[LINK] Kogan on Online Retail....

[Frank O'Connor]

Mmmm,

With most States in the US it was 8% last time I checked ... and 
hasn't changed in years. And the US retailer doesn't bill it to 
overseas customers anyway.

And with on-line US purchases, you get:

1. High delivery costs, but prompt delivery (less than a week vs 6 
weeks or better with our HN and other local middlemen)
2. An excellent returns and product follow-up policy (with our 
retailers it's 'go see the manufacturer - it's not our problem')
3. No dinky credit card or other charges applied (our retailers want 
their huge margins, plus full cost recovery ... and for some weird 
reason can't see that card purchases mean there are no debt recovery 
hassles and costs down the track)
4. Excellent and competitive pricing (vs the cartel like 'take it or 
leave it' behaviour of our retailers)
5. Customer service that. whist not up the to conventional bricks and 
mortar service in the US, is far and away better than that of our 
Australian bricks and mortar retailers

I feel that US on-line retailers add value to any transaction I do 
with them ... whilst the business model of their conventional 
Australian counterparts removes customer value in favour of providing 
business and shareholder returns. It's a nice, lucrative and 
comfortable middle-man niche for our people, and they don't want 
anything to mess with their comfort zone.

Yes there are efficiencies of scale in the US, but as a consumer I 
can negotiate an inordinately better deal for product (in terms of 
cost, service, convenience and end-transaction satisfaction) than I 
could even begin to contemplate with a conventional Australian 
retailer. And in terms of the difference in price ... the GST is not 
an issue. (Our retailers must be really bad negotiators if they can't 
source in bulk from the supplier for way better than I as a consumer 
can do with another retailer overseas for a single sale, plus 
attendant transport costs and the like)

That's not say Australian retailers can't compete ... Indeed the vast 
majority of my online purchases (80-90%) are made from retailers in 
Australia. And many of them really do get it ... Kogans, Rivers, 
Chemist WareHouse, etc etc. But other's don't provide much reason to 
go there, or return ... as they are mirrors of the bricks and mortar 
store, or the digital shop-front is a nightmare in design for the 
user, or whatever.

Bottom line: If they are even remotely competitive, and offer even a 
modicum of customer service, I will go to Aussie retailers and more 
often than not do ... but I won't put up with bad service, poor 
competition and cartel like behaviour, that ignores me as a customer. 
I don't owe Gerry Harvey or Solomon Lew or whoever or whatever a 
living, and their failure to adopt a viable online business 
strategy/model is their problem and not mine. And I will be less than 
pleased if the government caves into their bellicose and unreasonable 
demands.

Their protestations about economic damage seem to be a furphy ... 
particularly given the big retailer's role in pushing our own 
manufacturing sector to the brink, ruthlessly squeezing primary 
producers on pricing and the added service they have to provide (to 
the retailer), squeezing their own domestic suppliers (manufacturers, 
wholesalers and others ) to the bone, consistently cutting employee 
wages and conditions to the bone, wiping out the competition (small 
retailers and producers), lobbying government and councils to get 
their uncompetitive way way with regional and local competitors and 
stores ... and extending their tentacles and building vertically 
integrated entities that take their cut from the real estate they own 
(and hiring it out to small retailers at exorbitant rates), financing 
and hire purchase agreements, franchising and penny anteing all and 
sundry with charges, added costs and the like when you think a 
transaction has been concluded.

It's likely that our economy would be more efficient without these 
practices, and less warped by the artificiality of many of the added 
costs and charges our retailers have inserted into their transaction 
chains. Small retailers can't do this, but large retailers routinely 
do it.

If there's going to be a Productivity Commission enquiry, then these 
and many many other questionable practices of the large chains should 
be put on the table and examined.

Just my 2 cents worth ...

At 7:06 AM +1100 10/1/11, Jan Whitaker wrote:
>At 04:46 PM 9/01/2011, Marghanita da Cruz you wrote:
>>In the US, it
>>took some getting used to, to discover the price at the
>>Checkout was higher than the price on the shelf or the menu.
>>I think it was something around 15% - though I can't confirm
>>this.
>
>Too high. Usually below 10%. Some cities and counties add on their
>share to the state level, which the purchaser doesn't see. It's
>provided on the receipt as a total, I believe.
>What you find is that the locals know the different rates from town
>to town and will shop accordingly.
>
>Jan
>
>
>
>Melbourne, Victoria, Australia
>jwhit at janwhitaker.com
>blog: http://janwhitaker.com/jansblog/
>business: http://www.janwhitaker.com
>
>Our truest response to the irrationality of the world is to paint or
>sing or write, for only in such response do we find truth.
>~Madeline L'Engle, writer
>
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