Is Online Retail A Threat Or Opportunity To Retailers?
A recent article by The Sydney Morning Herald cited a retail industry body claiming that 88,000 jobs would be lost in the retail sector if the government did not levy GST on all goods bought online (currently any purchases bought overseas below a value $1,000 AUD do not attract the 10% Goods and Services Tax levied against items bought in Australia).
While some retailers and industry bodies are busy using tactics to try and protect their eroding revenue and market share they aren’t looking at the bigger picture and assessing why the trend is growing for consumers to purchase online. They also need to assess what they can do to serve these consumers. This is standard business management and something businesses do regularly, retail in Australia should be no different.
Online Retail Growth in Australia
Other statistics raised elsewhere this week were that the online retail industry in Australia is worth $30 Billion currently and is expected to rise to $36 Billion by 2013. Also Australian consumers are behind the US and UK who both have about 10% of sales online compared to 3-4% in Australia. Both these statistics tell us that online retail will only grow and growth will inevitably bring new jobs.
What Retailers Need To Do
Any retailers who think applying 10% GST to imported good bought online is the answer to their challenge is failing to see the issue from a consumers point of view. Consumers want value for money when they purchase a familiar product. In the global economy this means the identical product can be bought from anywhere in the world, often from a well known global brand that you know and trust. Consumers won’t pay a much higher price for something when they know they can get it delivered to their door in a few days at a much cheaper price. Retailers need to think about the issue from the consumer’s perspective to work out what they can do to meet the consumer’s needs rather than looking at protection tactics, even if successful they are likely to be short term gains rather than long term solutions. Consumers will find a way to get the best deal.
There will be winners and losers in Australian retail. The web has changed how consumers search, find and compare products and suppliers. Australian retailers must embrace online or this growth and the associated jobs will continue to go offshore. Embracing online will be more effective in the long term than looking at ways to block or make it more difficult for consumers to buy from abroad.
Only by understanding that the competitive rules have changed and seeing online as an opportunity rather than a threat will Australian retailers work out how to best deliver value to consumers and to grow in the new digital economy.