The world is full of idiots, and someone needs to point it out to them or they will never know.

Sunday, January 9, 2011

Big Retailers Wage War on Web (And They're Sure to Lose)

The other day, I saw an article on A Current Affair (now there's a way to lose your audience's respect in the very first sentence...) about how a bunch of retailers are annoyed that people can buy things cheaper online. Well, there was more to it than that, but after seeing ten seconds of A Current Affair my brain had a massive hemorrhage and I woke up a few hours later in hospital. Anyway, the next day, a similar piece appeared on the ABC's 7:30 Report.Now, it was real news.

The basic gist of the article (read it here) is that Australian retailers can't match prices with the overseas companies selling stuff online because the Australian businesses have to pay tax. Well, you know what I think? I think the retailers complaining (yes, I'm talking to you, Gerry Harvey) can suck it. Why? Well, I mentioned a few posts ago that I hate it when companies do things solely for the money, and here's yet another example of this. Do the retailers want lower taxes so they can give consumers a better deal? No. Do the retailers want lower taxes so they can put more money into serving customers? No. These retailers clearly care about one thing and one thing only: money. The overseas stores are a threat, and the local retailers are crying unfair. Well guys, I hate to break this to you, but that's the nature of capitalism. It's sink or swim.

Some of you reading this may be agreeing with the retailers, after all, to quote Russell Zimmerman of The Australian Retailers Association, "...we have to pay superannuation, payroll tax, workers' compensation, all those things... we are behind the 8-ball when we start." Yeah, those things are such a pain, eh? If I'm interpreting this correctly, Zimmerman would love for all those pesky expenses to just go away. Better yet, Zimmerman, how about slavery? I hear it's very cheap.

Alright, alright, I can still hear you saying, "Zimmerman makes a fair point! Australian businesses do have higher expenses." But is price really everything? You may be inclined to answer "yes", but price is only one seventh of the battle in winning customers. Take, for example, milk. Now, unless you're a connoisseur, you probably wouldn't be able to tell the difference in a blind taste test between home brand milk manufactured by the supermarket (like Woolworths or Coles) and milk manufactured by distributors (like Paul's, Dairy Farmers, etc.). You'd think with home brand milk being only 2/3 the price of the commercial stuff, Dairy Farmers and Pauls would be out of business pretty quickly. Yet they survive - why is this so?

The answer, is marketing. Dairy Farmers and Pauls have built a relationship with the consumer, so they're willing to pay a little more. Gerry Harvey and Russell Zimmerman seem to think profit is the only thing that matters, and this begs the question - how on Earth did these men get to be where they are with an attitude like that?

Harvey and Zimmerman's attitudes remind me of a cartoon I found a while ago:

I get the feeling all of the businesses whinging have this as their mission statement, too, but this is a very stupid thing to do. Why? Well, what you want (and think) as a business owner is much less important than what your customers want (and think). The reason for your business to exist is to create and service customers. Not just to make money.

To be honest, this whole debate reminds me of when the music industry cried foul when people started downloading music illegally. Rather than embrace the technology, they tried to tell us that we were doing the wrong thing. Naturally, we ignored them and... well, we know how that story ends. I don't deny that overseas online retailers present a threat to Australian ones, but crying to the government for some tax breaks is not the solution. They need to adapt, come up with new strategies. If you're losing customers, chances are it's not just because the store across the road is selling the same stuff cheaper.

After all, it's sink or swim.

© 2011 by The Free Man

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