Monday, February 28, 2011

Comments requested - Shoes of Prey to Parliament House


This Thursday Jodie is headed to parliament house in Canberra as part of a visit organised by PayPal for 3 PayPal merchants to meet with Ministers and shadow Ministers of Government. The goal is to share the story of our business and raise a number of key issues that affect e-commerce businesses.

Our fellow PayPal merchants are Paul Greenberg of Deals Direct and Vahid Ta’eed of Envato.

At this stage we're expecting to meet with:

  • Senator Stephen Conroy - Minister for Broadband, Communications and the Digital Economy
  • Malcolm Turnbull MP - Shadow Minister for Broadband, Communications and the Digital Economy
  • Bill Shorten MP - Assistant Treasurer and Minister for Financial Services and Superannuation
  • Senator Nick Sherry - Minister for Small Business
  • Bruce Billson MP - Shadow Minister for Small Business, Competition Policy and Consumer Affairs

Following is an outline of the issues we want to raise. We'd love to get your thoughts on these and any other issues prior to our meetings.

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We think online retail presents a fantastic export opportunity for Australia and an opportunity for Australia to develop a strong knowledge based industry so that we're competitive as a country beyond the current resources boom.

In our view the following are key issues for growing the online retail space that the government is in a position to help with:

Delivery Services - Australia Post is government owned and while more competitors are entering the package delivery market in Australia, we'd love to see Australia Post focus on this area more. We have a number of issues with Australia Post's parcel delivery service in Australia and it's forced us to switch from using EMS who contract with Australia Post to DHL for our deliveries worldwide. More background in this blog post.

Education - Education is critical for the future of the technology and online retail industries in Australia. We don't have enough computer science students to really encourage growth and entrepreneurship in these areas. Many budding Australian tech entrepreneurs have great ideas, but don't have the technical skills themselves and can't find a business partner with the technical skills to start innovative businesses. More computer science student places and scholarships are needed. The NBN is a great initiative but to take full advantage of it we will need computer science graduates.

Banking deregulation or incentives for financial institutions to encourage more competition in the merchant payments market. We're fortunate in Australia that we have PayPal in the merchant payments market because without them it would be very difficult for businesses like ours to operate, particularly in exporting our products. It would be great to see the Australian banks innovating in this space but to date their offerings have been nothing other than woeful. Here's some further background on our position on this issue.

GST threshold - While in an ideal world GST and duty would be charged on foreign online retail purchases, the productivity commission report outlining the high costs of implementing this means it's not worthwhile. Consumers and taxpayers shouldn't pay for what would be only a small benefit to Australian retailers. Don't succumb to the pressure from Harvey Norman, Myer and friends, they need to be encouraged to innovate in the online retail space rather than focusing on trying to protect themselves. More of our thoughts here, here and here.

Grants - The Export Market Development Grant is a good one for online retailers selling their products overseas, however the lack of certainty around these payments for exporters poses challenges when making decisions on marketing their products overseas. That said we can appreciate the budgeting challenges this grant creates if a limit on government spending isn't set.

One area open for improvement is that there could be less of an administrative burden to access the grant. A string of companies have sprung up to help businesses through the red tape to apply for the grant. They then take a percentage of the funds the government provides. This isn't ideal, it would be better if the administrative burdens were eased while still ensuring only legitimate businesses can access the funds.

All other grants we've looked into exclude online retailers as their requirements don't fit with our business model. Eg. Commercialisation Australia requires the business to have strong design or patent protections which don't apply to online retailers. It would be great if these other grants could be opened up to online retailers.

Let us know your thoughts on the above issues and anything else you think we should discuss.

Cross posted to Power Retail

3 comments:

  1. Regarding delivery services, I think the domestic market is ok, plenty of competition. When you need to import or export there is little or no competition, and no decent offering in the low-price bracket (plenty of couriers, but Auspost are the only ones offering standard international mail as an option). The internet has created a global marketplace, and my business in Australia cannot compete internationally with shipping in it's current state. 50% of my sales go overseas, I cannot track them, and they are expensive. I am considering moving to the US so my business can compete globally. Due to Australia's geographic challenges, the government will have to subsidise or help in some way to make Australia competitive in the new world.

    And I don't agree so much on your banking deregulation, I am with NAB & PayPal, NAB is cheaper than paypal, and once you're setup, you forget about it. Quit your whining and go get a NAB AU-currency-only credit card facility with eWay gateway and see your sales go up.

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  2. Hi Jeni, that's good feedback regarding domestic v international couriers. We'll pass that on to Senator Conroy when we meet with him (his department is in charge of Australia Post).

    In regards to payment options, I know your approach is a clever one, offering multi-currency pricing on the site but then charging customers in AUD taking a couple of percent off to cover international fees for them, but when we've looked into it it's not an approach we want to take. We want to charge customers in exactly the currency we've quoted the pricing to them in. That said, we're going to experiment with a NAB/eWay AUD account for our Australian customers to see how the difference in conversion is, but ideally then we'd be able to have the same set up for international customers without needing to go through the hellish process of signing up and using NAB's multi-currency service.

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  3. Great work guys. It is ridiculous in this day and age that Paypal is the only viable means of conducting e-commerce for a small business!

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