ukti australia - e-commerce opportunities for british companies

Selling To Australia OnlineA. The Australian Economy and E-commerce

Selling To Australia Online 04/10/2012 2


Drivers behind online shopping

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%.


Overseas providers preferred for products such as


Retail categories predicted to display the strongest growth over the next five years


Selling To Australia OnlineB. UK Exporters and the Internet


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.


Selling To Australia OnlineC. Adapting to Serve the Australian E-market


Adapting the way you operate


• 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


• 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


• 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


• 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)


• 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)


• 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


• 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)

UKTI Australia - Opportunities for British Business 19

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ukti australia - e-commerce opportunities for british companies

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