It's only January 5 and already we can name the winner of the most retarded idea for 2011 - the major retailers push for a GST on all items purchased from overseas online for less than $1000. I would be staggered if a more mentally unhinged plan could be developed this year. Are the lunatics really running the asylum that is major retailing in Australia?
So far, many of the major retailers have spent hundreds of thousands of dollars on an advertising campaign to argue for a GST. And then they have followed up with a whirlwind media blitz, from talkback to written contributions in our major newspapers. Which PR or consulting firm is the genius behind this ridiculous campaign? They should be run out of town for gross incompetence and failure to achieve any of their desired objectives.
For starters this push by the richest people in Australia to charge a GST for online purchases has no hope of success. None at all. Can we really imagine the Gillard Government saying yes to what would be labeled an increase to the GST? They may be guilty of some stupid decisions, but this would take the cake. In addition, the actual cost of administering the scheme would far outweigh the benefits in taxation revenue.
Secondly, the campaign will have a number of negative effects for major retailers. Not only have they already suffered a backlash, they have just highlighted to all and sundry that it is often actually cheaper to buy goods online that at a retail store here in Australia. Significantly cheaper. So the net effect of the campaign so far has been one giant advertisement for online retailers.
The reason people shop online is simple. Putting aside convenience, people are interested in saving money on a greater variety of products. Why buy locally when the same item can be sourced from overseas often at half the price - including postage and handling.
What the major retailers fail to understand is that even if they were successful, a 10% GST on all items purchased online would have a negligible effect on volume. The difference in price from local versus foreign sourced products is much more than 10%.
The real problem that retailers have here is fat margins. They need to understand that unless they choose to compete on price, savvy consumers will go elsewhere. The local retailers can compete, they just don't want to. When products are shipped from China to the U.S then on to Australia and sold at half the price, how is it that local players with major buying power are unable to compete?
As Helen Karlis from David Jones puts it they can actually compete already, but wont. According to Ms Karlis, "If we start on the same base, we have to compete. If they remove GST from us, then we will happily compete on price." In other words, give us a GST and then we will be able to match the big savings from overseas retailers. Will they? Not on your nelly.
But the quote of the day surely goes to Gerry Harvey. God knows how this man made all his money with all the free publicity he gives to his competitors. As a threat, Harvey indicated that "We'll go offshore, we'll open our store over there, send goods to Australia, evade the GST, evade the duty, and then it's a level playing field."
A couple of problems Gerry. Firstly most of the products you sell in Harvey Norman are already sourced from overseas, so other than the 10% what's so different? Secondly, if you do set up an online retail store, how will this affect your current Australian based retail businesses? Will you undercut them thus reducing their margins or putting them on the scrapheap? Or will you offer the same overinflated prices you do now, thus ensuring nobody shops online with you anyway?
It's this pure genius which underpins the retailer's campaign. Here's an idea for the future - have an end game - or is that too simple stupid?
About Just Grumpy
0 comments
Post a Comment