According to the Digital Media Research Report done in 2012 by PwC and Frost & Sullivan, total online expenditure in Australia in 2012 was forecast to be $16 billion of which $7.2 billion (or 45%) was on international websites. OK, I get that. I shop on overseas website myself where the goods are not available in Australia or completely overpriced or where the cost of shipping is ridiculous. So, this my rant is not about saying we shouldn't be shopping on international websites. My rant is that overseas people aren't shopping on Australian websites because our cost of shipping to them is so high.
According to one comment on my last post about this, for a business in Hong Kong to ship a 500g parcel to Australia it would cost $0.60. For an Australian business to ship a 500g parcel in a Parcel Post satchel would be $8.25 (that's 15 times the price) and for the Australian business to ship the same parcel to Hong Kong would be $11.90 (that's 20 times the price). No wonder we're shipping overseas. The Australian small business selling that item has the choice of either absorbing the $8.25, or charging for it. Why would you shop locally? That. Is. Insane. That is killing small business.
A friend who runs Daylesford & Heburn Mineral Springs Co. called me from the Post Office yesterday. He was mailing online orders to WA. The cost to the customer for a case of beautiful, Australian mineral water or Organic Brewed Ginger Beer? $50 - $65. The cost of mailing EACH CASE to WA? $69. Yes, the postage cost was more that what he earned on the sale. Seriously. He doesn't even bother with trying to export his mineral water... and yet, the most popular mineral water in Australia is imported from Italy. Yes, it is cheaper to bottle and ship mineral water 15,000km's across the world than it is to bottle and freight it from the other side of Melbourne.
This morning I received an email from a small US company that I have purchased from before. They are now offering US$4 postage for up to 10 pounds of product to Australia sent by DHL Parcel Delivery Express. I've emailed DHL in Australia to see if they will offer me the same rate for our shipments. I'll keep you posted on their response. You'll be relieved to know that I'm not holding my breath. Just as the recent Cabinet inquiry into software pricing revealed Aussies are paying as much as 170% more, so we do on shipping. Our monopoly, government owned, postal service leading the way on overcharging.
A few other things to consider:
- According to a report by ANZ, small business sales are down 5% (year on year) to the end of February.
- Australia's trade deficit has widened by eight per cent to $2.6 billion in November last year, the largest recorded since the Global Financial Crisis, according to new data from the Australian Bureau of Statistics. This represents the 11th consecutive month of deficit.
- According to the Digital Media Report, 55% of people surveyed said the most important reason they shopped online was lower prices. We can be pretty confident this is the case the world over. Well, given our high Aussie dollar and the fact that our minimum wage is the highest in the OECD we're already behind the 8 ball. Add to that the rort that is Australia Post's shipping charges and we may as well raise the white flag.
There aren't many times in my life where I have felt completely powerless, but this is one of them. It is like seeing a train wreck before it actually happens. Or knowing that that moron who just overtook you at double the speed limit is going to hurt someone. If we don't fix this, it is going to hurt. 2 out of every 3 jobs in Australia is in the small business sector. If we can't compete with our global competitors to ship at competitive prices, we'll have more businesses failing (insolvencies were at record high's in the September 2012 quarter) and more people looking for jobs.
As you know I am pretty passionate about Australia. We are wonderful innovators. We make world class products. Let's stand up and tell the Federal Government that they need to do something about making it possible for us to level the playing field and ship at competitive prices (both domestically and internationally). You can sign the petition here. If you're feeling a little blue after this post, you can buy Queen B pure beeswax candles here (made in Australia and shipped for "free" on orders over $100). You may also now have a better understanding on why we have a minimum order for "free shipping". Don't get mad when an Australian retailer charges for shipping, get even - send an email to the Minister for Small Business telling him that our shipping costs are killing sales. Take those 2 minutes to stand up for something you believe in. It's the only way we'll get the change we need.
If you want to live in a world where we are more than a giant quarry (and they're getting better at mechanising that and importing workers) or a dumping ground for cheap imports, then you need to stand up and do something about it. We want manufacturers. We want vibrant regional communities. We want artists and craftspeople and designers. And given we're part of the global economy, we need them to be able to ship their goods domestically and internationally at competitive rates, otherwise there will be no market for their product and they will close.
I'll finish with a few statistics from the 2012 Australia Post Annual Report (just in case you think I'm being unreasonable... or hysterical :-0). Mail volumes were down 14 per cent from 2008 to 2012, and yet overall revenue was up 4 per cent. Wow - those 3 price increases last year really delivered for them. Profit before interest and income tax expense from Parcels & Express Post was up 17% (2011 to 2012). So, are they investing in their network to improve their service (and justify all the price increases)? Well, no, their capital expenditure was at a five year low in 2012 (on par with the five year low in 2011). However, they did declare a $213.7 million dollar dividend (a 23 per cent increase on the dividend paid in 2011) – paid, of course, to the Federal Government.
Oh, someone powerful, can you PLEASE, PLEASE, PLEASE do something about this before we all realise too late that we had to act now?
This article appeared in the SunHerald on 14th April 2013.