Blog

  • New Zealanders are buying retail from overseas

    E-CommerceMore than a billion dollars of products are purchased by New Zealanders from overseas. This poses a number issues:

    1. Reduces the amount of products purchased from New Zealand retailers
    2. Reduces the amount of retail jobs in New Zealand
    3. Reduces the amount of tax collected by the goverment

    This is a big problem not only for New Zealand businesses but for the entire country. So what can we do about it?  

    GST on International Purchases

    The governement is proposing to try and tax International goods; this is a bad idea for a number of reasons:

    • No matter what they do, online payment services like PayPal and credit card companies will adapt to avoid it.  Google are already doing this by invoicing from Ireland to limit their tax liability in NZ.  It would also open up opportunities for countries like Russia to create new payment systems that wouldn't adhere to our government's wishes.
    • The administration of such a scheme is next to impossible.
    • It's fighting against the very structure of how the Internet works.  Remember when record companies tried to stop people from sharing music?  Those big companies are shrinking and have been replaced with smarter solutions like iTunes that utilised the benefits of the Internet and are now the largest music distributer in the World.

    Protect local retailers

    If we tried protectionism measures like tarrifs and quotas it wouldn't work because one of the new features of e-tail is that it is consumers buying directly from online merchants which makes it next to impossible to monitor, police or charge for. If we tried to do it, our Customs Department would become huge and extremely costly.

    What do we do then?

    Don't get me wrong.  I want New Zealander retailers to succeed because it's essential to so many other aspects of our culture and has a trickle-down affect on many other businesses.  We know that the recent drought had a huge trickle-down affect on other businesses; e-tail will dwarf it by comparison.

    I'm a strong believer in going back to root causes to identify solutions.  As an example, if there are not enough jobs in New Zealand but there is a plethora of IT jobs then the root cause is we don't have enough people that know IT.  The simple solution is to train more IT people.  With this in mind, let's now look at the root causes of why New Zealanders aren't purchasing from local retailers:

    1. Overseas products are cheaper because of the size of International e-tailers.  As an example, Chinese e-tailer Alibaba now turns over more than a trillion dollars a year.  With it's B2C subsidary Aliexpress they now have over 79 million registered users and rising.
    2. Overseas products are cheaper because labour and tax is cheaper.
    3. International e-tailers like BooHoo, Aliexpress and Amazon are now offering free shipping to New Zealand.

     Here's what I think local retailers need to do to compete:

    1. Get online and start selling to the World with free shipping.  Retail is really competative in New Zealand and now that they're competiting with companies like Alibaba they need to be selling online and overseas.
    2. Differentiate their product range.  We have lot's of things in New Zealand that everyone in the World wants like milk powder, wool, boats, quality tools, medical equipment, meat, water, brand, fashion, expertise and even trust.  Unlike Alibaba we don't need to sell cheap products to millions of people; we need to sell high value products to millions of people.  As an example, I asked one of my corporate clients in New York why they used Spinning Planet instead of a local company.  His reply was:
      1. The time difference benefits them.  They can ask for something in the afternoon before they go home and it's ready the next morning when they arrive.
      2. New Zealand businesses are very skilled and are better than many other companies.
      3. New Zealand businesses are trustowrthy and hard working.
      4. The lower value of the New Zealsnd dollar is a benefit but not the reason why they choose to use Spinning Planet.
    3. Utilise the benefits of international e-tailing by drop-shipping from places like China to other countries.  This uses very little local resource but it will bring lots of overseas income into New Zealand to help grow local economies.

    New Zealanders won't stop buying from overseas.  In fact it is dramatically increasing.  We have to work smarter to reposition how we do business in New Zealand and the World.

    Anyhow, that's what I'm thinking about this week.  If you'd like to be notified of our latest research FOLLOW our LinkedIn page.  The link is at the bottom right of this page. If you'd like to learn more about how you can improve your online marketing and sales check out our Internet Marketing workshop here.

    brynn :-)


    Brynn Neilson About
    Brynn

     

      Like this post? Share with your friends:
    • Facebook
    • Google+
    • linkedin