Big Aussie retailers are launching an advertising campaign in a bid to force the introduction of a goods and services tax on items costing less than $1,000 bought from overseas on the internet. Currently, these items are exempt from the GST applied to similar items sold in Australia.
The campaign is a furphy of the first order and the Federal Government is right to resist the call to tax these goods. In today's Business Spectator, Karen Maley, has summarised the relatively insignificant proportion of retail spending on internet sales. In addition, the dramatic improvement in the Australian Dollar relative to other currencies, particularly the US Dollar, has had a far greater impact than would the application of a 10% GST. As many consumers have noted already, the price differential between goods sold overseas and those sold in Australia is sometimes close to 50%, with the AUD at its current levels.
You have to remember that people are buying overseas despite the risks associated with goods being incorrectly delivered, or not delivered at all, and the issues associated with warranties that do not apply for even big brand products outside the country of purchase.
Rather than banging on about how unfair the application of GST is, the big retailers should focus on enhancing the shopping experience by providing knowledgeable and outstanding service. In most instances, this has been completely lost.
Case in point: My wife and I shopped for a barbecue yesterday. I am a frequent internet buyer, particularly of goods that I know quite a bit about. Bear in mind also that I usually buy online from Australian retailers or private sellers, as sometimes the price difference is insufficient to offset the added risk of buying off unknown overseas providers. But back to the barbecue.
I did research the internet first up and saw some cheap deals. But this was an item I thought I should see in the metal. I visited a small outlet, BBQs 'R' Us in Nunawading and one of the large retail outlets famous in the BBQ space. There was nothing flash about the small store experience, except the service and advice from Rachel. She really knew BBQs - even the difference in quality of the stainless steel used etc.
Contrast that with the 'big store' experience, where we interrupted a salesman's fly-past to ask about a BBQ similar to the one in the small store. "Is it on special?" Reply: "No. The specials are out the front." Nothing further offered, even though we had invited engagement on the BBQ we were standing next to.
The result, we phoned a deposit through to Rachel. Yep. Believe it or not, a Australian retail operator who had paid attention to what we were looking for and provided insights and great advice on what to look for. Indeed, she was so confident in her product that she welcomed us taking a look elsewhere. "You won't find better quality at this price," she assured us. She was right. We couldn't find better quality of product or service.
Herein lies the message for the big retailers. Don't shop around for the cheapest casual staff you can find. Invest in product training. Make sure the staff have more knowledge than I have when I visit the store. Train service providers rather than order takers.
The point is that shoppers allocate time to visiting your stores and there has to be a reason for battling traffic, finding parking and spending that time when it would be much cheaper and quicker to order on the internet.
And if margins are being squeezed, what's happened to the skills of 'upsell' and 'cross-sell'? These are outcomes that can only be based on in-depth product knowledge across competitor brands and vertically up and down product lines. If someone has to read the label on a television set to tell me how many HDMI connections it provides, they're merely doing something I could do myself. What's more, it's information readily accessible on the internet, so why should I visit a store?