FraserLive: Slipping through the net

The wonders of wwwdot may have been a boon for consumers but not so for local suppliers or governments. People now think it is clever to look at a product in an Australian shop and then trawl through the web to buy it at the cheapest price.

Although it is legal, it is wounding regular retail. How can a well presented shop in an attractive centre compete with an online outfit that operates from a garage and a kitchen table? Okay, that's the commercial damage, but what about the loss to government revenue? When you buy from overseas on the web the government gets no import duty or GST. Import duty is only payable on a shipment valued at more than $1000. In the case of clothing, the duty is 17.5 per cent.

The temptation to buy on line does not affect low cost goods because postage and handling eats up too much of the price. But on luxury goods like designer garments, for instance, a lot of money is lost to the Australian retailer, the Australian importer and the Australian Government.

Goods purchased on line arrive in Australia either by post or an international freight company. If by post, the parcels are often opened and searched for drugs and bugs. Freight companies are a little less watched but can get a random check at any time.

I'm sure the government would love to get its snout into this lost revenue, but how to do it? Somebody suggested that post offices could demand to see the original invoice from the overseas supplier and then charge duty and GST. For this service they would earn a commission. The same could happen to freight companies. Unfortunately, in both cases, it would quite an upheaval if post office and delivery people try to collect. Many post offices are manned by people whose second language is English and therefore may not have the articulation skills to win a verbal battle with a complaining parcel recipient.

As for a tyThe solution will come with the development of an electronic barrier system for all imports, big or small. Scanning will become obligatory and the receiver will have to pay up. In the meantime, the free entry system will remain. But don't be surprised if the Federal Opposition uses the missed revenue as a means of trying to prove the present government is economically irresponsible by allowing all this money to go down the drain.

Interface book

The success of KCX International and S & R Fashions, to name two, points to the rise of a category of major wholesale garment supplier which I call an "interfacer".

Interfacer companies are typified by being totally unknown to the person in the street and little known in the trade - except to those directly involved in doing the business - yet their contribution to designing and sourcing garments for major retail groups runs to hundreds of millions of dollars a year.

It was assumed that once importing opened up and big retail groups got a sniff of the juicy profits available by doing their own, that would be the end of third party suppliers. But it hasn't turned out like that. Retailers who have tried to replace wholesalers' skills by doing it all themselves have come some terrible croppers. Of course, we don't hear about these because retailers bury their mistakes in sales - often paid for by forcing allowances out of other suppliers. Along the way, the big retailers have learned that it is worth paying a reasonable percentage to an interfacer for at least some of their purchases.

A tyMoney is also a vital ingredient. Setting up to do millions of dollars worth of full service trade means employing skilled specialists and then maybe funding the goods for a short time. However, with a bit of letter of credit juggling, exposure can be kept to a minimum. That said, interfacing is not for the bright young business person starting out. The degree of trust required by the retailers generally calls for experience, middle age and punishing travel schedules.

The worst folly for an interfacer is to be seduced by fame, either public or trade. The most successful ones, such as the two mentioned above, are like ghosts, visible only to those wearing special retailer goggles.