthless; if someone has created something new using their talents (learned, developed or nature-given) then it has a financial value.  This fact is the reason so many musicians get tense if you ask them why they don't give their music away for free.  One does not need to hold something weighty and physical in order to have made a valid purchase.  If my mechanic fixes my car without needing parts or the purchase of tools I still pay him.  I don't know when we became so convinced that we need to be given something tangible in order to feel like a satisfactory financial transaction has taken place.

Amazon do not allow publishers and authors to set very low prices on their Kindle books, this is probably because they are attempting to maintain a perceived value on Kindle books.  As soon as something is given away for free it is considered worthless, and 'cheap' is just one step away from free.

Some Kindle books do seem a little expensive but the larger the publishing house is the more mouths they have to feed, which is why the Kindle Marketplace appears to be so beneficial to small publishers.  It's not in Amazon's interests for our work to become worthless.

What is the 'race to the bottom' in retail?

When I had a record shop we paid around £8 wholesale for most CDs, as did all other retailers. After a couple of years we noticed some online sellers were quite dramatically lowering their prices, they would make a make a smaller profit on CDs in order to sell higher numbers of CDs. It worked for a while, then other sellers on Amazon wanted to use the same method to shift units, but they needed an advantage over merchants who were already shifting twice the units by undercutting the established market.

What advantage could new Amazon sellers give themselves over the established sellers?  The words on the listings were largely out of their control, and postage prices were set by Amazon.  So the only advantage they could give themselves was price; if they undercut their competitors by just a few pennies then they would win the business, albeit at the loss of a bit of money per-unit.

Amazon, Ebay and the Web at large are very large marketplaces.  Many people want to sell online, and these many people all need an advantage.  For 99% of sellers the only advantage they can give themselves is to ensure their prices are lower than those of their competitors.  Their competitors then retaliate by lowering their own prices, so their 'peer' sellers can only maintain their advantage by dropping their prices lower than those of their competitors.

This process gathers pace until product is sold at a loss.  So we find a situation whereby merchants are selling their product at such low prices they're actually making a loss.  So do they stop there?  No.  There are enough sellers wishing to get a foothold in a pressured market that they will sell at a considerable loss in a frantic attempt to get established.  Huge numbers of these sellers find the situation unsustainable and go out of business.  But as mentioned earlier the Internet is all about huge numbers, so for every ten thousand sellers who go bust selling at a lot there will be twenty thousand joining the game. So where does it end?

We closed our shop the day we saw product we were paying our £8 for on sale for 25p a unit on Amazon Marketplace.

This is the race to the bottom.