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Selling To Australia OnlineA. The Australian Economy and E-commerce
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Drivers behind online shopping
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Reasons for purchasing mostly from Australian websites
• “The desire to support local industry” or “no need to buy from overseas”—30%.
• “I don’t trust overseas websites”—21%.
• “Item only sold or available in Australia”—18%.
• “Easier to return if I have a problem”—16%.
• “Takes too long to ship from overseas”—12%.
• “It’s cheaper after taking shipping costs into account”—8%.
• “It’s cheaper”—6%.
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Overseas providers preferred for products such as
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Retail categories predicted to display the strongest growth over the next five years
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Selling To Australia OnlineB. UK Exporters and the Internet
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Reasons for purchasing mostly from Australian websites
• There are 1 1101 100 British born people in Australia, representing 21% of all overseas-born migrants (2011 Census).
• Many of those Australian visitors are very familiar with UK brands and, together with UK residents, make a sizeable pool of consumers who are at least aware of UK brands.
• It is an axiom of Australian retailing that you need to “sell to Australians” to achieve good volume.
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Selling To Australia OnlineC. Adapting to Serve the Australian E-market
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Adapting the way you operate
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• Current legislation allows imports to individuals worth less than $A1000 in value to enter the country exempt of GST.
• Whilst this GST exemption is significant, it is not as considerable as the distributor and retailer margins that can easily double and maybe triple the landed cost of a product.
• Many companies are using this model and even some large high street retailers who have built a good e-business in the UK are finding they are passively exporting to Australia.
• Companies offering free or reduced cost freight will have a huge advantage over their competition.
• Companies that ‘internationalise’ their websites increase dramatically their chances of obtaining overseas business.
Fulfilment houses
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• One solution for companies with the market demand to make the equation viable, is to ship into Australia, pay the GST, and use the services of a fulfilment house to distribute product orders on the UK home website.
• Fulfilment, also known as order fulfilment or product fulfilment, is the process whereby a person or company fulfils their obligations to send a person an item or product that the person has ordered, purchased,
or requested from the organisation.
• Note that it is rare for a fulfilment company to provide its own courier services.
Advantages
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• Fulfilment companies will typically have thousands of available square footage for storage. Own inventory warehousing or use of a local distributor will incur additional expenses such as utilities. A fulfilment company is able to distribute this expense through storage fees they charge to multiple clients.
• A manufacturer will be unlikely get the beneficial ‘bulk’ shipping rates available to many fulfilment companies.
Disadvantages
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• Disadvantages include indirect control.
• Fulfilment companies will typically not take full responsibility for product damage, nor will they take full responsibility for product shrinkage.
• Some fulfilment houses have a requirement for a minimum number of orders in a particular time period.
• The most important thing to realise is that fulfilment companies are not there to represent a UK company.
Adapting your website (continued)
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• If a UK firm includes an order form on its web site, then the form should be created in such a way as to be compatible with international addresses, titles, surnames, telephone numbers, postal/zip codes, etc.
• While credit cards may be popular in Australia for online payment purposes, other secure payment systems, such as Pay-Pal are becoming increasingly popular.
• Paying unnecessary taxes irritates Australians just as much as it does anyone else.
• Australia uses the metric system.
Adapting your website (continued)
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• International firms need to ensure that any enquiries they receive are answered and dealt with as quickly as possible.
• In Australia, seasons are reversed, but festivals are held at the same time.
• Time difference: East coast Australia ranges from 9-11 hours ahead of the UK, depending on the time of year.
• Web sites not kept up to date will lose business.
Some local factors
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• A UK company does not need to have an Australian Business Number to sell products in Australia.
• Australian domain names cannot be reserved. A company must register its business to operate in Australia and then will have an Australian Company Number.
• Goods and Services Tax (GST), at a rate of 10%, applies to most imported goods over a A$1,000 threshold.
• Subject to eligibility criteria, importers who are registered for GST might be able to defer the payment on imported goods by participating in the Deferred GST Scheme.
What next?
• Ask questions now or follow the conversation on LinkedIn
• Attend our other webinars
• Follow us on twitter @uktiaustralia
• Contact me [email protected]
• Contact Douglas Linnette for any specific legal questions [email protected] (Douglas works for an external company so may charge for advice)
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