The Myer Online debacle – why GST isn’t the problem for Australian retailers

The bosses of one of Australia’s largest department stores, Myer, have been vocal in the past year about the need to remove the GST loophole (the fact that consumers do not need to pay GST on purchases over $1000) in order to ‘level the playing field’. Then the Myer website collapsed under the weight of the many buyers heading online to buy specials in the Boxing Day sales (traditionally the biggest sales in Australia). It’s still down as of 7pm on the 1/1/14.

This proves quite concisely that the issue is not that the GST is an oppressive burden. Australian consumers like shopping online. They have turned to overseas sites like asos, bookdepository and because they ship quickly and easily to Australia and have brands that Australians know but clearly Australians are still willing and able to shop from Australian sites like Myer. Shopping in person is particularly cumbersome for many people who have 2 full time workers in the house, single parents with young children at home (have you tried taking young kids shopping recently!), people who live outside of the metro areas and have limited ability to visit shops in person, people with limited transport options or simply the fact that the good online store have good ranges and its easy to compare offerings between brands.

Australian retailer also blame the very high retail rents relative to much of the western world and low shipping volumes. But the truth is, you have the option of a much more level playing field. Get your inventory system working and make sure that I can see from my home in Perth stock available anywhere in Australia. Any time. Make sure you regularly sense check your prices. I can regularly buy items from the US and use a resender than charges $20+/kg and still save money on my $50-$100 orders even when I can’t get free postage. It’s better to make a 20% margin on your sales rather than a 0% margin when your consumers buy from overseas. Get rid of whoever is managing your online department. Hire an asos director or someone from abebooks, anyone who gets the online sales proposition.

See it as an opportunity. When I visit a Myer store I tend to leave with what I came in for, if that. Half the time there is no one serving at a counter. The shops change floor layout all the time so I can never find anything and I have to try and get the homewares people to help me find lego (*cough*true story from the christmas*cough). It’s honestly easy to get assistance on the floor of Myer or Target. The floor is crowded and I feel overwhelmed. At home I shop when the kids are in bed. I often shop with a glass of wine in hand. I’m in my pyjamas. I can compare blogger reviews and look at the deals between sites. Once I work out where I’m going to shop I often check out with an extra couple of items that look like good deals or seem like a fun addition. It’s like a second treat when I actually get the parcels a few days later. Yay, a parcel for me! Some mail that isn’t bills! Smart retailers often give me a coupon to come shopping with them again in the next month. And when the gift feels like a treat, when it arrives quickly and is beautifully packaged I want to shop again. (Trust me, I very rarely want to revisit a Myer department store after I have recently been!)

The traditional acronym is KISS (keep it simple stupid). But in this case it’s Keep it Fun and Functional. KIFF might not be as catchy but I’ll bet its more profitable.

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