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Australia Post charges... killing Australian small business

I did a facebook post on this earlier today but realised that I had so much to say that it really warranted a blog post!

Today (with no prior warning), Australia Post put up their shipping charges by an average of 30%.  It is a short-sighted attempt to cash in on online shopping but actually just puts another nail in the coffin of Australian small business.  Small business is Australia's largest employer with approximately 2.7 million small businesses in Australia employing over 5 million people.  That's around 2/3rd's of the labour force.  This price gouge will be a direct hit on many of them.

You will very rarely find me whinging about running Queen B.  I love it passionately.  I consider it a privilege to do what I love 80 hours a week.  I still have to pinch myself that I get to ship our 'light' every day and at the same time to make a difference in so many lives.

Yes, the Australian dollar is high... we'll deal with it.  I understand that it is complicated and our dollar was floated several decades ago.  Our product is world class.  I still think we can compete.

Yes, people can buy stuff overseas and not pay GST on orders under $1,000... I understand that it would be expensive to administer.  We'll deal with that too.

Yes, our manufacturing labour costs are the most expensive in the OECD (all interesting reading but in particular read page 19 and on)... I understand our cost of living is ridiculously high in Australia.  We can even struggle through that (although we are understaffed because we can't afford to hire the staff we need).

But the rort that is Australia Post's shipping charges is incomprehensible to me.  It is just plain stupid and I am gob-smacked that a small beeswax candlemaker in Brookvale has more economic ability and common sense than the entire senior management team of Australia Post combined and our Federal Government. [that may be an exaggeration but on the surface of this decision appears to be true]

As I mentioned in my Facebook post, I have a friend who runs an online business in the UK selling natural skincare and cosmetics (including many well known Australian brands).  A few Christmas' ago we shipped a 2kg hamper to the UK on behalf of a client and it cost us over $90 to send.  I was so shocked that I asked my friend what it would have cost him to send.  Turn out that what cost us $90 to ship from Sydney to UK would have cost him £4.62 (less than AUD$6.00) to ship from the UK to Sydney.  I thought he was exaggerating, so I asked for a copy of his contract with Royal Mail.  Turns out it was true.  In fact, it is cheaper for him to send a parcel from London to Manly Beach (16,700 km's) than it is for us to send a parcel from Brookvale to Manly Beach (less than 5kms).

Which goes a long way to explaining why so many international businesses are able to offer free or extremely cheap shipping to Australia (and why Australian businesses can't do the same... and even struggle to ship cheaply within Australia).  We recently shipped a $140 parcel to WA and paid $26 in postage alone... which does leave a lot of room for the cost to hand make, pure Australian beeswax candles, package them ethically, use only Australian made boxes, sealed with water activated gum paper tape (it's non-toxic) and the labour to process the order, create the invoice, pick the goods, pack the goodies, handwrite a lovely note and pay for a 250 square metre building, electricity, wages, website and the like.  Yes, we are rorted on domestic shipping charges too.

The saddest part about it is that so many Australian companies are setting up their dispatch operations overseas.  Yes, Australian website, but all goods are shipped from overseas.  So Australia Post get only a very small % of the delivery fee charged by the international operator rather than 100% of the fee if that business had been able to base themselves locally.

And what really gets me is that rorting small business on shipping charges is a job killer.  Looking at our Google Analytics, we get as many hits from the UK and USA as we do in Australia, but we ship .0001% of the parcels to those destinations.  If we were able to get shipping rates comparative to what businesses of our size in those countries can get, we would need to employ a minimum of 2 additional people to handle those orders and the Government would have their hand in my pocket for company tax and in the pockets of those employees for income tax.  I am sure that the tax they would reap would more than compensate for any losses suffered by Australia Post.  And, yes, it is the Federal Government who own Australia Post and who could fix this immediately.

Now, just before you think this is one big whinge and that I've done nothing to try to fix it myself, think again.  I have raised this on 4 occasions with our "Relationship Manager" at Australia Post (and provided copies of my friend's contract with Royal Mail so that they have hard, factual information).  Nothing has been done.  I raised it almost 2 years ago with the NSW Small Business Commissioner and again provided factual proof of the rates being offered by national carriers overseas and again nothing has been done (in fact Australia Post have had 3 massive price increases since then).  I've raised it with the Federal Small Business Minister (Brendan O'Connor at the time).  As you can see his response (which took 6 weeks to send) doesn't actually address the problem or provide a solution. 20120814 Letter from Small Business Minister.  My email back to him along those lines was not answered.

So, what can you do?

Firstly, there is now a petition you can sign.  It says it is being sent to Australia Post. I sincerely hope that it is also sent to the Federal Small Business Minister and the Chamber of Commerce.

You could also write to the Minister for Small Business asking him to intervene personally in this decision made by a wholly owned Federal Government Enterprise that is killing the ability of Australian small business to compete internationally.

While you're at it, why not write to Julia Gillard?  She claims to be the people's Prime Minister, championing small business as "the engine room of the economy".  Why then does she bend over backwards for big business and the mining sector and allow a government Business Enterprise to kill Australian small business.

Please feel free to share our facebook post.  This is something that affects EVERY Australian.  Whether you're in mining, banking, fundraising, lawyering, small business, being a parent or any of the myriad of jobs we have, if we keep allowing money to flow out of the Australian economy (which is what happens when you order stuff from overseas) and we don't have corresponding inflows (because our shipping charges are a joke... witness our current account deficit) then businesses fail which means less employment which means less money in the economy and that affects everyone.

This has to stop.  Not only must this decision be reversed, but Australian small businesses need to be offered globally competitive domestic and international shipping rates.  Fine, they may not want to offer those rates to everyone, but any small business shipping a reasonable number of parcels needs to be given rates that will allow them to compete.

Thank you for your time.  I implore you to please take action.  Whilst you may not think that this impacts on you, it does.  Regardless of what your job is, your future prosperity depends on a vibrant Australian economy and that means a vibrant, internationally competitive small business sector.

Cate

27 thoughts on “Australia Post charges... killing Australian small business”

  • Katie

    I have to admit that I have gone online to purchase items and get to the checkout see the shipping costs and cancelled what i was doing. The fact it is going up so dramatically means that improbably won't even bother looking at aust sites. No good at all.

    How do you want people to take action?

    Reply
  • Christina

    OK, petition signed and letters sent to both Minister for Small Business and PM. I've "liked" your post, (and page) but as a FB newbie, don't know how to share it.

    Reply
  • Christina

    Whoops! Just saw the "share" button. Guess I may need my glasses checked....

    Reply
  • Bern

    It is an election year, call your local federal member and NSW senators and get them to take up the cause. This hurts not only the businesses but the consumers who don't seem to be able to win on any front. No wonder we find a way to find the cheapest product in the world. But there are some products like yours that are very hard to find. Keep up the good fight.

    Reply
  • Bern

    On 2nd thoughts invite your local member to meet you at your shop and get the other local traders to meet them too and get the story in the local and national papers. I am sure the SMH will love the story.

    Reply
    • queenbcandles

      Bern - thanks for the prod. I have sent through to a contact that I have at SMH and have everything crossed that she will pick up the story. I will get on to your other suggestion too. Thanks for commenting.

      Reply
  • Richard Warner

    I have shared this. also I encourage people to sign this petition against the latest price rises.

    http://www.change.org/en-AU/petitions/australia-post-reconsider-the-parcel-price-increases

    Also think of this.
    If a seller in Hong Kong ships something below 500gms to AU they can do for around .60c (without tracking) or $2.25 (with tracking) in AU its a minimum of $8.25 (without tracking) $11.25 (with tracking). there is a seller 3 offices down from someone I know over there that ships a minimum of 1000 packages a day to AU without tracking costs them around $600AUD ... same volume by an AU seller would cost $8250 + they paid GST and tax on the sale price ... not hard to work out where one should be as an eBay seller ... and that doesn't even factor the eBay fees.

    What hope do we have here now with these latest price hikes.

    Reply
    • queenbcandles

      Hi Richard,

      Great facts and figures. We need hard facts and yours add weight to the argument.

      I had put the link to the petition in the post. I have now bolded it and figured having it in your comment is also good.

      Really appreciate you taking time to share your knowledge and helping spread the word. When I signed the petition this morning there were less than 1,000 signatures. Now almost 2,500. Given small business is responsible for 2 out of every 3 jobs in Australia, even allowing for complacency, I'm thinking we should be aiming for for over 100,000.

      Cheers

      Cate

      Reply
  • Richard Warner

    Hi Cate,
    If we can get this info out to enough people we could. It just needs to be pushed a lot. By everyone you know and by everyone who reads this.
    The Aus Post CEO is doing whats easy with no regard to small business here.
    Instead of going in to bat for Australian Business. We are the ones paying for all these parcels being sent here from places like Hong Kong.
    The UPA/ Union is a farce. And the Aus Post management do nothing to make this more equitable, they cave at every opportunity to negotiate a better deal for Australians. So they just charge us more. If the AP management did their job and got us a more equitable deal our prices would be 1/2 what they are now. But the CEO is too caught up in just trying to make a $ for AP and looking good and getting his bonus and not looking the the whole picture and giving a damn about the people he should be representing.

    I am angry over this and I hope others reading this are as well.
    Stand up and be heard.
    And call the Aus Post CEO. number here.

    http://www.directory.gov.au/directory?ea0_lf99_120.&organizationalUnit&7b2df95b-d0c1-473c-b9ce-bd8430c48851


    Cheers,
    Richard.

    Reply
    • queenbcandles

      Hey Richard,

      The link to the phone number didn't work (tricky government). So, just for the record it is - (03) 9204 7171.

      I have sent several emails through their website addressed to Ahmed Fahour (the CEO) and bet you'll be shocked to know that I have never had a response. Ultimately, however, if he is a given dysfunctional brief by the Federal Government, then his hands are tied. This needs to be sorted out at a Federal level. There needs to be a decision made that the business division of Australia Post is run on internationally competitive pricing and that the government will more than reap the rewards back in company tax and PAYG tax. It is a no brainer. Think about the tariff concessions they have given to car manufacturers in the past decade. Subsidising shipping costs for small business by that amount would benefit the 5 million people employed in small business rather than just the international car manufacturers and the several thousand jobs supported... and they're all closing shop anyway. They have taken the money and run. Australian small businesses are committed to being in Australia and are only going to be more successful and more profitable and deliver more returns to the government.

      Cate

      Reply
  • Gavin Wilson

    PROFITS BEFORE PERFORMANCE!!

    C'mon, Ahmed Fahour was brought in for that very reason!!

    Time to revolt!!

    Reply
  • Ray of Sunshine

    An anecdote. I am a manufacturer, wholesaler and distributor of natural Australian made products. i rushed to my local PO to post orders from my online shop yesterday afternoon to find that my bill for postage was more than the entire cost of production, warehousing and logistics. For a business that hopes to operate on a gross margin of 50% the maths is compelling.

    My online shop is now unviable.

    Letters have been sent.

    Thanks Queen

    Reply
  • David Sykes

    The is an alternative avenue to cheaper parcels through Australia Post and that can be via a bulk mailing company such as D&D Mailing Services, our knowledge and know how plus our ability to bulk purchase can negate the increases and in some cases save money, from one to 100,000 parcels.
    Contact us via our website www.ddmail.com.au

    Reply
    • queenbcandles

      Hi David. Whilst we wouldn't usually allow comments that are blatant advertising on our blog, on this occasion I have made an exception because people need to know there are alternatives and look into those alternatives. Having said that, you would still be constrained by what the carriers are charging and in Australia they are charging like wounded bulls, so I can't imagine that your rates would allow a small business to compete with the mail rates that businesses are able to get overseas.

      Cheers

      Cate

      Reply
      • David Sykes

        My apologies, firstly it was not my direct intention to advertise on your blog and secondly only now have I had the time to respond to your comments. Firstly we spend in excess of $2,000,000 per month with Australia Post, they do us no favours however our volumes mean that we have commensurate discounts, you might be suprised what we can offer or how we can direct you to achieving better rates. Overseas, outbound but not via Post is also much cheaper in the commercial world like ours, the service is excellent and would compete worldwide but absolutely kill the rates Post offer. I know you have had alook at our website and I agree it really doesn't provide you with much insight into this part of the business this is because we are fortunate, we have a niche business that does not rely on advertising moreso word of mouth within the publishing industry. Imwould be more than happy to provide some pricing, and this can be best done by contacting me via email with dimensions, weights and destinations. Whats in it for us? Volume growth and ultimately greater discounts, leave this comment with, kind regards Dacid Sykes

        Reply
  • Melanie Hay

    Very well said Queen B! Have signed the petition & am sharing your post & the petition link on all my social networks.

    As a small business owner this latest price hike just puts up yet another barrier to Australian small businesses being able to compete on a even playing field locally & globally. No matter how wonderful our products & or services are, potential & even existing customers will simply not understand why our postage costs are so high & will instead choose to purchase from overseas rather than buy from Australian small businesses.

    The gov't & Australia Post should be ashamed of themselves to think that this price hike was acceptable & that it would not severely impact the viability of many small businesses.

    Regards

    Melanie

    Reply
  • Geoff

    I just looked up your company Dave, whilst i love the idea of anything that can compete with Auspost nothing was black and white about the service you can provide in relation to a cost effective parcel service. If I can offer some advice the first company willing to invest the large sum required in a simple mailing system that does a national small parcel service with a simplified system that offers pre paid parcels at a flat rate with the same price nationally going on weight that offers services in line with paypals seller protection system (Its not hard to read it they paypal system is paramount to any parcel service) will be onto a winner until then we are forced to use Australia post. Looking at alternatives it is quite clear they are still in the mode of dealing with commercial businesses based in commercial areas rather than residential addresses this includes delivery to residential addresses. And have no idea on how to tap into the huge residential based home business market. Cheers Geoff.

    Reply
  • Aleta @ Hinterland Mama
    Aleta @ Hinterland Mama April 10, 2013 at 7:44 am

    One of the most common messages I receive from overseas would-be-customers is "I really just can't afford your postage". That makes being a WAHM with a small handmade business a little challenging!
    Thanks for this post Cate. Very interesting, as were Richard's comments above. Will share on facebook too x

    Reply
  • Richard Warner

    Feel free to share the pic I did of Aus Posts CEO here.
    It is just how I feel about the whole thing at the moment.

    http://www.facebook.com/richard.warner.3150

    I have shared on the AP Facebook page but they keep removing it :)

    Reply
  • Richard Warner

    Here is some food for thought.

    A parcel weighing just under 500g sent within Australia.

    Requiring a signature and insurance of up to $100 cost me $7.20 Last Friday.

    As of Monday same thing will cost me

    $7.15 basic postage,Click and Send

    $2.95 for the signature option.

    $1.50 for the $100 insurance.

    So it goes from$7.20 >>> to $11.60.

    This is a jump of way over 60%. this is a joke.



    No way can they justify a jump like this IMHO. X-(



    This give an idea how absurd the rises are.:(


    I honestly feel Australia Post have stuffed up on this one.?:|

    Reply
  • anita manuell

    Thanks for supplying the links within your post. I have signed the petition, emailed the PM and the Minister.

    Reply
  • Danielle Hocking

    This is the best thing I have read in days.. Well Done! I have definitely signed the petition and I have saved the PM email site and she is next on my list. We are are small Aust Post Licensed Post Office as well as an on-line seller for our products. I have also posted your stuff on our facebook page today and also written on the AP FB wall. I will find your email address and send you a copy of our termination letter (we have sacked AP from our site) They are Corporate Robbers and they need to be accountable on so many levels. They are a National Joke and something needs to change immediately. More to follow and thank you again for writing this - Exceptional and spot on - Danielle Hocking Director - Upper Sturt General Store

    Reply
  • Ben

    I'm concerned that postage prices will probably continue to increase in Australia. Infact I'm concerned that the postal service may even reduce delivery days in the not to distant future. Overall I believe less people are using the postal service despite the fact that online shopping and postal delivery within Australia has increased. When you think about it, email, facebook and smart phones have taken over as the preferred "written" communication form while billing and banking is going online too. There is courier for bigger businesses and of course the issue of international online shopping.
    I seem to be an odd one out in my age group - I enjoy receiving hand written post and everytime a parcel arrives it feels like Christmas!

    Reply
  • Connie

    Boycott Australia Post spread the word don't use them let there profits plunge and see them run! Yay!! People power.

    Reply
    • Ben

      Unfortunately it doesn't work like that with a service like postage. If people boycott postage it ends up making the problem worse, the demand drops and the service will drop too. This is something which is currently happening and I wouldn't be surprised if the current postage service will soon be restricted to certain days of the week simply due to the decline in people posting.

      Once it has gone it's not like we can start using postage service #2 to send and receive letters and parcels. While courier is great for big business and urgent deliveries it is not a suitable regular service - for everyday postage and deliveries and certainly not feasible for most small businesses and their customers.

      Reply
      • queenbcandles

        Actually, Ben, Australia Post parcel shipping is experiencing massive increases with the increase in online shopping (not dropping as you say). Letters are dropping and I don't think anyone would care if they limited that service to once a week - letters are largely redundant as most 'mail' can be communicated electronically (which would save millions, if not billions, of trees). Parcels on the other hand are a massive revenue spinner for them and they've increased prices 3 times in the past 18 months or so.

        When you consider the likes of Book Depository, Saks, ASOS, Strawberrynet etc can ship for FREE to Australia and Australian businesses are being rorted by Australia Post so their charges make it nigh impossible for us to ship overseas at even a competitive price (let alone free) it makes you realise how short sighted the Federal Government are. Ahmed Fahour is doing what the government have told him to do.

        Cutting parcel post rates for businesses over a certain size would lead to a boom on Australian businesses sending their wares overseas which would mean more jobs, more PAYG tax, more Company Tax, more money circulating in the economy. Win/win. Given we've pretty much killed manufacturing in Australia and mining is in a big downturn we actually need the government to make structural change to stimulate other parts of the economy.

        Sobering thoughts... Australians spent over $7 billion shopping on overseas websites during the 2012-13 financial year. No idea what we exported in online sales of retail goods but I can guarantee you that it was a fraction of that.

        Cate

        Reply
  • Jessica

    Hi Cate, great post. As someone who primarily uses the post for letters (domestic and international), I hadn't realised how much parcel prices had also increased. I recently had a conversation on Twitter with CEO Ahmed Fahour, and while he didn't let me get to my questions regarding small businesses and maintaining accessibility to the general public, I believe I still managed to call him out on it. https://twitter.com/parcelandpeony/status/410202032327229440

    Reply
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