Tag Archives: customer expectations

GST payable on all items purchased overseas – WTF!!


From the 1st of July, courtesy of the Federal Government who has once again bowed to big busines, lobbyists and those who provide large donations (to both political parties) another tax will be forced upon us.

This new tax will apply to all online purchases under $1,000, where the items come from overseas.

This is the result of extensive lobbying from big business (Harvey Norman, Myer, David Jones et al) who claim their declining sales have been caused by these types of purchases.

Basically they are saying it is not fair for an overseas retail business to provide the same goods they sell but at a better price and with better service.

If you believe that, then you are a big business wearing blinkers to stop you from seeing reality. The reality is that in Australia we receive poor customer service and are ripped off by their suppliers pricing models.

Allow me to explain. But first a quote from an Australia Post study published in 2017*;

Online retailers are a blessing for many Australians – especially those living remotely, or in areas with limited access to conventional bricks-and-mortar stores. Increasingly, customers are heading online to find their everyday essentials at better prices, with buyers in remote
regional locations and tourist towns shopping online the most.

So if shopping online to get the best deal is so important to us, why are they going to tax it?

The answer is in the question, as Governments are always looking to increase taxes. Or, in this case, impose a brand new one. It pays for their perks and helps to fill holes in their budget created by overspending on shiny new infrastructure in marginal electorates.

This new tax goes against the findings of the report quoted above and is weak, pathetic and completely unjustified. Do local businesses really believe that an increase of 10-15% on the price we pay for an item overseas is going to somehow force us to buy local instead? Maybe, if they offered free shipping instead of charging $10-25.

I can buy one book a day for a week (or a month!) from the UK and have free shipping on each one. I can also buy almost anything from China with free shipping. And yet Australia Post would charge me around $20 for me to send one book interstate (including packaging).

I would hate to get a quote from Australia Post as to what they would charge me to send just one book back to the UK!

Local businesses need to be better negotiators with Australia Post, or use someone else (Startrack).

And then there is the ‘Australia tax’.

The ‘Australia tax’ is another way of saying suppliers (Apple, Samsung, HP, Sony, LG and many, many more) rip us off because we are “just a small market” so their costs are higher. Since all their products come from the same factory I find this argument hard to swallow. Again, local businesses need to lessons on negotiation.

So overseas companies sell their products to Australian retailers at up to 30% more than their very same goods sell for overseas. Books, DVDs, medicines and computers to name but a few.

On a visit to the US in December of 2015 my family saw bottles of 500 ibuprofen tablets (yes, 500!), possibly the biggest selling painkiller in Australia, on sale for $10 each. Here $10 buys you about 48 tablets, or ten times the price of the same product you can buy in the US! The same whopping price differential can be found on many everyday medications and vitamins.

A pair of Rockport shoes is half the price if ordered from overseas compared to my local shoe store. The exact same product from the same supplier from the same factory.

I think you get the point.

In addition there are some products you cannot buy here at all, so you have to purchase them from overseas. This includes many excellent vitamin supplements and other health care items. Why should we be punished because we have to buy these from overseas?

There are many, many more examples, especially if you do a quick search for technology, clothing and health products. Many of these overseas sites have free shipping (as per the above examples) and arrive within days. This is mainly because they do not use Australian Post, who take longer to deliver everything and charge you three times the amount for the privelidge.

So because Australia Post cannot get its act together (except when paying their CEOs very large bonuses despite losing money, in which case they are extremely efficient) and large businesses cannot negotiate properly they blame overseas purchases for their declining sales.

Actually we buy online simply because we want the best price and the best service, and unfortunately businesses in Australia cannot compete in most cases.

So we will be paying the government a brand new tax of around 15% of the value of the items we now buy online.

Fifteen percent? Yes, because GST will not only apply to the price of the item you purchase online from overseas, but also on any overseas taxes (such as the VAT in the UK, their version of our GST) and shipping. So you will soon be paying up to 15% more for those items you buy online today from Amazon, Book Depository, iHerb, Alibaba and many, many more.

The same Australia Post report quoted above says most of our purchases online are with largely domestic businesses, not overseas ones;

“Despite international access, domestic purchases still make up the majority of online spending in Australia. At the end of 2016, domestic spend represented 79% of the online market, showing a growth rate of 11% compared to 7.3% for international spend.”

So why did businesses here complain so much about it being unfair? Because that is easier than competing or trying to negotiate better pricing from their overseas suppliers.

The report also states that overseas spending accounted for 21% of purchases. The vast majority, 79%, being purchases from Australian online sites, so they can get it right if they want to. The only unknown factor is how many of those overseas online purchases were under $1,000, the target of this new tax. My guess is around 70%, but we will use 50% to be conservative.

Given that Australian households in 2016 spent $21.65 billion (according to Australia Post whom I don not believe as I shall explain shortly) in online purchases, collectively we will be paying an additional $341 million in tax each year.

It gets worse if you believe Roy Morgan Research over Australia Post (I would) as their study states that we spent $37.8 billion online during the 2014-2015 financial year”**. If we use their figures, we will be paying a total of nearly $834 million a year (using the same numbers as above) on this new tax.

No wonder the Government chose to listen to big business over common sense. However doesn’t the Federal Government keep saying they should let market forces decide pricing because competition is a good thing? At least that is what they say about the electricity market.

So not only are we currently paying far more locally for many hundreds, maybe thousands of items because of the Australia tax, we will soon be paying 15% more for those same items.

My suggestion is that local businesses lift their game and then we would gladly buy from them, as many studies show we want to buy Australian. To do this they need to significantly improve their customer service, have far better web pages, make it easier for people to buy online (have you seen the David Jones and Myer websites? Complete rubbish) and improve their Google search score.

Much easier to blame someone else, and it’s free too.

However, within this rant of mine I do concede that some big businesses here are viewed as quite minor in sales by their global suppliers. Therefore they cannot negotiate lower pricing (Samsung, Sony, Apple to name a few). I suggest they make this fact publicly known so we can decide what to buy with all information on the table. A nationwide boycott of certain brands might even get them to lower their prices.

Oh, and also go to war with Australia Post over their rediculous delivery charges.

When an overseas online book retailer in the UK can send me a $12 book with NO delivery fee, and I can buy a product from China that is worth $5 and get it delivered FREE, we are being ripped off by local freight charges.

In summary GET RID OF THIS STUPID TAX! Businesses have to learn to be more competitive, improve their customer service, maximise profits, make sure they can be found by Google and have great websites that look good on a phone. Pull your socks up folks, do some targeted marketing and stop blaming everyone else.

The retail market has always been tough, so learn what works for your business, keep experimenting.

You must keep up with technology and react quickly by constantly making changes to your product or service.

Or we could all just pay hundreds of millions of dollars in a lovely new tax.

* Inside Australian online shopping, Australia Post and Startrack, 2017

** According to Wikipedia there were 9 million households in Australia in 2016

*** The state of Australia’s $37.8b online shopping landscape, Roy Morgan Research, 2nd December 2015

Build it…and they will NOT come


Before 2003 when Steve Blank wrote his now famous best seller, The Four Steps to the Epiphany, the dot com bust need not have happened.

His book became the basis of Lean Startups with his Customer Focused model. Before then it was all Product Focused, in that startups planned their product or service to the nth degree and ignored customers because “If you build it they would come.”

They didn’t.

Unfortunately their budgets went into developing and producing the best, shiniest widget they could possibly make.

There was just one problem – no customers. Their product was either too expensive, or didn’t have enough features or had too many.

It wasn’t their fault, this is the way they, and every other startup, were taught.

A precious few identified the one great but simple flaw in this way of thinking, in that the customer had not been consulted before the product had been produced. Until this ‘epiphany’ no-one had thought to ask the potential customer whether what they were building actually solved a problem for them, at a price they would be willing to pay.

One of the notable exceptions is Steve Jobs, who produced products we didn’t know we wanted until we saw them, and then we had to have them!

Until Steve Blank wrote his book pointing out this simple error, hundreds of millions of dollars had been wasted. True, some of them had successful IPO’s where the clever investors took their profit and ran before debtors came calling, but it was only a matter of time before the bust came after the emotionally charged boom finished.

Ignore potential customers at your peril.

And they did…and closed their doors.

Eric Reis wrote an excellent book nearly ten years later when the term ‘Lean Startup’ was born. He directly credits Steve Blank’s book as having been the catalyst for this.

Today one of the very first questions asked by potential investors, and on shows such as ‘Shark Tank’ is, “How many have you sold?” and “Have you researched the market to see if people want this and will buy it?”.

Strange as it may seem, but these questions are relatively new concepts to startups… except for the successful ones.

The idea of living on baked beans for six months to a year validating that your market exists, finding out what your customers want your widget to look like and how much they were prepared to pay for one (hopefully at a price point sufficient to make a profit), had only occasionally been considered.

Until Steve Blank wrote his book and out of it came the term ‘Lean Startup’.

It may seem obvious now that you must obtain customer validation before spending a fortune on manufacturing your goods and marketing them, but at the time of the dot com boom all investors wanted to know was; do you have a website and does it have ecommerce? That is, can customers buy online.

If the answers to both questions was yes then you received a rather large mountain of cash.

And ran out of it a year or so later.

So, if you are a budding entrepreneur, talk to potential customers before you build anything. Preferably, obtain contracts from one or three saying that if you make this product, and it does what they want it too at their acceptable price point, they would buy it. This way your first customer/s are already ‘in the bag’ and they can provide you with essential feedback as you make changes, fine tuning your product.

Knowing who your customers are, where they are and how you can reach them is critical these days. The dot com bust hurt a lot of people, thankfully most have learned from their mistakes and will not give you one cent if you cannot answer those simple questions regarding your customers. It also helps if you are already working with several customers, so you can receive their feedback and fine tune your product to make sure that when it is released it is successful.

Listen more than you talk, and do not spend copious amounts of money on your product until you know everything about your target customers.

Now we call this a Lean Startup, however I call it common sense.

Good luck to entrepreneurs everywhere, may your customers be eternally happy and grateful that you solved a real headache and seemingly insurmountable problem for them.

Or if you are Steve Jobs, or know where his crystal ball is, please ignore me entirely.

Craig Pickering, 31st March 2018

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Centrelink – epic fail!!


Centrelink is there for the needy, sick and disadvantaged, and yet provides the worst service of any government agency.

The top level of management needs to be sacked immediately, along with their middle management that publish outrageously incorrect phone answering statistics.
Then, and I know this will cost us, but there needs to be a Royal Commission into the whole Department and the policies currently in place. It could easily be a case of the right people being tied up by stupid beaurocracy. Until such a public, complete investigation is done those most in need of help in our society will continue to be treated with disdain.
We should all be ashamed (especially the policy makers who make it so difficult for Centrelink staff to do their job) for treating our people so badly.

Two Thirds of University Students Fail to Graduate


So two thirds of university students fail to graduate…when will they learn that they need to provide far more than text books and large lecture theatres?

A huge shake-up is needed in this sector for it to still be relevant in the years and decades to come. Teaching techniques have to change drastically – having young post grads being tutors because they are PhD students is rediculous, as is expecting people to sit through lectures over an hour long.

Come on guys, time for some disruption!