The future of Australian retail

You may have been too busy doing your Christmas shopping this weekend to have noticed, but the Australian Government made an announcement  over the weekend about “The Future of Australian Retail”. The announcement has been welcomed by the Australian Retail Association. There were four parts to the announcement.

The first part of it was that the Government is asking the Productivity Commission to conduct an inquiry into the structure and performance of the Australian retail industry, including drivers of structural change such as the digital economy. The inquiry will also consider “the broader issues which are contributing to an increase in online purchasing by Australian consumers and the role of online purchasing in providing consumers with greater choice, access and convenience.” This inquiry responds in part to concerns that some in the retail industry have expressed  about the GST-free threshold on goods purchased overseas, discussed in more detail in our GST section.

The second part was that the Government will launch a compliance campaign to ensure GST and customs duty concession for imports with a value of $1,000 or less are not being abused or exploited. The campaign will start from the beginning of 2011.

The third part was that the Government announced its intention to host an online retail forum in early 2011. The forum will help Australian retailers better understand the opportunities that online selling may bring and encourage and support Australian retailers to explore online options.  You can register your interest for the forum on the Department of Broadband, Communications and the Digital Economy’s website  or send an email to onlineretail@dbcde.gov.au .

The fourth and final part was the release of an economic analysis of Australian e-commerce activity and trends. This report  shows that Australian households are increasingly engaging in online purchasing – both domestically and internationally – but still lag some way behind their US and UK counterparts. The lag is attributed to reluctance by some retailers to provide online services as well as consumer concerns about purchasing items electronically. It estimates value of domestic online retail sales in 2009 was between $19 billion and $24 billion with between 20% and 50% of Australian online retail sales possibly going to international retailers. The report concludes that international comparisons suggest there are unexploited e-commerce opportunities for Australian businesses.

Some of the benefits for Australian businesses and consumers from engaging in e-commerce include:

  • an increase in consumer welfare as a result of greater choice and reduced information costs;
  • increased productivity via a reduction in the number of sales and customer service staff required (although this may lead to job losses in particular industries); and
  • an increase in competition that may over time lead to a welfare transfer to the consumer sector via an increase in consumer surplus.

We think this announcement is also an important part of our work to get Australian businesses online and enjoying the efficiency and productivity benefits and increased revenues that are possible by participating in the global digital economy. You can learn more about incorporating e-commerce functionality into your business in our e-commerce section.

by Mia, DBCDE

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