Witnessing the growth of online retail has been a truly unique phenomenon, but further work needs to be done to support our local industry, writes ARA Executive Director Russell Zimmerman.
The growth of online shopping in recent years has been a phenomenon to witness, and stands testament to the fact that the retail industry is going through perhaps the biggest period in history when it comes to the changing needs of consumers, growth and economic pressure.
That online, and therefore multichannel retailing, is the biggest growth area in Australian retail is no secret, and the Australian Retailers Association estimates it will continue to grow by up to 20 percent per year over the next few years. It’s only stating the obvious that retailers will be embracing opportunities offered by a constantly connected customer.
According to a recent presentation by Google at an ARA event, Creating Success Online, the top reasons why Australians shop online is product range and convenience, with the significance of price paling in comparison to this ‘top two’.
This presents a huge opportunity for Australian retailers to make sure their products are available in the multichannel shopping world to an increasingly connected consumer – to whom the channel through which a purchase is made is becoming increasingly irrelevant.
Supporting the Local Retail Industry to the Benefit of All
The projected growth in Australian online retail has necessitated moves to level the playing field for tax on offshore transactions to be collected, rather than slipping through the fingers of state economies. In light of this, ARA is calling for urgent implementation of the recently released Low Value Parcel Processing Taskforce’s final report recommendations.
The ARA believes not only will any delays to implementing recommendations create an inherent tax divide between onshore and offshore retailers, but also hamper the ability of the states to collect much- needed revenue, which ultimately goes towards employing the likes of teachers and police, not to mention relieving pressures on household budgets, which will in turn further stimulate the economy.
The last thing state economies need is for hundreds of thousands of dollars in potential revenue to slip through their fingers.
The sweeping reforms recommended by the Taskforce will also ensure Australian retailers can grow and innovate towards business success as a vital part of Australia’s economy, regardless of whether these retailers are operating bricks and mortar, online or multichannel businesses.
As more Australian retailers are moving and opening online the bulk of offshore transactions will remain uncollected due to the 2010-11 68.17 percent fall in the under $100 category. It’s imperative to implement the recommendations to start drawing the threshold below that figure in order to allow equal tax treatment.
Retailers need support – not barriers – to grow their businesses in the online space in order to respond to consumer demand. Many retailers are operating small businesses, and at the end of the day they’re trying to make a living and go home to their families.
Contrary to trying to stop online shopping or indeed overseas shopping, retailers are looking to join in on this and engage with their consumers in ways relevant to them- this can only be done fairly if the playing field is level. The reduction of the LVIT would remove one barrier for these Australian retailers and allow them to thrive and survive as part of a $240 billion economic sector.