Online shopping: Is it really a threat to the Oz retail sector?

[GumbyLearner]

With all this talk from retailers like Gerry Harvey about the decline of retail spending at Australian outlets is overseas online shopping really a threat to the OZ retail sector?

Retailers under threat from online stores: Harvey

http://www.abc.net.au/news/stories/2010/11/23/3074366.htm

The boss of Harvey Norman, Gerry Harvey, says local retailers are under threat from online stores and is calling for online purchases from overseas to be taxed.

He says at the moment offshore online retailers have the upper hand.

"They don't pay any taxes, they haven't got any overheads, there's incremental sales and that's where they make their money. In the end they just put up their hands. Enough of this happens, they just put up their hands and say I can't stay in business," he said.

He concedes the strong local currency is a major factor driving online shopping, but that does not excuse the fact that offshore operations have, what he calls a competitive advantage.

Currently consumers can purchase goods online from overseas under $1000 without paying GST.

He is calling for the government to address the issue and impose the GST on online purchases that come from overseas.

"A good government would look at it, anticipate the problems, and start doing something about it. They wouldn't sit there and just ignore it and say it's too hard. But guess what they'll do. They'll sit there, they'll ignore it, it'll be too difficult, they'll make excuses, then later on [say] 'Oh yes we should have done something back there. I wish we'd been a bit smarter'," he said

 

[joea]

Hi.
Harvey is technically correct in what he says.
However in Cairns, WOW, The Good Guys and JB HI FI (two stores) have opened up in the last few years. There has been no population explosion to warrant this.
So the retail stores, who existed before this are now feeling the pinch on this point alone.

So Harvey is doing it tuff!!

But Harvey does nothing to help the everyday people who are suffering with rising prices. The cost of living is increasing, that's a fact.

So I suggest Harvey put his thinking cap on, and pull his finger out to ensure he can manage his business in a way that is viable.

Personally I think the people in Australia have had a gut full of (SALES). People want a deal, but they are unsure when the next sale is on. You feel a bit of a mug when you buy a clothes dryer for $599, but at the first sale its $469, then in the boxing day sale its $439.(these are exact sale prices of one particular brand, and incidently I got it for $439.) I am pretty sure the thing is only worth $350.

You would think that Harvey could come out with an idea "value for money" and stop trying to rip the customer off in the first instance. ( this applies to a number of retail stores)

Cheers

 

[Tyler Durden]

He and the other retailers in the campaign are going about it all wrong. First, they're billionaires whinging to the poor public that they're not profiting as much - they're not going to get much sympathy from us. Should we dish out more just to make them richer?

Secondly, doing all this campaigning is just bringing more publicity to the fact that online shopping can be cheaper. As more and more people are exposed, more and more people will test online shopping.

 

[Dowdy]

I'm glad there was a public backlash.

He's (Gerry Harvey) trying everything he can to justify his overpriced goods and bad service.

I prefer JB. Their service is always better. At Harvey Norman you wait around for service and you find out the store assistances are having a chat with each other and don't even make an effort to come to you.

 

[SM Junkie]

Living in a regional area, I have to do most of my shopping online, so shops certainly need to be advertising and allow purchasing of goods online if they want a broader market.

BUT of all the shopping I do, over the last 10 years I have only purchased overseas twice (and this is only recently due to the strong dollar). Once you add on freight to your purchase, sometimes it is still better to buy closer to home.

Personally I think they are barking up the wrong tree. Online shopping gives you the opportunity to search out the best deal, so I feel more informed about a purchase than just believing some young salesperson. What I have noticed however is the amount of auction sites and clearance stores that have opened online. I think these are more of a threat to Mr Havey Norman than the overseas purchasing.

An example is Catch of the Day. A snip from their site:

•CatchOfTheDay started in October 2006 with 5 employees and a 200m2 warehouse. Since then our team has expanded to 65 full time members, we store and ship all our products direct from our 4600m2 Moorabbin distribution center.
•On average, an item is sold is every 15 seconds, 24 hours a day, 7 days a week.
•Since we started, we have shipped over 3 million items in total!
•Our highest selling item of all time 220,000 units of Ferrero Rocher sold in 8 hours
•Highest rate of revenue, $1 million per hour on Samsung LCD TVS - this one had the reserve bank calling us with questions!

I think that this might demonstrate the threat is within Australia not overseas.

 

[Wysiwyg]

Companies offering discounts through online brokers such as Jump On It, Spreets and Cudo is the latest rage I noticed on Business Channel 602.

 

[tech/a]

He and the other retailers in the campaign are going about it all wrong. First, they're billionaires whinging to the poor public that they're not profiting as much - they're not going to get much sympathy from us. Should we dish out more just to make them richer?

His organisation employs 1000s.
Would you prefer him to be poor and employing 1000s
So when he takes his warehousing to Chindia and opens Harvey Norman Direct you'll harpoon him then as well!

Secondly, doing all this campaigning is just bringing more publicity to the fact that online shopping can be cheaper. As more and more people are exposed, more and more people will test online shopping.

I cant believe Jerry Harvey made such a blunder.
He bought National recognition into every household and admitted it hurt!

He and others will just join the Web Ranks.

 

[Dowdy]

An example is Catch of the Day. A snip from their site:

•CatchOfTheDay started in October 2006 with 5 employees and a 200m2 warehouse. Since then our team has expanded to 65 full time members, we store and ship all our products direct from our 4600m2 Moorabbin distribution center.
•On average, an item is sold is every 15 seconds, 24 hours a day, 7 days a week.
•Since we started, we have shipped over 3 million items in total!
•Our highest selling item of all time 220,000 units of Ferrero Rocher sold in 8 hours
•Highest rate of revenue, $1 million per hour on Samsung LCD TVS - this one had the reserve bank calling us with questions!

I think that this might demonstrate the threat is within Australia not overseas.

Now that's a great story. I never ever heard of them until now. Although I'm not too sure how they get soo many sales since there is no link to their product range on the website

 

[Wysiwyg]

His organisation employs 1000s.
Would you prefer him to be poor and employing 1000s
So when he takes his warehousing to Chindia and opens Harvey Norman Direct you'll harpoon him then as well!

And no doubt consumers have to pay higher to cover the ever increasing labour costs.

 

[Market Depth]

Gerry is a clever bloke, I'm sure he'll work it out himself. If he hasn't already. I'll still hunt around for the best price, the same a Gerry does. The Government can add the GST to imports under $1000, I don't really care. I could still get it cheaper. If they were to impose a Tariff, to protect local business, then that might be different story.

 

[Smurf1976]

The last thing I bought online was from an ebay seller who themselves was adding around 100% mark-up to Chinese product.

Had I bought locally, I would have simply ended up with the same product at literally double the price. Why would I do that? More to the point, HOW would I do that given that local retailers only keep the most popular, best selling models of anything in stock and that didn't include what I purchased.

And the time before that was to buy and item that I simply couldn't obtain in Australia from any local "bricks and mortar" store or online. But I had no trouble getting it from New Zealand, so let's not hear anyone say it wasn't available due to Australia being a small market etc.

I'd like to support Australian business. But they aren't even in the running for my business when they simply don't sell what I want to buy or will take ridiculously long to order it in.

 

[Vicki]

I know of friends that have lost their jobs because the 'number crunchers' have decided that it is far cheaper to run their opperations abroad, using almost slave-labour.

Look at even Telstra etc. who utilise call centres in India, with workers that earn next to niks.

Their [companies] attitude, is plain & simple, they're a business not a charity, & they'll conduct their business in a way that is most cost effective to them..tough cookies.

Fair enough, but it cuts both ways...If the consumer can source a good or service cheaper overseas, then tough cookies too!..We're just acting in the most cost efficiant manner that suits our purposes...Fair'n square.

Vicki

 

[joea]

Hi.
Kogan is another site and he has a little chart on how to cut out the middle man.

Interesting article in the Business Speculator. Rich Pickins; tax tempations.

"Gerry Harvey and Solomon Lew were reminded of a very important lesson this week - the public never like it when billionaires whinge about tax matters" etc"

So say all of us.
Cheers.

 

[Dowdy]

The last thing I bought online was from an ebay seller who themselves was adding around 100% mark-up to Chinese product.

I run an ebay business so are you talking about cost price or another ebay (chinese) seller?

I pay GST on all my goods and I try as best as possible to provide the best customer service possible. You don't have to have a face-to-face conversation to provide good customer service.

People like good communication and quick postage, not to mention cheap prices

All local online businesses pay the GST. Gerry Harvey's campaign made it look like ALL online stores avoid the GST. It's only the overseas ones but that doesn't concern me. It's a free market so you just have to find an edge to compete with them, that's what alot of businesses are forgetting these days. They don't know how to find that edge to compete when real competition comes in and then when times get tough, they have a little sook....

 

[Boggo]

I know of friends that have lost their jobs because the 'number crunchers' have decided that it is far cheaper to run their opperations abroad, using almost slave-labour.

Look at even Telstra etc. who utilise call centres in India, with workers that earn next to niks.

Vicki

Exactly Vicki.
It would be a major contradiction for the government to start penalising individuals or small companies who sell online when they condone the likes of Jetstar operating in Australia with foreign crews.
Qantas (yes, the Aust icon) has setup Jetstar with their planning operations in Manila, their booking system about to be moved to India, the cabin crews for their operation out of Darwin to be sourced from Manila but flying out of Darwin on Phillipine pay rates.
Most of their their new pilots employed in Australia are sent to New Zealand, then told they are in oversupply in NZ but there are vacancies in Aust but on NZ (lower) pay with no compulsory superannuation etc, take it or leave.
As for Tiger, their response to the authorities last year when they almost caused a midair prang and didn't report it was "we are not Australian and don't have to report to you" which is a fair call when they are allowed to bring in foreign crews with a 'different' and cheaper standard.

Have a look at what is happening to Qantas aircraft when they get cheap maintenance overseas, is cheap actually cheap, initially it may be.

There is an interesting aside to this, that is, if you want cheap fares you get cheap service. We also need to be careful how far we go to the cheap side of the fence.

Large companies complaining to the government about GST though, we know whose interests they are concerned about.

 

[Trembling Hand]

I know of friends that have lost their jobs because the 'number crunchers' have decided that it is far cheaper to run their opperations abroad, using almost slave-labour.

Look at even Telstra etc. who utilise call centres in India, with workers that earn next to niks.

Their [companies] attitude, is plain & simple, they're a business not a charity, & they'll conduct their business in a way that is most cost effective to them..tough cookies.

Fair enough, but it cuts both ways...If the consumer can source a good or service cheaper overseas, then tough cookies too!..We're just acting in the most cost efficiant manner that suits our purposes...Fair'n square.

Vicki

WRONG.

Telstra has no call centres in India.

 

[Boggo]

WRONG.

Telstra has no call centres in India.

Philippines, the last time I spent 30 mins on the phone trying to get put through to the local Telstra shop which is about 1km away !

 

[Trembling Hand]

Philippines, the last time I spent 30 mins on the phone trying to get put through to the local Telstra shop which is about 1km away !

http://www.telstra.com.au/shoplocator/

 

[Boggo]

http://www.telstra.com.au/shoplocator/

Very good TH, when they first set up these stores the number they provided sent you directly to 132200, not sure if that has changed or not.

 

[Gringotts Bank]

Shopping for food and clothes at a store may become a thing of the past. There's only one thing standing in it's way and that's transport issues. There'd need to be a massive overhaul of transport logistics and technologies to have a delivery-based system. Obviously some industries will remain as they are - petrol, healthcare, entertainment, restaurants.

I can see local governments relaxing zoning laws to allow un-tennanted commercial property (due to failed businesses) to be transformed into mega-high density residential monstrosities. And you know who will be living in them.

One thing the Aussie governments can't be accused of and that's protectionist policy!