Monday, 24 January 2011

Australia slowly emerges as prime market for online retail

Australia is fast-gaining a reputation as a global hub for online shopping, with no less than US giant internet retailer eBay reportedly alluding to the Aussie market as a viable and standout business consideration for web retailers.

The remarks made by eBay chief executive John Donahoe came weeks after a debate was spawned by giant Australian retailers led by Gerry Harvey, when the group called on the federal government to consider the imposition of GST on online purchases originating from Australia.

The group, which also comprised of Solomon Lew and the head of Myer and David Jones, drew flak from Australian consumers, who scored the retail group's position as self-serving and insensitive of shoppers' general welfare.

Harvey pushed forward his suggestion amidst fluctuating performance of the retail sector even during the peak of the holiday season, when shoppers were expected to accelerate their local spending.

Retailers blamed the emerging behaviour of local consumers, in which they turn to online shopping for its offering of more convenience and more savings. Australian retailers explained that internet sellers are able to provide cheaper products due to their lower operations cost.

Harvey also scored that fact that online retailers are not paying local taxes as he asserted during his initial campaign for GST to be imposed on online providers that "if I think something is right I'll fight for it, always have."

Yet his campaign appeared to have adapted a milder tone lately as Harvey revealed that his recent back-pedalling was mostly caused by attacks that he described as increasingly becoming "vicious and hateful."

Australian retailers have been complaining that they are absorbing significant losses owing to the present environment in the industry and reports are swirling around that many retailers are rethinking their current approach to combat rising rent costs and to reach more customers.

Chief of Australian retailers' concern is the prohibitive costs of land leases in the country as Myer chief executive lamented that the business climate in the US is more accommodating for retailers, citing that "in California, some of the largest shopping centres are well out of the cities where the land and rent are a lot cheaper."

However, consumer group Choice reminded the retailers that they may be missing the real reason why they are lagging behind and sales are on a downward spiral.

Choice campaign director Christopher Zinn told The Australian that "the big chains should recognise that it's their high prices, limited range and poor customer service that increasingly encourage people to use the internet."

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