Bricks & Mortar vs Online Essay

2827 WordsJun 26, 201212 Pages
Question What can local retailers do in their value chain design to compete with the GST advantage enjoyed by overseas online sites? Use examples of supply based and demand based retail value chains to illustrate your answer. Introduction Since the introduction and mainstream adoption of broadband Internet and the improvement in security for online transactions, many companies are utilising this sales and communications channel to increase revenue and offer better service to their customers. Simultaneously customers, desiring a better value for their money go online looking for better prices, convenience, information and alternatives for the products and services they are willing to purchase. Although some bricks and mortar retailers perceive online retailing as a threat to their business, the truth is this channel represents a major opportunity for those companies to deliver higher value to their customers. In 2011, prominent Australian retailers including electronics retailer Harvey Norman and the department store Myer, intensely and publicly lobbied the Australian Government to start levying GST on overseas purchases under $1,000. Local retailers cited the GST advantage of overseas retailers as a reason for declining local sales. However, the Australian Government Productivity Commission, which undertook an inquiry into the performance of the Australian retail industry, demonstrates that online retailers are not the major cause of traditional ‘bricks and mortar’ retailers’ problems; and in fact, the Commission’s recommendations go in other direction and also states the costs of do so would be higher than the tax benefits perceived. This report aims to identify some of the improvements to value chain design that can help local retailers be successful in this new era. First the concepts of value, utility, costs and value proposition are
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