The plan to apply a GST for online purchases of imported goods under $1,000 has been promoted by the Government as a win for small business.
In the past 12 months to May, more than 7.6 million Australians used their keyboards to rack up $17.1 billion dollars worth of purchases, of which $4 billion was from overseas retailers.
So the question is, what benefit, if any, will small business gain from a tax for online imports, and who will be the big winners?
According to Roy Morgan Research “Online shopping on the rise….” http://www.roymorgan.com/findings/6095-online-shopping-on-rise-201503182332, the top 10 most shopped categories in ranking order for 2014 were:
Entertainment & Leisure
Food & Beverages
Health & Beauty
Home & Garden
If you are not a retailer or supplier in one of these categories then I am afraid, any change in the GST policy for online purchases is going to have little effect.
Aside from this there is a presumption that if a GST is applied that this will significantly impact shopper behavior, as there will be better price parity, however will this actually be the case. Only last week I received an email advertising genuine Ray Ban Sunglasses online at 90% off, with a retail of $19.99 US ($28 AU) with free shipping for orders over $88, while the exact same pair of sunglasses was advertised here in-store for $190. Is a GST really enough to change buyer behaviour?
While any progress to level the playing field should be encouraged, the real winner in all of this will be the government. Online deliveries are here to stay, and you only need to look at the importance Australia Post now places on this side of their business, or the investments that courier companies like Toll are making in new parcel processing facilities, to realise that this is an emerging sector.
HIM! International revealed at the recent AACS Leaders Summit that “Not having the right range of products” is the 2nd biggest deterrent to using a convenience store in Australia (40%), and that the stores range and layouts need to reflect the shoppers needs and missions.
While we should never loose sight of the importance of price, consumers are saying that they shop where they shop because of Location, Range, Service and then Price.
Our own members have realised this and are leveraging their good locations with the benefits of the Stock Box product awareness program, to address the changing consumer needs for a better product range in-store.
To find out more about us go to our web site or contact me below.
Thanks for reading
Craig Matthews is the MD of Stock Box, with over 30 years industry experience in retail development, specialising in independent retail programs.