Friday, September 07, 2012

Simply too costly

For a long time now many retailers have complained that we're encouraged to buy online from overseas because GST isn't charged on purchases less than $1,000.

Today it's reported that Mike Baird,  NSW Treasurer, wants that GST-free threshold for goods bought online from overseas retailers cut to around $30.

Reported in the Herald he talked mainly about the additional revenue the government would collect, and that makes sense.

But he also said it was so that our retailers could compete on a level playing field, repeating that on radio this morning, and that's nonsense.

Buying from overseas gives us a hugely bigger choice and cheaper prices, whether it's online or in person.

A massive problem that Australia has is our ridiculously high costs. Not just for consumers and business here but when we try to compete on the world stage.

But just on retail, Australians are travelling overseas more - nearly five million trips last year - and we see how the range of products and prices leave what we're offered here for dead.

I travel regularly and I haven't bought clothes, digital cameras, perfumes, cosmetics in Australia for years.

Look at these leather jackets:
I bought them in Dubai for AED140 each. That's A$35.
On my last trip to Dubai I bought two pairs of Reebok trainers from the Reebok store in Dubai Marina Mall. They were AED120 (A$30) a pair.
A caller to ABC radion during a discussion of the GST proposal summed it up clearly.
She worked in drapery shops but bought material online from overseas. She made the point that the range offered was many times larger than what was on offer here and she bought it retail at the same price the retailers here pay for it wholesale.
Adding GST will add a few dollars to what it costs us to buy online from overseas, will help the cash-strapped state budgets, but it certainly won't encourage us to buy from local retailers.
Like so many businesses here the real problem retailers have is the high costs we all labour under. Plus bad management and bad marketing.
Ridiculously high rents, ridiculously high fit out costs, high wages with extras like penalty rates, superannuation contributions & leave loading, high taxes, high freight costs.
They have the system of importation/wholesale/retail distribution, the price doubled at each handling.
And yet all retailers sell on is price. No marketing, no value for money message, no selling of quality, just price.
They make price the only reason to buy. They got away with it when we didn''t have the opportunity to see how bloody expensive their prices were in comparison with overseas retailers.
We're doing what they've always told us to do. We're buying on price, but we're getting better prices overseas.
It's too late to wind back salaries and no politician would dare try to remove the 'entitlements' that add to the wages bill.
But other factors need to be looked at. Rents, taxes, freight, the cost of getting anything done, like shop fitouts. 
But we desperately need better management and we need to learn how to market products and services rather than simply selling on price.
No point trying to sell on price when your price isn't competitive.


Keefieboy said...

Well, thanks to the wonderful World Trade Agreement, the only countries able to be price-competitive are those in the Third World (and, of course, quality doesn't enter the equation). I'm surprised you didn't mention Australia's richest woman suggesting that Australians might emulate those folks in Africa who are desperate to work for $2 a day.

Seabee said...

Keefie, I've been meaning to post about Mrs Rinehart's interesting views on what's best for the economy - sorry, I mean her income - but I haven't had much time for blogging recently.

She talked about African workers 'willing' to work for $2 a day, and of course that Australian workers should spend less time drinking, or smoking and socialising, and more time working.

Risking the possibility that she'll sue me, I will try to get around to it.