Wednesday, January 5, 2011

Whinge and moan...

Here we go again. The retailers are having another whinge about the fact they feel their massive margins and profits are being eroded by online shopping. So much so that if the Government doesn’t acquiesce to their demands, they will take their ball and bat and go home.

Here are some facts for you readers: An Access Economics report showed Australians spent between $19 and 24 billion buying goods online in 2009, representing about three per cent of total retail sales. Three percent. The reality is Online Shopping is not hurting Australian retailers. Through bad service, high prices and lack of choice, they are managing to erode their own business models and profits themselves, thank you very much.

The Access Economic report also found that 50-80 per cent of those online sales were made with Australian online outlets, so the vast majority of purchases wouldn’t be subject to any change in policy anyway. We already pay GST on those items.

Reality Check time: What we are talking about is a tiny percentage of goods purchased from overseas, but what this campaign by the retailers and the Australian National Retailers Association has done is raise awareness of the benefits of online shopping to the many millions of people who don’t already shop online. They have been out there, banging their drums and telling everyone about the amazing bargains to be had from overseas online retailers, driving everyone off to go and see what the fuss is all about for themselves. Online retailers like Net-a-Porter and the like couldn’t ask for a better PR campaign from anyone.

I don’t want to reiterate all of my arguments as to why Australians shop online (and ergo why recent arrivals on the online shopping scene won’t succeed) but I have to say it does seem a tad strange to moi that these retailers are crying poor while spending millions of dollars on a poorly executed advertising campaign to try and get people On Their Side..

It’s ludicrous and it won’t work. Thanks to the retailers and their perpetual constant sales cycles, Australians don’t really buy anything at full retail price anymore. We’ve been conditioned over the past few years to seek out value and shop around. We compare prices, we look for the best items at the best prices. We seek out good customer service and reward it with patronage. With a lot more competition for the retail dollar, those who understand customers are more likely to succeed in the new world of retailing.

Charging GST on imported goods over $1000 purchased over the internet is the craziest thing I have heard in a long time. It’s a desperate scramble. The death throes of the condemned. Nowhere else in the world that I know of does it. It’s lunacy, plain and simple. Protectionism courtesy of Government interference and taxation won’t help our retail sector survive and thrive, but evolving to become more customer centric and focusing on good service, driving harder bargains with suppliers, passing savings on to customers and sourcing unique items from overseas will help Australians walk back through your doors, be they physical or virtual.

Rather than trying to destroy the competition, they should be observing them, imitating them, understanding why they are successful.

Retailers say that the high Australian dollar is hurting their sales with more and more Australians taking advantage of the exchange rate to make purchases overseas. Whilst I agree with them on this – yes, people are definitely doing it – I also think there is another way you can look at it. With the high Australian dollar over the past 12 months, the cost of importing goods into Australia has also dropped for those retailers. They don’t pass those reductions in costs onto consumers though – instead, preferring to pocket the difference as profit. Astute business practices or outright robbery? You decide.

It’s not rocket science but it seems that some retailers need to take a long hard look at their business models rather than on seeing who can complain and whinge the loudest. In the end, people will vote with their feet – and their wallets. And there’s nothing that the Government can do to stop people shopping overseas – adding 10% on to the cost of items won’t change people’s desire to buy them when they are already saving between 30 and 50%. Pursuing this agenda will do nothing but make the retailers who are involved look like a bunch of whinging greedy grabbers, and highlight the incredible amount of bargains already available on overseas websites.

I say let them dig their own grave. They seem eminently and efficiently able to do so.


Sydney Shop Girl said...

Well said!! There was an excellent article in today's SMH and it's amazing the amount of reader resentment of Harvey et al.

I've been itching to have my say and here's the right forum.

I don't understand how some Australian retailers can make the current situation work for them (the kitchenware retailers online routinely offer great prices and I shop from them all the time) yet the giants like DJs are complaining.

It's not just the price of online shopping, it's the convenience and the service. I find so much more information about products from online retailers - product information and consumer reviews. It just makes sense for me to buy online.

SSG xxx

Sydney Shop Girl blog

Z said...

I agree, and I think that the Retailers Association definitely misread the public mood on this. However, the real risk here if the government is pressured into levying some form of charge on imports under $1000 is that overseas retailers simply won't ship to Australia due to the extra paperwork required. Gerry Harvey and co. know that the 10% isn't going to make a difference to online purchasing decisions, but not being able to purchase online at all certainly will.

Like the MRRT/MSPT debate, I'll be watching this with interest.

Z -

Semi Expat said...

Here, Here Miss Kitty. Well said! X

Not Quite Nigella said...

I couldn't agree more. So, so, so greedy and one track minded of them. Shows how out of touch they are really...

Miss Kitty-Cat said...

Thanks ladies. There has been a lot about this issue in the papers and online this week and the retailers just don't get it...

The Productivity Commission will be calling for public submissions on the inquiry into the efficiencies in retailing (note, not online retailing) and I for one will be submitting a case.

Kiki Chaos said...

Well written, miss kitty. It's very reminiscent of the recording industry spending years and years and billions of dollars fighting illegal downloading instead of spending all that energy and money providing music and media the way people want to buy it. That's what the retailers are doing - trying to force people to shop a way they don't want to shop anymore, now that there's newer and better options.

Why do I have a sick feeling in the pit of my stomach, though, that the government is going to side with the retailers? :(

Miss Kitty-Cat said...

You know what? I'm not convinced they will. Given the overwhelming public sentiment I think they'd be mad to consider lowering the tax threshold like this. It just looks so damn greedy and mean... And at the end of the day all the Government is interested in is winning elections and this won't help them do that.