Opinion: Why abolishing the GST limit may not be a silver bullet for Aussie e-tailers

Internet Retailing

18th Feb 2016

The federal government has responded to calls to levy Australia’s Goods and Services Tax (GST) on products acquired from online vendors based in other countries.

The federal government has announced that from July 1, 2017 the existing $1000 limit at which GST will be levied on internet purchases outside of Australia will be abolished. The intention is to ‘level the playing field’, so that goods purchased from overseas suppliers will be charged the same 10 per cent GST as those purchased from suppliers within Australia.

The change was urged by many local retailers who complained they were placed at a disadvantage by the $1000 threshold.

After the changes take effect there will indeed be a ‘level playing field’. But that cuts both ways. Australian and international retailers may be paying the same tax, but they also have access to the same marketing and customer service techniques and technologies. That is where the battle will be fought and won.

There is a risk that many Australian retailers will see the change in the GST regulations as enough to put them on parity with their international competitors. It is not. It may help, but any online retailer who believes that they can take a breather and that market competition has evened out is not paying attention to what global competitors and retailers are doing to enable technology and services to enhance the online retail experience. Much more work is needed if local businesses are to survive in the fiercely competitive online retail market.

A recent study by management consultants Kurt Salmon showed that UK retailers now lead the way in omnichannel and customer experience. But there’s no doubt that managing and enhancing the shopping experience is challenging. Locally Fifth Quadrant’s Customer Experience Report in Australia showed that 53 per cent of customers use more than one channel to resolve a query. And the report revealed three key customer pain points including businesses not knowing their shopping history across the channels, repeating queries across every channel, and repeated identification of the customer at each channel.

It is worth noting that while lower prices are important to customers – and the declining Australian dollar may help local competition – customers also seek a wide range of products to choose from, a fast turnaround time, and competitive freights costs in an online retail experience, and this is what they find with international brands. In online, as with bricks and mortar retailing, it is customer service that sets a successful business apart from its competitors. This is where many Australian online retailers must lift their game.

Unfortunately, customer service from contact centres in Australia is not improving to the extent it should. A major global consumer survey – ‘Where contact centres are missing the mark with customer care’ – conducted by research firm Ovum, that included respondents in Australia and New Zealand, has found that there is a significant gap between what today’s connected customers have come to expect from customer service and what they are receiving.

Nearly half (48 per cent) of customers said the ability to reach the right representative has actually declined over the last two years. Three quarters (76 per cent) said they had stopped doing business with a brand following a bad customer service experience.

The biggest customer complaint is the time is takes to reach an agent and resolve a problem. Many are turning to the web for support enquiries, with half of all customer interactions coming from channels other than voice.

More than half (59 per cent) of customers go to the web to look for information before contacting customer service. But only five per cent of managers in those organisations believe their customers frequently use the web before calling – a massive discrepancy.

This means managers need new tools to track web behaviour and link it to live customer interactions. The research clearly shows that many online retailers in Australia and New Zealand are not delivering on customer service, and that they are losing business as a result.

The changes in the GST threshold will help with one factor – price – but is a 10 per cent shift enough to keep or attract customers? And in any case, the changes do not take effect for more than 18 months. That is enough time to go out of business if your customer service does not measure up.

The fact is that many international online retailers offer a better omnichannel experience than their Australian counterparts. They offer multiple channels of contact (hence the term ‘omnichannel’), enabling them to be more responsive and to offer superior customer service. And we all know customers want a better multichannel experience. It is obvious that Australian online businesses cannot put omnichannel development on the back burner due to the upcoming changes in GST limits, or changes in exchange rates. Quite the opposite – it means that retailers need to work even harder to stay competitive. Complacency in any business is fatal.

Daniel Cran is the APAC Director at LogMeIn responsible for managing local and international sales teams, building strategic partnerships, and networking throughout the region.