Online trend costing Australia Post

Online trend costing Australia Post

Summary: Although ordering online from overseas retailers might save consumers money, it is a drag on the profits of national postage provider Australia Post, which has said that Australia's importing frenzy will set it back as much as $20 million per year.

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Although ordering online from overseas retailers might save consumers money, it is a drag on the profits of national postage provider Australia Post, which has said that Australia's importing frenzy will set it back as much as $20 million per year.

In a submission to the Productivity Commission's inquiry into the retail industry, Australia Post noted that the amount it received for processing inbound post from overseas often didn't cover its actual cost of delivery. Because of this, the pricing of international parcels destined for Australia weren't priced as highly as they would be if the costs were taken into consideration.

The Productivity Commission inquiry will consider whether there is a need to impose the goods and services tax on items worth less than $1000 bought from overseas. Retailers say that this is creating an unfair playing field and causes customers to shop online for cheaper goods. One of the arguments those fighting against the imposition of the tax is that Australians ordering goods from overseas are hit with postage fees, levelling out the field again.

However, Australia Post said in its submission that the payments it receives under arrangements made by the Universal Postal Union are well below the cost of delivery for mail and packages up to two kilograms. With Australia receiving more than it sends, it put Australia Post in a loss position, according to the organisation.

"For example, in the financial years 2010 to 2012, Australia Post estimates that it will make a loss of AU$1.06 per inbound international airmail packet (parcels less than two kilograms) on a volume of approximately 39.7 million articles," it said. This works out at around $20 million for each of the two years.

The organisation also believed that its service provided faster delivery and cheaper prices than comparable services from other postage providers.

Westfield said in its submission to the inquiry that a possible reason Australian retailers have been slow to get into online has been that customers buying from overseas retailers are able to ship into Australia for low costs and, in some cases when the retailer is willing to absorb the cost, for free.

"Without knowing the full 'end to end' costs of the logistics supply chain, the items' purchase price and other factors, it is not possible to determine the true logistics costs and overall profitability of the transaction. From a shopper's perspective, however, it appears that it can cost as much to ship a product from Melbourne to Sydney as it does from the UK to a destination in Australia," Westfield said.

Topics: Laptops, Amazon, E-Commerce, Emerging Tech, Mobility

Suzanne Tindal

About Suzanne Tindal

Suzanne Tindal cut her teeth at ZDNet.com.au as the site's telecommunications reporter, a role that saw her break some of the biggest stories associated with the National Broadband Network process. She then turned her attention to all matters in government and corporate ICT circles. Now she's taking on the whole gamut as news editor for the site.

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9 comments
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  • Aust Post the last bastion of public service bloat where the union is dragging costs up when their productivilty is going down and costs up. Time to modernise Aus Post rather than slug us for its Unionised wastage and bloated staff numbers
    Hideous62
    • Aust Post may not be the best postal system in the world but, at least its workers aren't so over-worked and over-managed that they start shooting each other.

      I may live in one of the slowest served areas of Australia, but who else delivers directly to my back door without asking for even more money?
      Treknology
  • You don't think Hideous that the international organsation might have underestimated how much it costs to deliver post in such a large country?
    suzanne.tindal
  • Australia Post are a hideout for the incompetent seeking an easy job, pretending to be corporate. You wouldn't expect any more of them than to make a deal on international postage rates then turn around and complain they are losing money on it.
    Greg124
  • USPS thoroughly overcharges for deliveries to this country, whereas international couriers seem to offer better rates (but not FROM Aus) for US exporters.

    If AP has a problem making a profit from inbound deliveries, it needs to take it up with the UPU, because that is the organisation that has put it in the disparity.


    As far as the benefits of importing from OS, notwithstanding even heavy courier/USPS fees, there is often a huge enough discount from Aus prices to still make it worthwhile, even if there were GST charged.

    In other words, it is not the 10% of the GST that is enticing purchasing overseas, it is the 30 to 50% margin. We would not buy from OS just to save 20%. One has to factor in returning to the supplier if required due to faults or not fitting. Even in those cases, US retailers that are properly set up are more prompt than local ones.

    Just look at the phone accessories aftermarket, where stuff costing over $20 in Aus (like a USB phone charger or screen protectors) is less than $5 from Hong Kong, and they have very low or zero delivery charges.

    I think who is really killing the retail trade is the wholesalers, who are obviously taking too big a slice for what they eventually supply - poor service.

    Significant electrical/electronic items are generally the exception as they can often be DOA or problematic, and having a local shop is better.

    Shoes and clothes are just plain bargains from OS, and are far cheaper and have better ranges than from local stores. Soon these local stores will have to charge $20 just to allow people to try them on before they buy from OS. Even then, being able to buy almost two pairs from OS for the price of one here makes that fee a bargain. Such fees may allow local stores to stock better ranges and employ more staff.

    However, one just has to look at those successful local stores that have plenty of staff and provide good service - Athlete's Foot and Body Shop. Now go into Myers and try and get served - and they wonder why they are not hugely profitable. Service and value (not necessarilly monetary) are the keys to profitability.
    Patanjali
  • Harvey Norman is another one on about declining profits due to 'unfair overseas' competition.
    Gerry Harvey's complaints & recent advertising campaign about being disadvantaged by GST free items purchased online from overseas are a joke!

    I usually purchase all my electronic components online but just yesterday I needed a quick replacement for a friend's PC so called in at my local HN store to purchase a DVD burner.
    Having been completely ignored by the staff I finally cornered one for assistance. He just pointed in the general direction & left me to my own devices.
    After locating the product myself, I checked it's price: $84.95!!!
    That same DVD burner can be purchased online from multiple sellers, ALL located in Australia (thus subject to GST) for under $35.00 with Free Postage.
    Needless to say I departed in haste.
    An example below:
    http://cgi.ebay.com.au/ws/eBayISAPI.dll?ViewItem&item=270659056709&ssPageName=STRK:MEWAX:IT
    grump3
  • Big aussie retailers are loosing money because I buy from OTHER Aussie retailers online at a far, far reduced cost than what the big companies want to gouge me for.

    Corporate Australia isn't making money because they are too GREEDY and sites like Shopbot, Getprice and Ozbargain meen we can shop around for businesses that aren't greedy f***s...
    Tinman_au
    • My point being, even if AusPost do add $1.06 (or even $2) to the cost of a delivery and they add GST to >$200 imports, it still won't change a thing...
      Tinman_au
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