Online retailing doesn’t always deliver

Hey, Gerry Harvey and the crew of the whingeing Australian retail coalition – online retailing doesn’t always deliver!

If you’ve been following the brouhaha here in Australia over online retail then you would know that some of Australia’s biggest retail behemoths have been whingeing boldly and loudly about the non-application of GST (10%) to overseas online retail below $1000 in value.

If you believed these retail dinosaurs, you’d think that online retail was a great evil attacking the very fabric of fair-faced capitalism! Nothing could be further from the truth.

As this latest article identifies, online retail has some problems that should be familiar to anyone who has spent a little bit of time understanding the phenomenon. Problems facing consumers shopping online include:

  • non-delivery
  • item was not what was claimed online
  • privacy and security issues with internet transactions
  • confusion over application of domestic consumer law to overseas purchases

One of the reasons consumers shop online is because “bricks-and-mortar” retail has let them down.  Big retail in Australia generally has poor customer service and the range of products on sale is far fewer than what is available online over the internet. The first problem is something big retail could fix but it would cost them extra money in recruitment and training, something they all want to avoid. The second problem is unavoidable due to globalisation and communications – something that has been obvious over the past 20+ years.

Rather than spend the millions of dollars on a public relations campaign whingeing about a paltry tax payment, big Australian retail could actually improve performance through good ol’ fashioned competition. They could provide better service. They could offer a wider array of products. They could lower some of their prices to be more competitive with online (still higher, but not the umpteen hundreds of per cent differences we often see now). This comes at a cost to the retail monoliths and this is the real reason why they fly the online tax propaganda.

Retail stores in Australia have a huge advantage over online:

  • products are visible and tangible
  • products can be bought on the spot
  • there is no postage charges and overseas currency banking fees to pay
  • good customer service builds consumer trust and improves word-of-mouth marketing
  • Australian retail can use their own online stores to supplement their retail stores, thereby being both supportive of the business and enhancing the brand (but only if the online store actually meets consumer needs)

The trouble is, big Australian retail needs to put in some effort to compete. That’s why the CEO and Board of Directors get paid the big bucks – to work hard on strategy and operational performance. Quite frankly, I don’t see much evidence that they are willing to work hard beyond the easy fix of spending their company’s money on simplistic advertising drivel.

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