Retailers eCommerce tax bid misguided at best

It’s official. Australia’s retail industry is living in a vacuum.

If there was any doubt about this at all, surely it was dispelled with the Australian Retailers Association’s bid for a more favourable tax deal on goods purchased from offshore websites.

In case you missed it, ARA Executive Director Russell Zimmerman (while acknowledging retailers also need to make sure they are competitive) wants the Federal Government to reduce the threshold of tax on imported goods from the current $1,000 to $400, claiming that goods bought from offshore websites was hurting the industry.

With all due respect Mr Zimmerman, Australian retailers are only hurting themselves.

Offshore retailers already have freight costs and delays and marketing challenges as natural impediments to selling to Australians.

The real reason Aussies are buying from offshore websites is quite simple.

They cannot get the same product or accompanying service from Australian retailers on the web. So they have no option but to shop offshore.

As discussed in this blog in the past, the vast bulk of Australian retailers simply refuse to acknowledge both the opportunity and threat the web presents.

With a dismal estimated 10% of retailers operating a fully functional eCommerce website, retailers have snubbed the online channel – only to create their own competition.

In the meantime, thousands of ‘pure play’ online retailers have sprung up in this country, stealing business from their lumbering bricks and mortar competitors and doing very nicely.

Retailer apathy creating competition

I know one such business operated by a friend and client part-time out of his home. Investing less than $5,000 only last year he is now at the point where he is looking very closely at giving up his secure day job to continue the business full-time.

And that’s just the small end of town. Dozens of larger firms have sprung up online to steal the march on their slow and lazy traditional counterparts.

Of course the mother of all online retailers, Amazon.com took full advantage of this retail malady to become a multi-billion dollar organisation.

And Apple took full advantage of retailers’ navel gazing by launching what soon became the biggest of all online music retailers, iTunes.

From clicks to bricks

There are now several examples of the opposite adoption procedure. We are now seeing web-based business that are so successful that they have opened bricks and mortar stores to complement them.

What traditional businesses are failing to recognise is that newlywebs like this are stealing business from right under their noses.

All when, at the risk of repeating myself, traditional retailers already have the stock, storage, staff, supplier relationships, procedures, customers et al that a newlyweb needs to create from scratch at considerable expense.

I think the fundamental thing that retailers are failing to grasp is that online selling is in fact retail as well. Instead of seeing online selling as retailing, they are seeing the computer that facilitates it. And that scares them.

So rather than blame the Government for the high threshold on imports, perhaps the ARA should instead invest in educating its members about adopting and embracing the web.

Before it’s too late and yet another online competitor drives them out of business.

Id love to hear from retailers on this subject so leave your comment on the ARA’s tax bid below.

In addition to being a leading eBusiness educator to the smaller business sector, Craig Reardon is the founder and director of independent web services firm The E Team which was established to address the special website and web marketing needs of SMEs in Melbourne and beyond.