Fashion online: Selling to Australia
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Fashion online: Selling to Australia

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The internet is fast becoming Australia’s most popular shopping destination - 48% of Australians made online fashion purchases in 2012. A recent survey showed Australians spent the equivalent of ...

The internet is fast becoming Australia’s most popular shopping destination - 48% of Australians made online fashion purchases in 2012. A recent survey showed Australians spent the equivalent of £7.3 billion shopping online last year, up by 23 per cent from 2011. British companies such as ASOS and Topshop have already found firm footing in this high demand market and have opened the doors for other UK fashion labels to be successful here.
This presentation outlines the current opportunities and trends as well as tips on how to sell online effectively to Australia.

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  • - The country is approx. 4000 km from east to west and 3200km from north to south <br />

Fashion online: Selling to Australia Fashion online: Selling to Australia Presentation Transcript

  • Fashion – Selling Online to Australia Joanna Olivera, Trade Development Manager
  • 2 Presentations - UKTI Australia: Joanna Olivera, Trade Development Manager - General overview of Australia E-commerce and Fashion sectors in Australia Trends and Drivers behind growth of e-commerce Adapting the way you sell How can we help? - Guest presenter: Ned Shelton, Founder and Managing Director, Starting in Australia Pty Ltd - Q&A session
  • 3 Why Australia? - Over 1,000 UK companies - Very similar business, legal and regulatory culture - Best performing OECD country economically, with good growth prospects - Sophisticated, literate and multicultural market - Strong Australian dollar making UK goods and services more affordable - Closely linked to fast growing Asia-Pacific nations
  • 4 An Overview of Australia - Australia is an island continent and the world’s sixth largest country - Population is 23 million - All states/territories have separate governments, sitting under federal government with regulations varying between them - Largest and most populous cities are Sydney and Melbourne - Capital city - Canberra
  • 5 Overview of E-Commerce in Australia - Shift from traditional retail to online retail - Australians spent AU$14.2 billion in 201213 - AU$7 billion was spent on overseas online shops last year - Australia has over 16 million people active online - 62% of online users purchase goods and services online on a regular basis - The Australian uptake to E-Commerce has been very fast - Online sales grew 90% from 2010 to 2011
  • 6 Opportunities for growth in E-Commerce - Online sales in Australia are set to continue to grow exponentially over the coming years due to; • Roll out of National Broadband Network • Rise of M-Commerce – 53% of Australian mobile users use a smart phone - Strong Australian dollar and rise in disposable incomes
  • 7 Trends & Drivers behind E-Commerce - Australian consumers are attracted to online shopping for three main factors; 1) lower prices 2) convenience 3) speed of delivery 4) a wider range of goods than available from bricks and mortar retailers - Goods under AU$1000 bought overseas do not attract 10% GST
  • 8 Fashion Sector - Demand for niche products - Shift away from mass manufactured and standardised products - Demand for quality and uniqueness - Reflects popularity of mid-price and high-price niche items - Strong growth in menswear and childrenswear - Australians have demonstrated a strong appetite for foreign brands
  • 9 UKTI Australia Adapting the way you sell
  • 10 Adapting your website for Australia - Simplify customer service processes - Forms need to allow for international addresses and information, e.g. post codes - Answer enquiries promptly and be mindful of time difference - Keep website and product listings up-to-date - List prices in AUD and note that Australia uses the metric system
  • 11 Adapting the way you sell -Companies that ‘internationalise’ their websites dramatically increase their chances of obtaining overseas business - Credit card payments are popular and other secure payment systems, such as PayPal are becoming increasingly common - Focus on site security
  • 12 Shipping and Returns - Seamless checkout to reduce shopping cart abandonment - Clear information on time frame for delivery and cost - Companies offering free or reduced cost freight generally have an advantage over their competition - Efficient and clear returns policies
  • 13 Fulfillment Houses - A solution for companies is to use the services of a fulfillment house to distribute product orders - Viable for the companies with strong market demand - Note that it is rare for a fulfillment company to provide its own courier services
  • 14 Local Factors - A British company does not need to have an Australian Business Number (ABN) to sell products to Australia online - Australian domain names cannot be reserved. - A company must register its business to operate in Australia and then will have an Australian Company Number to have a com.au address - Goods and Services Tax (GST), at a rate of 10%, applies to most imported goods over a A$1,000 threshold
  • 15 UKTI Australia How we can help?
  • 16 How can UKTI help your business? - Carry out in-depth research on the market and research local contacts to your specifications (OMIS) - Help you attend trade fairs and missions - Product launches and PR and marketing support - Whatever you need to succeed in the market!
  • 17 E-Commerce Sector Report - A detailed sector report which expands on the topics featured in this presentation may be purchased from UKTI Australia - Features trends, tips on selling to Australia and Case Studies - Will provide a background that will allow you to make a reasoned and logical analysis of opportunities and the realistic potential for your product in Australia
  • 18 Contact Details Further information: Joanna Olivera Trade Development Manager UKTI Australia Email: joanna.olivera@fco.gov.uk - Ask questions at the end of this webinar or follow the conversation on LinkedIn - Keep in touch with the latest Australian business opportunities - Follow us on twitter @uktiaustralia
  • 19 Guest Presenter: Ned Shelton Founder and Managing Director Starting in Australia Pty Ltd
  • 20 Q & A Session Joanna Olivera Trade Development Manager (Creative Industries, Fashion and ECommerce) UKTI Australia Email: joanna.olivera@fco.gov.uk Ned Shelton Founder and Managing Director Starting in Australia Pty Ltd Email: N.Shelton@StartingInAustralia.com.au
  • UKTI: Selling on-line to Australia – 23 October 2013, from 9.30am (UK time) By Ned Shelton Managing Director, Starting in Australia Pty Ltd N.Shelton@StartingInAustralia.com.au www.StartingInAustralia.com.au www.SheltonsGroup.com Phone +61 2 9089 8792 © Ned Shelton 2013 21
  • ‘Sheltons’ & ‘Starting in Australia’ Sheltons – established in 1994 in Europe  Offices in Denmark, Cyprus, Malta and Australia  Areas   Sheltons International Tax Training Institute (SheltonsSITTI)  Local and international tax  Corporate services (all accounting, company secretarial work, tax, legal and accounting compliance, providing directors, registered office, company secretary, ++)  Australian office (Sydney) – not ‘Sheltons’ but ‘Starting in Australia’ www.StartingInAustralia.com.au 22
  • Starting in Australia Pty Ltd Working exclusively with foreigners doing business in Australia – existing and planned  Services      Tax advice & compliance, legal and company secretarial Full range of accounting services, GST & payroll admin Providing local director and public officer Business advice, intro to trusted partners & suppliers + Specialists – many specific issues apply to inward investor, not known to locally operating advisers  Independent – work well with your UK accountants and lawyers  Understand the UK (and many other countries)  Cost efficient – one stop but specialist shop  www.StartingInAustralia.com.au 23
  • Selling on-line - phases  Pure export – do nothing  Customs and GST issues  AUD 1,000 exemption – per consignee/addressee  No GST on import if GST-free in Aus (e.g., wheelchairs, food, clothing)  Customs duty important  GST payable at customs clearance – unless arrangement made for monthly/quarterly payments in arrears www.StartingInAustralia.com.au 24
  • E-commerce - phases  Pure export – use .com.au domain  Need an Australian entity or trade mark registered in Australia  Does not necessarily cause profits to be taxable in Australia  Useful (in searching) – and in reassuring the Aus customer  Pure export – use .com.au domain + marketing in Australia  Normally still not taxed in Australia on profits– even if have own full-time staff here conducting marketing www.StartingInAustralia.com.au 25
  • UK vs Australia – company tax Australia – 30% (flat, not progressive) – Applies to Aus subsidiary’s profits and to Aus branch’s profits – Proposed reduction to 28.5% UK – 23% – 1 April 2013, 23% (21% from 2014 and 20% from 2015) – small profits rate (SPR) 20% Australia – pay about 50% more in tax than the UK Typical planning: earn the profit in the UK rather than Australia www.StartingInAustralia.com.au 26
  • Branch (‘permanent establishment’) UK Australia www.StartingInAustralia.com.au ABC Ltd ABC Ltd has a branch in Aus Branch 27
  • Branch (‘permanent establishment’)       Taxed at 30% Do you have a branch (‘Permanent establishment’ (PE)) in Australia – deliberately – or accidently? It matters. ‘A branch’ – general term, often used in the context of company law ‘Permanent establishment’ (PE) – a tax term If UK business has a PE in Australia – taxed in Australia on the ‘business profits’ (i.e. trading profits) attributed to the PE PE arises if there is a certain type of physical presence in Australia www.StartingInAustralia.com.au 28
  • Branch (permanent establishment)  Examples of a PE in Australia (i.e. gives rise to 30% Australian tax on the profits):  An office generally trading / carrying on business  Selling through an (unrelated or related) agent – if that agent is mainly working for the UK principal  UK business ‘has a building site or construction or installation project in [Australia] or supervisory or consultancy activity [in Australia] connected with such a site or project, but only if that site, project or activity lasts more than 12 months;’  Example of no PE (no Australian tax):  Export to Australia via unrelated importer  Sales rep who simply introduces customers to the UK business head office  Renting a warehouse (for storage and delivery of your goods)  Have staff – if only performing marketing activities www.StartingInAustralia.com.au 29
  • UK tax – re Australian branch The profits from an Australian PE are most likely exempt from tax in the UK if UK business is a UK company  What is best – to have a PE in Australia or not?   UK corporate tax - lower than Australian tax  Thus: best to not be taxed in Australia – thus only pay 23% or less in UK – rather than 30% in Australia  Also: not being taxed in Australia means reduced tax compliance burden in Australia, avoids ‘discussions’ on transfer pricing, etc.  (If the Australian tax rate was less than the UK, best to have a PE here) www.StartingInAustralia.com.au 30
  • Australian subsidiary UK Australia www.StartingInAustralia.com.au ABC Ltd ABC Ltd has a subsidiary in Aus ABC Pty Ltd 31
  • UK tax - with Australian subsidiary 30% corporate tax (flat, no progression)  Profits calculation roughly similar to UK company  No dividend withholding tax on the distribution of the 70 (i.e. 100 less tax of 30)  UK Co potentially exempt from UK tax on the dividend of 70 received (exemption method)  Thus: from the 100 pre-tax Aus profits, UK Co receives 70 cash > UK tax (of nil)  Gain on sale by UK Co of shares in Australian subsidiary – potentially exempt in the UK  www.StartingInAustralia.com.au 32
  • No PE vs. PE; PE vs. subsidiary  UK corporate owner (of sub or PE), tax aspects:  No PE preferred – less tax in total – and no/less Australian tax compliance burden  PE vs. subsidiary – little difference (30% Aus tax in both cases, probably no UK tax on dividend from sub or on PE profits)  UK corporate owner, non-tax aspects:  Far easier to do business in the form of a subsidiary – if significant interaction and transactions in Australia (e.g. employing staff, renting property, marketing, interaction with local customers)  Running a business with no branch (PE) or with a branch – cumbersome  Costs (legal, tax, accounting) – best to have no PE; PE vs. subsidiary: costs about equal  Depends on the case www.StartingInAustralia.com.au 33
  • Forming & running an Australian company Can be formed in a day / on the spot  No minimum share capital needed  Must have   an Australian resident director (company law) and  an Australian resident public officer (tax law) Strict responsibilities for both  Small companies   do not need to prepare financial statements (FS)  or be audited,  ie annual accounts/FS do not need to be published with ASIC (= UK Companies House) Must always file tax returns  GST (= VAT) quarterly for small turnover  www.StartingInAustralia.com.au 34
  • Relevant case study – 1/3 ‘CoolClient’ UK Co – branded apparel (niche/prestige market)  Initially - no effort put in to in selling in Aus, but relatively strong on-line sales in Aus via UK site  To capitalise:   Started a subsidiary in Sydney  Opened a shop in Sydney (planning for Melbourne)  Held promotional events  Managed to get in to some large national outlets (department store and clothing shop chains)  Role of subsidiary/shop – primarily to promote the direct sales form the UK company to  a) direct on-line customers and  b) via the national outlets www.StartingInAustralia.com.au 35
  • Relevant case study – 1/3 ‘CoolClient’ – how we assisted  One-off up-front work  Advised on whether branch or subsidiary  Formed the company (subsidiary)  Provided Australian resident director and public officer  Advised on important practicalities re import, GST, customs duty  Reviewed shop lease, arranged necessary insurances, provided template for employment contracts, advised on wages to be paid to shop staff  Assisted developing systems and procedures re finance and accounting www.StartingInAustralia.com.au 36
  • Relevant case study – 1/3 ‘CoolClient’ – how we assisted  On-going work  GST (VAT) administration  Monthly management accounts  Fortnightly payroll administration  Set up payments for approval in banking system  Ad hoc advice and assistance (staff termination, company car for senior employee, visa issues, tax aspects of repatriation of profits, emergency assistance after shop break in) www.StartingInAustralia.com.au 37
  • Relevant case study – 2/3 ‘HorseProductClient’ UK Co – special products for horse health  Aim: to sell primarily on-line (to Australian horse owners)  Process   Started a subsidiary in Australia  Employed one sales person www.StartingInAustralia.com.au 38
  •  Relevant case study – 2/3 ‘HorseProductClient’ – how we assisted One-off up-front work  Formed the company (subsidiary)  Provided Australian resident director and public officer  Advised on important practicalities re import, GST, customs duty  Advised on how to urgently obtain an ABN  Advised on fulfilment houses and logistics regarding goods from overseas ordered by Australian customers  Worked with Australian bank to facilitate on-line payments www.StartingInAustralia.com.au 39
  •  Relevant case study – 2/3 ‘HorseProductClient’– how we assisted On-going work (so far)  Fine tuning import procedures (cash flow aspects, ironing out hitches in the import process)  GST (VAT) administration  Regular compliance work www.StartingInAustralia.com.au 40
  • Relevant case study – 3/3 ‘Client C’ UK Co – selling Indian produced consumer products  Aim: to sell primarily on-line to Australian consumers and to retail outlets  Process   Did not involve an Australian presence www.StartingInAustralia.com.au 41
  • Relevant case study – 3/3 ‘Client C’ – how we assisted  One-off up-front work  Urgently obtained an ABN  Fee: AUD 500  On-going work  N/A www.StartingInAustralia.com.au 42
  • Thank you, that’s all for this time! © Ned Shelton 2013 43