WHY BRICKS SHOULD LOSE TO CLICKS

Lisa Creffield, Sky News Business Reporter

4 January 2011

eBay ran a particularly clever campaign this year: "Browse at Westfield, buy on eBay." It's a 180-degree turn from a few years ago, when the internet served more as a catalogue for shopping that eventually took place offline.

Retailers predicted a gloomy festive season: they claim one of the key reasons, other than rising interest rates, is a rush by Australian consumers to overseas shopping sites. The strong Australian dollar means that buying items from the US - even when international shipping costs are included - often works out cheaper than buying goods here.

So now retailers want GST imposed on online shopping and are running a huge (and presumably expensive) advertising campaign to lobby the government. This is, of course, not only shutting the door after the horse has bolted, it's also advertising to a lot more horses that the doors are currently open.

"No GST on international goods!" "Cheap discounts online!" "See how far your strong Australian dollar can go!" No need for e-tailers to bother doing their own promotions, with Myer and David Jones so kindly obliging.

The government points out that the big retailers' claims are exaggerated anyway. Online retail sales currently account for only three per cent of all retail sales in Australia - and as little as a fifth of this relates to overseas purchases. Though that number will only continue to grow, particularly as older demographics increasingly get online, and young generations get their first credit card.

But the fact is that price isn't the only reason that people shop online. Offline, "traditional" shopping can still be a very hostile and often futile experience. Shops should be bending over backwards to woo customers, but they too often fail to do so.

For example, if you are in a clothing store and they don't have the size you want, they can usually look up available stock on their computer and tell you where it is. Great. But can they get it delivered to the store you're at, even if you pay in advance, even if you're prepared to pay a delivery fee, even if you're prepared to wait a couple of weeks? Even though they have an existing, often daily distribution system between their stores and warehouses? No.

The absolute reverse is true for online stores: if they've got what you want, no matter where it is, they'll deliver it. If Amazon hasn't got it, it suggests Amazon Marketplace sellers.

The big retailers' campaign also begs the question: why, in the year 2010, is it still Them vs Us? Why are they still bricks-only, or so weak in their online presence that they can't make up the store sales they're losing? Or even expand their sales?

Quite apart from this, the entire issue has parallels of futility akin to the Wikileaks phenomenon: it's too late to stop it, and it can't be practically policed. How, ultimately, do you implement and enforce a GST on overseas sales? How do you collect the money, and from whom? And short of Customs opening up every single parcel that arrives from abroad and checking every single receipt (if it's even included) how will it be monitored?

The current tax regime is admittedly inconsistent. It is arguably "unfair" that foreign goods valued at less than Au$1000 are exempt from duty. But even with the strong Australian dollar, there should not be such a huge price discrepancy between foreign and domestic goods.

Sites such as http://www.Booko.com.au and http://www.priceusa.com.au/ illustrate the insanely wide gulf between overseas and domestic vendors. American prices are routinely half Australian prices. Propping up a dying (suiciding) industry through tariffs and duties and disincentives is a negative and hostile way to proceed.

If Australian retailers aren't able to close the price gap - despite the wholesale prices, bulk shipping and economies of scale they have access to - then maybe it's time for them to close their doors.

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Craig, Manchester (31 January 2011 11:16PM) wrote:
Some good, detailed points. I used to work at Manchester University recently and we arranged shipping for a lot of our students through a company that were usually happy to do shipping to australia in bulk http://www.excess-baggage.com . They were pretty useful at the time with some surprisingly low costs as well as low as £30 for boxes. We had some mixed experiences trying a couple of others first though they didnt get actually back to us sometimes.

robusta Arabica, Sydney (28 January 2011 4:38PM) wrote:
Great article. Every time I fly back into Australia from Asia I return to the land where no one smiles at you, where you are an inconvenience to busy sales assistants, and the big chains gouge us. Go into a shop in Japan and see how different it is.

Simon Berry, Melbourne (4 January 2011 3:46PM) wrote:
I totally agree with your article, this Xmas I spent about $1800 on overseas online shopping many due to the savings but I had float growth and GST because it exceeded a $1000. I also spent about a large amount at several Aussie on lines because it was convenient, delivered and gift wrapped. I felt a little guilt at buying overseas but as for the local online shops they still employ people, pay rent etc. The facts are I was sick of going to major retailers who lack any sense of customer service, often you ask if they have the item in your size only to be told it's whatever is on the floor!! Unattended checkout counters and no gift wrapping service annoy the he'll out of me...if I am to make the trip to a shopping centre I want excellent customer service. Shop at a department store in Asia or America and the service is ten fold to what it is here.