eBay: the brand that almost single headedly popularised online retail has declared Australia to be amongst its fastest growing markets. This will no doubt be cause for another bout of sleepless nights for Australia's brick-and-mortar retailers. eBay currently boasts nearly 100 million online shoppers, and has saturation level brand awareness.
Since December, news has been buzzing with a coalition of traditional retailers, led by Gerry Harvey (Harvey Norman), Solomon Lew and the heads of Myer and David Jones in their public campaign against online retail. They are focusing on the GST-free threshold for items under $1000 that provide overseas based retailers with a competitive advantage. They are also bringing out the emotional arguments that the use of online retail will result in lost Australian jobs.
The campaign has been successful in placing the matter at the top of the national agenda. However in doing so it has unwittingly brought an uncomfortable fact to the entire public: great value can be found online. Newspaper articles about this issue have printed price comparisons between shop and online products, which have proven rather embarrassing for local retail outlets.
There is evidence that these high profile Australian brands are facing a public backlash as a result of this campaign. Many feel they are being asked to forgo significant bargains for businesses now paying the price for their inability or unwillingness to create their own online retail experiences. Furthermore consumers are used to being appealed to for value and competition, and in this context it is hard for many consumers to sympathise with retailers crying foul for having a formidable opponent.
Sob stories are not enough to keep customers away from online shopping. In retail, brand loyalty is not a given but needs to be constantly earned, particularly when concepts of value and good price are part of the brand identity. As one commentator was quoted by the Sydney Morning Herald, "When all of a sudden a Canon camera is available overseas 40 per cent cheaper, the loyalty may be maintained with the Canon-brand camera but it certainly won't be maintained with the retail outlet."
At present Harvey Norman do not have online shopping on their website. David Jones only relaunched their online store last November. And online sales account for a tiny percent of Myer's overall sales. These are companies that have failed to invest in globally competitive online presences. Yet they are now complaining about having lost ground to companies who have shown non-stop innovation and leadership in the online retail sector.
If these companies succeed in reducing the GST threshold for online sales, many Australian consumers will be quite incensed. It won't stop consumers shopping overseas, but they will incur the wrath of consumers who will long remember that it was these brands who increased prices.