Wheels turn in online retail’s favour

Toll and Linfox are looking to challenge Australia Post’s dominance in parcel delivery. The see growth moving from bricks to clicks.

Last month I spent time at the US consulate waiting for an American visa. On the announcement boards the consulate proudly revealed that those who were given American visas would have their passports sent to the required destination via the Australia Post delivery system.

But on discussion I discovered that Australia Post had lost the contract and that the passports would be sent via Toll. The American consulate contract is not a critical loss for Australia Post but it’s a sign that the battle is heating up to determine who wins the 2014 battle for the delivery of Australian on line parcels.

Both Linfox and Toll have been slow in the area but are now making their run. Australia Post under Ahmed Fahour has captured an incredible 80 per cent of the market – a remarkable achievement for a government body. Toll, under Paul Little, had decided not to enter the parcels area but rather to concentrate on its major stock transport business (Heart and parcel: Toll's play to topple the Post, August 23).

And of course that business got an enormous boost late in 2013 when Toll captured the Coca Cola Amatil contract which is one of the largest in Australia.

But the growth area in transport is going to be the delivery of parcels usually created by online retail purchases. That is why the new CEO of Toll, Brian Kruger, decided that the market will become too large for Toll not to participate. The Fox group has made a similar decision.

And of course there are other players in the area including DHL. So the stage is set for an intense skirmish between the competitors in what is one of our rare growth industries.

The plan to substantially boost shift allowances and penalty rates in July 2014, which was set in stone some four years ago, is going to substantially increase the cost of retail selling in Australia which will deliver a huge boost to online purchases.

As the online industry moves to ten per cent and higher proportions of the retail trade, economies of scale will kick in and drive online market share even further. Australia has been a major investor in shopping centres and I don’t think that the overall shopping centre industry fully appreciates the magnitude of what is going to hit them.

I must add that the top grade shopping centres like Chadstone and Bondi will not be affected. But it will be a tough time for many others. Many strip shops will struggle.

When I talk to cab drivers that are finding it difficult to get a return for the time they are spending behind the taxi wheel I always suggest van driving as a useful alternative.

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