GST battle is just 10 per cent of the online retailing picture

Ever since it first reared its head as the retail bugbear du jour, the question of imposing GST on online retail sales from overseas websites has periodically made its way into headlines in recent years.

Retail figureheads including Harvey Norman’s Gerry Harvey and Myer’s Bernie Brookes have become vocal advocates for lowering the GST threshold on online imports, while other retail groups have called for an “even playing field” that would see local retailers fighting the fair fight on pricing with their international counterparts.

In recent weeks, the issue has once again been making headlines. Myer chairman Paul McClintock told the ABC last month that “jobs and much needed state revenue are being lost every day” because of the tax disparity in online retail; state treasurers have cried foul over lost tax revenue; and consumer advocacy groups, including Choice, have urged the Federal Government to avoid a “knee-jerk response” to the issue by “punishing Australian consumers”.

Each of the parties concerned has a decent case to make: retailers are not on an even playing field with their overseas counterparts if local prices are required to factor in a 10 per cent tax; states are missing out on tax revenues from online shoppers who might otherwise be shopping locally; and, as consumer groups have argued, imposing GST on all online sales could very well become a maze of red tape that would lead to increased prices for consumers.

But talk of a 10 per cent tax is arguably only 10 per cent of the issue when it comes to online retailing.

Those who argue that Australians are shopping on overseas websites in droves just to get a 10 per cent discount are missing many larger issues at play. Indeed, it is this very same argument — that consumers only shop online to find cheap prices — that has seen many retailers falter in the online retailing game.

For many consumers, shopping online is not all about price — for online shopping aficionado Emma Gardiner, it’s just one part of a much bigger picture.

Speaking to Appliance Retailer, Gardiner listed a number of reasons for doing the bulk of her shopping online: convenience, speed and ease of comparison top the list, while free shipping “is a nice bonus”. Importantly, the ability to compare is not just a matter of finding the cheapest price — it can be about weighing up the different options in a category to find the most suitable choice, without having to walk from one end of a shopping centre to another.

Gardiner is also more than willing to go local when she shops online, adding that she will quite happily spend more at online stores with niche offerings such as vintage homewares or hard-to-find products.

But ultimately, it’s hard to beat the convenience argument.

“I know what I want when I go shopping,” she said. “I don’t want to have to push my way through a crowded shopping centre on the weekend or face sales people trying to sell me something I don’t want.”

For many, it’s a similar story.

Online shopping represents an unprecedented convenience to consumers. Rather than heading into the city on a 30-minute lunch break, the whole process of browsing, comparing and buying can be completed online in a fraction of the time.

Some consumers are choosing to meet retailers halfway by taking advantage of ‘click and collect’ shopping options that offer the best of both worlds — browsing and comparing can be completed quickly online and then the consumer can head into their local store to pick up the product straight away, without having to wait for delivery.

One benefit of online shopping that Gardiner mentioned is no doubt an issue that many top retailers in the major cities would have trouble appreciating; having lived in smaller regional centres across Australia, Gardiner is more than familiar with shopping from a limited selection.

“In some of the stores, you could be looking at stock from last season or two seasons ago,” said Gardiner.

“Darwin doesn’t even have a Myer or David Jones,” she said by way of example. “Plenty of people out there want to shop in the bigger department stores, and some people even organise shopping trips out of town to get there.”

Many parts of Australia are facing a watershed moment in online shopping right now: it is in these smaller or more remote locations where there are fewer bricks and mortar stores that Australian retailers have the most to gain. It is also where, potentially, they have the most to lose.

Regardless of their online presence, major retailers such as Myer and Harvey Norman have one thing in common — they are nationally recognised brands with a strong of history in Australia and a lot of good will in the marketplace. While there are no doubt plenty of consumers who could share a bad shopping experience in one of these stores, most consumers are more likely to trust a big local name they know (with the local customer service department and local shipping to match) than an unknown overseas website.

A consumer might be able to find their product 10 per cent cheaper at an overseas website, but if they have a question about the features, they want details on the delivery or if they want to know that they are buying from a trusted site, are they likely to hand over their credit card details to Greg Shifty’s Grey Market Megastore as readily?

When it comes to an even playing field, local retailers have a lot working in their favour. But countless retailers are not taking advantage of this competitive edge.

The comments from the top of the chain are perhaps the most telling. In the last three years alone, while overseas sites have been honing their offerings, Myer’s Bernie Brookes has described his company’s websites as “average at best”, Gerry Harvey has said “there are no internet sales in the world…to speak of” for whitegoods, one of his store’s key product offerings, and David Jones’ former CEO Paul Zahra described online retail as a “medium to long term goal” rather than a pressing competitive issue.

Many local retailers, both big and small, have sold their customers short for years — offering them a sub-par shopping experience online while overseas websites got their act together and offered a much more tempting offer.

Australian retailers run the risk of becoming the less-than-enticing Al Bundy, slumped at home waiting for a little attention to come their way. But for every lacklustre local store, there’s an exotic overseas website willing to woo shoppers with a flawless experience, new gifts and the attention they deserve.

So what barriers are you putting in the way for consumers shopping at your online store? Are you doing everything you possibly can to make the experience quick and easy, to provide that extra service and to focus on the small touch points that will set you apart? When consumers can’t come into your flagship store to see your lavish window displays or your shiny new products, are you living up to your brand’s reputation when customers see you online?

These are the things that keep customers coming back. Not the promise of a 10 per cent discount.

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