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Analysis: The e-tail retail divide

If anyone didn't already know that the internet is a powerful tool for retailing they do now thanks to Australia's best ever example of how to shoot yourself in the foot.

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Perth
Ahh, this is the Tim Treadgold we all used to love, another half baked argument. It seems to me that Australian businesses just want a level playing field. So Tim, if you don't want taxes added to internet sales, then surely you'll be campaigning for retailers have the right to GST exclusions on all sales of less than $1,000, Import Duty rebates, Compulsory Super payments exemptions, Payroll tax exemptions, Land Tax exemptions etc. I'm sure that the retailers wold be happy to carry their additional costs of shop fronts and sales staff on the basis that they offer a better quality of service, even if it does mean that they are displaying the products that the online retailers offer. Not sure if Tim still resides in WA, but we need GST funding based increased, not decreased, given that at the moment we seem to be getting less of what now be an ever diminishing fund pool

Perth
I agree with Tim. I think instead of whining that others are more competitive than them and asking for those others to be made to be less competitive, they should simply become better themselves.

Perth
I like the way his advice to the retailer is that they can benefit "by finding positive ways to harness the technology". How can a mastery of the internet combat the fact that the consumer can purchase online from the US cheaper than a retailer can purchase from the Australian distributor of that product? That's the core problem I see smaller businesses facing, at least in the industries I am familiar with. I work in a small "bricks and clicks" store, and witness sales disappear overseas daily, after failing to price match US prices. The customer very rarely cares about reasons for the price discrepancy, and even sometimes seems somewhat indignant that we would charge so much more.

Pert
Tim, Your so right - King Canute! In europe, if you order cinema tickets on-line, you receive a discount (no staff / no printing / no banking at source etc) but Hoyts charge you $2 - go figure. A friend bought a golf club from the states, new, current line, with free shipping for $149 australian, yet Drummond over here want $269? Hardly Normal charge over the odds and Gerry cannot deny it; a camera in an article in the West on this subject was 50% less on-line than in his store and that was an Australian web site. Power to the people!

Claremont
Thank you Tim Treadgold for a sound argument. Level playing field complaints by the big retailers ignore their preferential rental treatment by major shopping centres, their abandonment of Australian manufacturers & suppliers, their transport requirements to their dropping off points, and their reluctance to pay their accounts within 30 days. They also use home brands as a considered and deliberate method of stealing a suppliers brand name and screw pricing for heavily discounted prices without any regard for sustainability. They even import vegetables to compete against those grown locally. Please spare me the employment argument. NOW when these same large retailers feel the force of the internet and the bigger online market impacting on their financials they cry out like babies. Mike King Subiaco The other great advantage of the internet is that it will impact on the Retail Shopping Centre Rentals. That has been a disgrace for over 30 years given the zoning impacts on small retailers. Bring on the net and a levelling of the playing field.

Perth
It may be reasonable for retailers to ask for a level playing field and on-line purchases avoiding GST is hard to justify except on administrative grounds - how might the money be collected efficiently. However in many respects the problem arises because consumers perceive that they are faced with a playing field tilted heavily in favour of the retailers. For decades consumers have seen Australian prices for many products being much higher than overseas prices. In the 1970's I started buying my cameras mail order from Hong Kong and my books mail order from England. In both cases the savings were typically 30% to 40% even after paying import duty and sales tax as well as postage and insurance. While the details may have changed, the disparity for many products is still there. To be fair to retailers, I suspect that some of what can only be described as price gouging is probably done by import agents and the retailers get caught in the middle. But that is business and large retailers usually have enough weight to overcome errant importers if they want to. The Internet has just made this difference in price more obvious and purchases easier. Hence many of the protests are a case of shooting the messenger to avoid hearing the message.

Perth
The completely disingenuous argument made by the major retail chains fails on a number of fronts. Principally the cost of collection of imposing GST on imports under $1000. If you assume the average item is around $500 the GST would be $50 which is unlikely to cover the cost of collection. This is nothing other than a smokescreen to further the retailers real agenda which is to have the GST lifted on goods they sell under $1000, does anyone really believe that they would pass the savings on to the consumer… No they would just pocket the additional profit. The article makes a valid argument that the major retailers should address their own internet presence and supply chain management. I for one would be happy to pay the GST if I knew I was dealing with a reputable Australian based business and could be assured of a faster delivery than ordering from overseas. If major retailers cannot match overseas supplier’s base price plus shipping costs given their enormous buying power they need to really have a good look at their practices. The entire argument is a ruse to maintain their unreasonable profit margins to the determent of the consumer. Put simply this is Free Market Competition where the most efficient supply chain will win, so Harvey Norman, Myers and the rest had better evolve or become extinct.

Ellenbrook
I've been in retailing for 20 years - bricks n mortar and we had a multi million dollar business which thrived on great customer service, good product knowledge and readily available stock. We couldn't compete with the likes of the big majors on pricing and we couldn't match the deals or promises that were offered online but our customers knew we respected them, offered incentives where we could such as after sale service, free advise and our customers knew they could come back and always be treated that way. We were a small business, we couldn't afford to cut our profit margins and with all our products being made available on line and in a deregulated industry, anyone could sell our products, yet we still retained and increased our customer base over the years. Customers are so much more aware and informed these days. They do their own research on the internet for products, price comparisons etc to a point where they know more than the sales staff when they visit a retailer. Delivery is also a major reason customers shop online. You can order something from the US and get it shipped across to Perth quicker than something from the eastern states. Customer service has gone out the window so why oh why would anyone (including me) go into a major retailer who cannot offer any customer service, cannot guarantee any delivery time that is realistic or convenient to the customer, cannot offer any information, experience, advice or comparisons on their products (unless they grab the instruction book - any idiot can do that!) and cannot supply a product that has been offered on sale because they're out of stock and it's only the first day of the sale (that includes supermarkets!) oh and cannot be bothered dressing neatly for work - total lack of disrespect right there - but that's another issue : ) Is it any wonder customers go online? I said a few years ago, when Gerry Harvey said the internet wasn't the direction he wanted to take Harvey Norman in, that he was short sighted and endangering his company.....now he's trying to blame everyone else for his poor judgement. Small business shouldn't panic over this situation. For years, small business has had to stand up against the bullies of the majors and those who have succeeded, did so with dignity and without losing their businesses. Learn, adapt and welcome change to improve your position. Incorporating an online presence makes sense these days. If you have a bricks and mortar business, include online marketing through social media options such as Facebook and Twitter, with traditional printed marketing material such as brochures, newsletters and offering an online shopping feature on your website (which should be updated on a regular basis) and you can have your fair share on the consumer dollar! You will lose customers to overseas sites, that can't be avoided but when retailers aren't giving their customers a reason to shop locally, of course they will look elsewhere and pricing is the best way to get their attention! This entire situation has just proven to the community at large how greedy and shortsighted big retailers have been and how little they want to work for your hard earned dollar. Well done on squashing this stupid argument!

East Perth
Adapt or perish! It's that simple!

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