NetChoice arrives down under

Global coalition of e-tailers attracts first Australian members, cautions against barriers to ecommerce by traditional retailers.

A coalition of global e-tailers has launched its first Australian presence along with a warning that traditional distributors and retailers may attempt to create barriers to e-commerce as Australia's online market matures.

NetChoice is a worldwide coalition of nearly 10,000 e-commerce businesses including eBay, Yahoo and News Corp, and has just brought on its first local members – Deals Direct and Dinosaur Deals.

NetChoice director, Steve Delbianco, said traditional retailers had fought to create artificial barriers to e-commerce under the guise of consumer protection in mature e-commerce markets such as the US.

“What happens to middlemen, traditional brick and mortar retailers when they are exposed to a lot of competition and pressure from the online world? Some innovate, but unfortunately many others turn to measures to create barriers to e-commerce,” he said.

Attempts to criminalise online commerce because retailers claim it is driving theft from loading docks and store shelves, proposed bills to force online sellers to remove any item a retailer believed to be stolen without involvement of law enforcement agencies, pressuring suppliers out of selling to the online channel, and claims that items are fake or unsafe for consumers are some of the tactics NetChoice claims it has come up against in the US.

“In 13 states I’ve had to fight against retailer-driven legislation to criminalise online commerce under the assumption that so much of it is stolen,” Delbianco said.

He claimed retailers didn’t care about protecting consumers from fake or stolen goods, but wanted to protect their own supply channel.

“If an e-commerce seller can’t get these direct from the manufacturer or supplier, they are allowed to buy them overseas and sell them here. It’s a parallel import and completely legal in Australia, but it draws pressure and criticism from competing retailers and they find a way to harass and intimidate small online sellers,” he said.

Harvey Norman’s general manager of computers and communications, Luke Naish, said Delbianco’s concerns were unfounded in Australia, and that the Internet made the world a tighter and more competitive market. This was a positive for consumers.

“The reseller and distribution market existed and evolved in IT long before the retail market ever did. It has also been online for more than a decade. So I’m not sure how retailers would prevent online retailers or resellers from existing,” he said.

Naish sees a strong future for traditional retailers provided they employ multi-channel retailing.

“While there are characteristics of this in Australian retail, the goal is something that has yet to be achieved on the scale of say, Best Buy in the States. A true multichannel retail provider provides real choice and that is its value.”

According to Naish, Harvey Norman has recognised the changing dynamics of the market and has begun to place “far greater” emphasis on developing a true multichannel retail presence of its own.

Executive director of Australian Retailers Association, Richard Evans, said traditional retailers should realise the potential impact of the online channel and join the market with good online facilities themselves.

“I can’t speak specifically, but in general terms history says that when any market is threatened the people in that market will try and protect their market. Although there is no organised discussion on this - and I’m not necessarily expecting any - you would expect retailers if they feel threatened to try and protect their market,” he said.

Evans said savvy traditional retailers were learning to use the Web more effectively, offering consumers the ability to browse and purchase products online in addition to the traditional tactile experience of visiting a shop.

“There’s always been different methods of retailing, and online is retailing just like any other traditional form. While some people would feel a threat with online, it’s just another form of retailing," Evans said.

“I support all forms of retailing whether it’s online or through traditional means. What current traditionalists will have to do is get used to the fact that online is here and adapt.”

In his meetings with Australian ecommerce businesses, NetChoice’s Delbianco said the biggest concern was access to supply, where too many online businesses couldn’t get access to the goods they needed because of channel conflicts stimulated by competing retailers.

But Deals Direct managing director, Paul Greenberg, said his website, a leading online department store in Australia, enjoys rich and increasingly beneficial relationships with local suppliers.

“As one of the founders of DealsDirect and current head of business development, I have gone out of my way to understand the challenges of local branded suppliers and distributors, and how the online channel could best work with them,” he said.

“We have made tremendous progress but, of course, more work needs to, and will be done, in reaching out to suppliers, especially in our new and emerging categories.”

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