Online selling is here to stay

No doubt you have heard the mad ravings of big store retailers like Harvey Norman, Myers, and Borders complaining about unfair competition from online retailers.

Please note that much of their ranting fails to distinguish between online sellers in Australia and overseas, although the propaganda campaign really targets non-GST payments of overseas retailers. Mind you, Gerry Harvey has had a long-time spat with Australian online retailer Ruslan Kogan who sells televisions in direct competition to Harvey Norman. Perhaps Gerry Harvey has had it so good for so long he has forgotten what competition is all about.

The GST exemption is for goods under A$1000 in value purchased by Australian consumers overseas. At 10%, the maximum tax that could be applied is a pretty paltry A$100.

But of course most people who buy from online retail (about 2% of all retail sales)  don’t do it for tax reasons and don’t necessarily spend big. For example, I buy the odd book or CD from overseas when I cannot source the items in Australia. If  my purchases come to A$60, then the GST exemption saves A$6. I bet it would cost more than A$6 to manage the application of GST to such small individual purchases. But then, the big Australian retailers don’t have to fork out for the costs of administering the tax – the Australian taxpayer does.

The PR campaign from big Australian retail is a whinge that reflects more their lack of adaptability in the market than enything else. Business journalist Michael Pascoe sums it up here and Michael Fox here.

More fundamental to the attack by dinosaur retail in Australia on new methods of consumer shopping is the fact that consumers have far greater visibility on choice of product and price. Whereas before, Australian consumers pretty much had to take what retail offered in their stores. Nowadays Australian consumers can buy what they want and when they want from anywhere. Moreover, Australian consumers can see the different prices for the same goods from many, many different retail suppliers.

Along the same lines, but at least a dinosaur moving into the 21st century, is newspaper mogul Rupert Murdoch with his proposed Ipad newspaper. The digital newspaper will be called the “The Daily”, but the launch has been delayed slightly. Murdoch has in the past vociferously complained about news media’s failure to generate income from news on the internet. This new venture is obviously something Murdoch is pinning his hopes on for the future.

The content will be important if it is to generate big sales.  Murdoch’s News Corporation has often been criticised for right-wing bias (Fox News in the US is a classic example). It will be interesting to read the tone of the content on the digital newspaper and what that means for online sales.  If Murdoch gets his content and pricing structure right, then this will be a huge success.

One of the myths about online is the belief that people want everything for free. The massive increase in online shopping over the past five years belies this myth. The fact is that people will pay for a service or a good online (like anywhere else) when they see it delivers what they want at a price they find acceptable.

It will be interesting to watch the digital newspaper take-off in the same way it will be interesting to watch loud-mouth big Australian retail adjust to the new shopping realities brought about through online shopping. (It seems that the Australian big retail bully boys will persist with their campaign – read here. A more sensible response can be found here).

All of this will have a huge impact on online marketing and communications; a trajectory that continues to advance online media over the traditional forms of media communication.

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