E-Retailing Services Approved by the Australian Government - Coursework Example

Logistics management The consumer interests have changed and point and click way in terms of buying or selling products has taken internet to a new level of economy, even in case of products or services that were once considered to be only a part of a strict traditional practice like retailing. The growth in these sectors is fueled so high that a new term of e-tailing for retailing has been coined. While common perception is that all products can be had from shops; however, when a hypermarket is looked at having thousands of products from hundreds of categories, one generally forgets how all those products are there in the first place. Consumers even expect products to be available to be on the day of their launch, simply at the click of a mouse; clearly indicated that consumer perceptions about buying have changed. Patience to wait for a new launch, get served by it and ultimately satisfied has reduced drastically. The customers’ perception about retailing and buying expectation hasn’t changed on its own, but has altered because the supply logistic system has been transformed in the recent years (Sparks, 1998). Logistics management has taken over the physical distribution of materials and their management, and the whole structure and functioning of the supply chain has changed (Jones, 2002). Online retailing has actually done away with holding inventory and stock in the warehouse which was considered to be a very expensive proposition involving, in the first place, huge costs of building warehouses, operating and maintaining them. Not only that it, again, involves high costs are incurred since number of vehicles are used to ferry the products from factories to warehouses and from warehouses to shops. Online retail store logistic is based on a simple logic that they lower product costs and add value to time and place utility. Online retail logistics derives its strength from factors like cost, retailer and consumer change and service requirements, since; otherwise, expenditures on logistics can be exorbitantly high if they are not controlled in the correct manner (Fernie, 1990; Fernie and Sparks, 1998). The most worrying factor is that if the stock doesn’t sell, it stand chances of becoming obsolete. Online retailing offers a value proposition in terms of becoming a single-source solution for the every-busy consumer of today. This is because online retailing doesn’t provide only products but also as much information about the same as one would need. Innovation add further value to this proposition. For example, certain grocery websites give the customer an option for a recipe preload, which means they can load a recipe on the website, click for results and order a matching recipe that comes in the results. Traditional stores do not offer this facility, since they can’t, and nor can they make for a customer his or her customized weekly shopping lists or shopping aisles that are personalized. A stored weekly information from a customer on a online retailing facility make shopping the same or other products next week easier, less cumbersome and a lot time saving. Though, it cannot be denied that there can be exceptions in rules. For example, in case of groceries, Smaros et al. (2000) has seen that even though customers may not like the idea of buying grocery online, but once they have tried it, the convenience captivates them. There is a cost imperative in case of online retail logistic activities and can turn into a profitable business venture if it is executed efficiently and effectively while resources are being allocated most appropriately throughout the supply chain. It can also yield extremely acceptable service benefits if demand and supply is integrated well with the help of technological systems and information technology. When there are spurts in demand, the reaction time can be radically quick through the efficient use of information technology. Operated properly, a good logistics system would definitely improve service and reduce costs while putting the retailer at a competitive advantage (McKinnon, 1996). This is irrespective of the parties involved in the supply chain – they could be within the country or country to country. Australians, for instance, shift to online retailing for reasons centering around convenience and price and consumers prefer shopping online than going to the local supermarket for their needs. That gives enough reason for Australian retailers to give up their bricks-and-mortar operations and switch to retailing online. Australian retailers are waking up to this call, but there is still a long way to go. The primary reason considered for this is the procurement of the goods from the manufacturers; unless even manufacturer are willing to sell them the products online, the business for mall retailers cannot be sustainable, which is needed to supplement their bricks-and-mortar operations. The option they are left with is look for supplier, like China, who can sell them products of equal quality at relatively cheaper prices so that their overall cost of procurement is reduced and yet profits possible. The driver, bigger in the sense here, is the price and it would be impossible for the local retailers to compete unless their business models and supply chain is revamped (Keane, 2011). The supply chain revamp has to be on the lines suggested by Drucker (1962) which saw the distribution as the focal point in business in order to save costs and achieve success. He had envisioned this concept decades back when information technology hadn’t even inseminated the world. That time supply chain was considered as a disparate function and not much of logistics went into it. Once it started getting attention, a coupe of very important things began to be understood. The importance of demand and supply came to be realized in the chain; making it a demand-driven supply chain. In the marketing channel, customers started gaining more access and power, all due to the integration of information system in almost every sphere of daily life. Inventories, unnecessarily staying idle in the supply chain, began to be eliminated, and focus shifted to outsourcing of certain activities, particularly on non-core nature, to the external sources. As on date, China is considered to be a darling of procurement managers worldwide. This is attributed to its extremely sophisticated and well-coordinated manufacturing mechanism (Luca, 2011). Through the last two decades China has been at the forefront of exports to even the developed European nations and US; shipping anything from small electronics items to garments and even heavy machinery. That growth has been phenomenal and has put China at the top slot of exporters with all time highs in the volumes exported. This, however, began to change since 2006-07, on account of currency appreciating and labour costs increasing by the day; something that has impacted both the China and the nations that it exports to. The global financial crisis is said to be one reason for the increasing labour costs. Increasing labour costs give rise to increases input prices for the products manufactured in the country and meant to be exported. This is what has been felt by many Australians who were earlier interested in procuring from China. Undisputedly, a number of Australian businesses have realized that they need to turn to China, and some other Asian nations, for procurements in order to make their businesses sustainable. Though, it is mentionable that a number of these businesses could manage sourcing in an effective manner on account of a number of pitfalls which they realized once “going into” the act. There was also a mismatch between the project cost savings and the actual ones after procurements were made for own or for use of resale by these businesses (China Procurement, 2011). Issues pertaining to communication and cultural differences are said to be the primary factors that begin the downslide of the euphoria. Importance of language and understanding of the Chinese culture are said to be two vital factors for any external business to strike a chord with the Chinese counterparts. These two are considered as offering a competitive advantage for an external sourcing country. On the political front, Australia-China FTA negotiations have been going on for some time, hoping to shape an agreement between the two nations. These negotiations have been discussing each other’s trade regimes in order to gain mutual access to markets in both countries (Australian Government, Department of Foreign Affairs and Trade, 2006). That apart, there are many agents based in both countries to help retailers identify, evaluate and select suppliers for their retail procurements based on the competitive advantage one offers over another in terms of product costs, time and place utility and as well as international transportation from China to Australia. Both Australia and China are a part of Economic and Social Commission for Asia and The pacific (ESCAP) region, which are responsible for developing integrated transportation systems based on projects, initiatives and policies drafted from time to time (ESCAP, 2005). ESCAP countries have intermodal services and infrastructure., and even though there are numerous challenges that these countries are facing in this, initiatives and remedial actions are continually underway to meet these challenges. The difficulties might be on account of differences in political ideologies, but almost all these countries recognize the importance of having a foolproof international transportation network in place in order to enhance the economic growth and social development. Australia has been recently at the forefront of realizing the importance of freight moving both internationally and interstate. In this connection, government has resorted to target-setting between States through a new program called ‘Auslink’, which also is private sector-funded. This has led to an advanced transportation network at the intermodal level. China, on the other hand, has specifically developed as many as 97 objectives related to transportation – both international and national – as part of its Tenth Five Year Plan and 2015 Long-term Programs of the Railway Scientific and technological development (Ministry of Railways, China. 2005). It has envisaged the development of new and improvement of the existing networks through integration of information technology and state-of-the-art methods keeping in view safety issues and social one along with safeguarding environment. Agreements between the two nations govern the export of goods from China to Australia and freights received at Australian ports and airports are subject to customs inspections, quarantine and clearance from the Australian government (Australian Government, Department of Foreign Affairs and Trade, 2010). The import of goods is broadly categorized into the ones that have absolute prohibition or part restriction. Goods falling within the absolute prohibition category cannot be imported by retailers and goods on which there are restrictions can be provided relevant permissions are ought for such goods. Good thing about Australian customs is that it offers many schemes for the local businesses and manufacturers willing to import goods. Schemes include import of items at what is called deferment of duty or at concessional and free rates. This is done with an intention to support the industry and is supposed to act as a boon to Australian importers. Known as Tariff Concession System (TCS), the government has devised this so that the local industry becomes internationally competitive. The ultimate benefit that it offers the importers is actually passed on to the end consumer who is left without charging hefty good tax on the commodity imported. And it suits those industries the most which do not have substantial local ground or manufacturing facilities in the country. But, under this scheme, there are also goods that fall in restricted category like clothing, foodstuffs and motor vehicles. These are termed as ineligible good (Australian Customs and Border Protection Services, 2011). Most of it is handled by eRetailing services approved by the Australian government, whose operations are based on a quarantine approved premises and a customs approved bond. These services have strict clearance procedures in place and faster and satisfactory clearance processes, thus minimizing costs, by liaising directly with Australian Quarantine (AQIS) and Australian Customs, and international airline and shipping companies. Import threshold and enhanced compliance are also looked into by these services. Goods found not to be meeting the specifications given in the documents, like found of undervalue or part shipment, can be detained until the import processing or duty charges along with goods and services tax (GST) are paid by the importer. References Australian Customs and Border Protectiion Services. (2011). Tariff Concession System. Available at http://www.customs.gov.au/webdata/resources/files/commer01.pdf. Accessed on December 13, 2001 Australian Government, Department of Foreign Affairs and Trade. (2006). Australia-China FTA Negotiations. Available at http://www.dfat.gov.au/fta/acfta/060601_subscriber_update.html. Accessed on December 13, 2011 Australian Government, Department of Foreign Affairs and Trade. Available at http://203.6.168.90/fta/acfta/. Accessed on December 13, 2011 China Procurement. (2011). Getting it right for Australian and Chinese businesses. Available at http://www.chinaprocurement.com.au/. Accessed on December 13, 2011. Drucker, P (1962). The economy’s dark continent, Fortune, April, pp 265–70 ESCAP. (2005). Integrated International Transport and Logistics System for North-East Asia, Draft for the Workshop (same title), 11-12 April 2005, Ulaanbaatar. Fernie, J (1990) Retail Distribution Management, Kogan Page, London Fernie, J and Sparks, L (1998) Logistics and Retail Management, Kogan Page, London Jones, D T (2002) Rethinking the grocery supply chain, in State of the Art in Food, ed J-W Grievink, L Josten and C Valk, Elsevier, Rotterdam. Available at www.leanuk.org/articles.htm. Accessed on December 13, 2011 Keane, B. (2011). The threat of the internet to retail, Available at http://www.crikey.com.au/2011/07/27/underestimating-the-threat-of-the-internet-to-retail/. Accessed on December 13, 2011 Luca. (2011). A New Approach to China Procurement. Available at http://www.chinasourcingblog.org/2011/11/a-new-approach-to-china-procur.html. Accessed on December 13, 2011 McKinnon, A C (1996) The development of retail logistics in the UK: a position paper, Technology Foresight: Retail and Distribution Panel, Heriot-Watt University, Edinburgh Ministry of Railways, China. (2005). Part Three: Intrnational Experience in Moving Toward Integrated Transport Systems. Available at http://www.unescap.org/ttdw/Publications/TPTS_pubs/pub_2399-1/pub_2399-1_ch9.pdf. Accessed on December 13, 2011 Smaros, J., HolmstrÄom, J., and KÄamÄarÄainen, V. (2000). New service opportunities in the e-grocery business. International Journal of Logistics Management, 11(1):61-74. Sparks, L (1998) The retail logistics transformation, Chapter 1 ( pp 1–22) of Logistics and Retail Management, ed J Fernie and L Sparks, Kogan Page, London Read More