Report: The rise and rise of online retail

this isn't a dig at your LBS, they mainly have their hands tied by distributors from what I can tell

The better distributors are doing their best to get prices more competitive but it comes down to economy of scale.

Over on rotorburn someone was doing a survey on what people look for in a bike shop and why people would go lbs over online.

Every says service is most important in a bike shop. but at the end of the day price and ease is the biggest influence and for most enthusiasts that unfortunately means send their business OS online

Still there have been a couple of instances recently customers have either bought a product or asked for a price from me to get some thing in and then commented that it was as cheaper or cheaper then they had found on line.

Like:
http://www.phantomcycles.com.au/

I don't believe on-line actually cuts costs that much for retailers. Yes, less timewasters using up staff time per unit purchase... perhaps. Maybe offset and then some by even more time invested in dealing with email enquiries. And then there's the cost of system setup that needs to be amortised over its useful life, and that is far from a trivial expense.

CRC employes 420 people in its warehouse. That's right ... four hundred and twenty. So staffing costs and rental savings don't really factor in either.

I think it is in part economies of scale, but mainly that distributors here have been enjoying a bit of a gravy train for a long time and are reluctant to give it up.

Australian retailers must explain why they charge huge mark-ups on products that cost half as much from overseas internet companies, consumer group Choice says.

And global companies with a presence in Australia prevent local customers taking advantage of cheaper prices offered on their overseas websites, it says.

In its submission on Friday to the Productivity Commission's retail inquiry, Choice says the strong Australian dollar should enable local retailers to pass on savings to their customers.

It has found that the same pair of Nike running shoes costs $240 at a major Australian sports retailer while consumers can buy the same shoes for $134 from an online store based in the US.
Rant Bit>>>>
We are getting bent over with mark ups over 100% for some goods... Last purchase of a few days ago - I wanted some light road wheels - looked locally then O/S - CRC was half the price and delivered in 2.5 days from Belfast.
Harvey bleats because he is a franchise king - he cannot undercut his franchise stores so we is trying to close competition - i say enjoy the high dollar while it lasts and hopefully the retailers will find their niche like lower prices or better service perhaps a smile.
In the last year I bought 4 bikes from one Northern Beaches retailer - last time I went in there to buy a tyre they were so cold. At a recent ride some of us were discussing another local LBS where we have (without knowing each other ) stopped going because of the atitude.

I've bought a couple of things from OS websites too because it's cheaper. Being a hypocrite here because I run my own business. I try to support them like most say, service and repairs.

Running a business in Oz is expensive, tiresome and mainly unrewarding. Fees, registration, compliance, insurance, GST and quarterly BAS, you name it. Cost like rent and staff aren't cheap either--this has to be passed on somehow. Hence the huge difference in price. How LBS survive on service and repairs, I don't know. Some still manage to sponsor events.

Moreover, some retailers like DX are drop shippers. They do not have a dollars worth of stock behind that website. Hence their terrible service and almost non existent warranty because they made a few bucks and hasta la vista. Factories which drop ship aren't interested in your charger not working or whatever it may be. They won't say hasta la vista. They prefer Adios.

Probably not the forum for this but lets have a little chat about this. How having to input all those piles of paperwork and to reconcile 4 quarters and having an accountant lodge the BAS cost nothing? We are not just talking about sales tax alone here. The layers of compliance means you and I pay more than we have to at the LBS or any other business in Australia. We are not paying 300% more because we're helping the LBS' boss' AMG Merc and nothing else. It's not greed, it's survival.

Granted, some countries may be harsher with the BS, but I reckon we're up there with the best.

CRC is a great business. I have no argument with the way they conduct business. They do it big, professionally and do it cheap. However, profits that sponsor races are in the UK. Unless you are telling me CRC sponsor races here?? Who sponsors races here?

My question is, if we all went down this path, will we miss the LBS? Libraries and music stores are on their way out already so I guess the LBS will go too, eventually.

I'm suggesting this: you have to do it annually for income tax anyway, so spreading it out over quarters in smaller chunks incurs you no additional cost. And it's a lot simpler than it used to be with the old wholesale sales tax.

From my limited understanding of these matters, it seems to me it has the benefit of forcing you to keep the task down to a manageable size instead of letting it get into an out-of-control annual nightmare, so you could possibly argue it actually saves you time ... and therefore money.

And good businesses are into record keeping and analysis for management purposes anyway, so while I could be wrong I don't believe you are at any relative disadvantage compared to the better run offshore operations on this front.

Agree with you on the many other red tape costs with which Oz businesses are afflicted. Rents are high too, courtesy of a decade and a half's asset price inflation and a few other factors I won't bore you with. Would like to see the government rationalise a lot of this stuff - we're all paying for it.

Productivity commission doesn't have a lot of sympathy for the big retailers' position, it seems:

Major reasons for high local cost pressures are real estate costs, poor productivity and employment-related red tape.

http://www.smh.com.au/business/a-report-that-won...

http://www.smh.com.au/business/online-not-to-bla...