Crippling Compliance Costs Pricing Aussies out of Global E-Commerce Market

April Davis By April Davis | 15 Jan 2019

While Australian retailers have a strong appetite for cross-border trade opportunities, research has revealed that local businesses are falling behind their international counterparts on the global stage.

A recent study has revealed that Australian retailers are falling behind businesses in Asia Pacific and much of Europe, as local companies struggle to break into profitable international markets.

According to Stripe, online businesses are increasingly becoming “global natives”, as more brands look overseas to expand their existing customer bases, with many making the move within their first year of operation. Australian brands, however, are lagging behind with only 66 percent of businesses selling internationally, compared to 88 percent in both Hong Kong and Singapore, 84 percent in France, 78 percent in Italy and 77 percent in Spain.

Of the companies currently selling into overseas markets, 71 percent plan to expand their global presence within the next few years, with 38 percent saying they have ‘dramatic’ plans to capitalise on the international e-commerce boom.

There are substantial arguments in favour of online brands expanding overseas, as global findings from the last five years have revealed that companies that broadened their markets within their first year of operation grew their revenue 141 percentage points faster than those that didn’t.

This was the case for online wine business, Vinomofo, with the company’s co-founder, Justin Dry saying international trade is a large chunk of the business’s revenue.

“Global expansion has been a huge part of our overall business success – it’s given us more opportunities to expand our offering, increase our buying power with winemakers and better serve our tribe,” he said.

However, 39 percent of the Aussie retailers surveyed said that they’re finding it more difficult to operate in multiple countries now than it was just five years ago. Respondents identified government tariffs (49 percent), taxes (48 percent) and regulatory barriers (44 percent), as well as high business expenses (44 percent) as the biggest hurdles they face when trying to expand internationally.

Of particular note is that 28 percent of Australian online retailers selling internationally pay between $68,000 and $139,000 each year on compliance and regulatory issues alone. A further 29 percent spend even more, with expenses coming in at between $139,000 and $689,000, while 47 percent of respondents claim these costs are getting higher every year.

Overall industry sentiment, however, indicates that emerging technologies are making it easier for e-tailers to overcome the barriers they currently face, with 65 percent of businesses saying internet-based technology has made operating an e-commerce business easier in recent years.

“Out-dated financial and regulatory barriers are still slowing down innovation and growth for online businesses… Luckily, today’s technology has made it easy to expand, allowing businesses to go global from day one. Australian entrepreneurs have the ability to impact economic growth both locally and globally,” said Head of Australia and New Zealand, Stripe, Mac Wang. 

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