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Are we being gouged on delivery as well?

Australians aren’t merely being gouged by bricks-and-mortar retailers, they’re paying more than American and British consumers for delivery when they order products online, according to eBay.

The online retailing company’s submission to the Productivity Commission’s retail inquiry, put together by Allen Consulting Group, includes data on shipping costs within and outside Australia. Prompted by shipping costs being the most frequent issue of concern to local online retailers, eBay compared the cost of posting typical online-purchased products — shoes and DVDs — from Auckland to Sydney and Melbourne to Sydney, and found dispatching items from Auckland cheaper for both. The company also used data from eBay websites in Australia, the US and UK to check domestic shipping rates across the same range of products in the three countries, and found that Australian domestic shipping rates, at 2.7% of purchase price, were consistently much higher than those in the US - 1.5% - or the UK - 1.7%. EBay has said it is working with Australia Post to try to overcome online retailers’ concerns.

Australia’s parcel delivery market is dominated by Australia Post, which recently stated that it controlled two-thirds of the Australian market, Australia Post relies on growth in parcel delivery driven by online retailing (and delivering junk mail) to offset the decline in traditional letter writing. Criticism of delivery services also emerged from the submission by Choice, which found “common complaints from members included the cost and delivery times of products ordered from Australia online retailers, with some noting that it would be faster and/or cheaper being sent from overseas”.

Australia Post rejected the criticism. “We believe that Australia Post’s parcel service is price competitive and best value for money for the average user, compared to alternative offerings in the domestic market,” an Australia Post spokesperson told Crikey.

There are obviously differences between shipping domestically if you compare the US, UK and Australia, but these are driven by numerous factors and are not always a clear comparison. For example, the UK is a much smaller and densely populated country, which makes comparisons very difficult. Also, both the US and the UK are much further advanced in their eCommerce market growth and therefore benefit from economies of scale. Of course, as the eCommerce market continues to grow in Australia, we too will be better positioned to take advantage of economies of scale. In the mean time, we continue to look at ways that we can keep the costs of delivering parcels low, as well as providing greater choice and convenience for our customers. For example, at St Leonards Delivery Centre we are currently trialling 24/7 parcel pick up.”

The eBay submission (not yet online at the PC site) also discredits claims by the National Retail Association that further growth in online shopping would cost jobs. The NRA claimed recently that online retailing threatened 88,000 retail jobs, and has been backed by the reactionary Shop Distributive and Allied union. But the Allen report details expected growth in transport, domestic online retail and other domestic industries, and provides modelling suggesting a decrease in the $1000 GST threshold would see low-value imports face an effective 5% tariff due to customs charges, and a marginal net fall in employment.

The inquiry has also been used by an obscure “AstroTurf ” campaign funded by Microsoft to attack Google. The “Initiative for a Competitive Online Marketplace” provided a submission entirely aimed at attacking Google, and demands legislative action to reduce Google’s market share.

It is ICOMP’s view that where there is a single dominant search engine the current framework in the digital economy requires scrutiny, especially given the dependency of so many businesses on the services of a single search provider and online advertising network ICOMP believes that in light of the growing importance of online platforms in Australia, the existing legal and regulatory framework should be applied with the aim of maintaining and restoring the balance in the system and providing online retailers and consumers with greater choice. Where the pre‐existing framework proves to be inadequate, it will be necessary for the legislator to step in and make the necessary changes.

Who is ICOMP? It’s essentially a front group for Microsoft, dedicated to attacking Google at every opportunity. it was first unmasked in 2007, and continues to operate, primarily in Europe. Journalist Richard Chirgwin has more detail about the local version of ICOMP here. Microsoft is of course keen to promote its own search engine, Bing, ahead of Google. But according to the ICOMP submission, Bing only attracts 4% of searches in Australia, compared to Google’s 92%.

Microsoft might need more than a legislator to “step in”.

5
  • 1
    dunph45
    Posted Wednesday, 8 June 2011 at 1:03 pm | Permalink

    THE REALITY IS THAT BOTH AUST POST, ITS SISTER COMPANY STAR TRACK EXPRESS (OWNED IN JV WITH QANTAS) AND THE TOLL PARCEL DIVISIONS (IPEC / FAST / IN2 STORE) ARE NO LESS COSY IN THEIR PRICING ARRANGEMENTS THAN THE GOOD OLE DAYS OF TNT / MAYNE NICKLESS AND BRAMBLES. YES, THEY COMPETE, BUT REALLY WHAT ARE THEIR POINTS OF DIFFERENCE : THEY ARE ALL REGULATED BY THE SAME STATE AND FEDERAL BODIES AND THE TRANSPORT WORKERS UNION - SO IT IS AS COMFY AS THE 4-PILLARS OF BANKING - DIESEL PRICES? UP GO THE SURCHARGES! SO NOW WE HAVE A HIGH AUD WHICH MEANS (SURPRISE) THAT THE INTERNATIONAL RETAILERS CAN COMPETE NOT ONLY ON THE COST OF GOODS, BUT ALSO THE LANDED COSTS OF GOODS … DEREGULATION IN ITS PUREST FORM = GOTTA LOVE THAT AUD.

  • 2
    Mad Dog
    Posted Wednesday, 8 June 2011 at 5:10 pm | Permalink

    I don’t know about other countries, but a standard trick by eBay sellers in Australia is to drop their headline prices and make up the difference with the ‘packaging and handling’ part of the postage. This results in avoidance of eBay fees on the excess ‘postage’ and more in the seller’s pocket. I never do it myself, of course!

  • 3
    John Turner
    Posted Wednesday, 8 June 2011 at 7:08 pm | Permalink

    Don’t the banks do extremely well out of overseas transaction fees from credit cards used online and overseas? This fee has, I believe, in recent years increased by 50%: from 2 to 3% per transaction.

  • 4
    Kevin Tyerman
    Posted Thursday, 9 June 2011 at 12:47 am | Permalink

    …they’re paying more than American and British consumers for delivery when they order products online, according to eBay.

    Umm did the report include the ways that Ebay itself gouges it’s Australian customers? I pay about 4 times the listing fees for an auction with gallery on the Australian site compared with the US or UK sites. While an AU $1.09 listing cost on the Australian site compared with a US 25 cent listing cost for the exact same auction on the US site may not sound substantial, when sellers are listing hundreds of items in a billing period it represents a substantial impact on the bottom line of the business.

    The gallery picture itself, is free to the users of the UK and US sites, but costs 59 cents per auction on the Australian site, in spite of the fact that they are hosted on the same US servers and use the same software. These vastly increased costs on ebay.com.au add substantially to the cost of selling into the Australian market.

    Declared interest: I make a substantial proportion of my income on Ebay, using the Australian, British and US sites.

  • 5
    Wrigbe
    Posted Thursday, 9 June 2011 at 10:42 am | Permalink

    I recently bought an several horse riding apparel items from a couple of UK sites (one ebay, one other internet) for my daughter because the items themselves were significantly cheaper from the UK compared to Australian prices. I was not surprised that the items were cheaper from the UK (children’s horse riding gear in Aus is very dear) but was surprised to discover that the postage itself was also signifcantly cheaper than the Australian postage dispite being international postage. In both instances I paid around $6 postage compared with quotes of $10 -$12 for the same items from Australian sites.

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