The tarnished reputation of e-tailers is likely to lose more shine this week in the run up to the start of the GST. On top of this, doubts have been cast on the darling e-tailer of them all - Amazon.com.
With the business section of most popular media talking about little except the GST, there is bound to be a considerable amount of confusion.
Added to this is the row over what will happen to the very politically sensitive price of petrol. Not to mention the row over GST on rents in caravan parks. Amazon.com's problem surfaced late last week as reported by ZDNet.
Wall Street analysts are now saying that Amazon.com is looking more like a plain old-fashioned retailer. As reported by ZDNet, debt is beginning to pile up at Amazon, and Lehman Brothers convertible bond analyst Ravi Suria said last Friday in a research report that "the company is displaying the operational and cash flow characteristics of a normal retailer, despite its 'virtual' pedigree."
Indeed, the company itself is looking more like a regular retailer and behaving like one. For example, Amazon.com is building warehouse space. Hold on a minute, "Building?" Isn't bricks and mortar stuff? And if it is, then what indeed separates Amazon.com from any other retailer except you can only order over the Internet. Last year, everyone and his Internet-compatible dog where pointing to Amazon.com as the perfect model of an e-tailer.
So, if the darling e-tailer is looking tarnished, what hope is there for the other e-tailers -- especially those listed locally.
Some of them are very small operations. For example Chaosmusic has a market capitalisation of less than AU$5 million. All of them will eventually have to make a profit or simply go out of business.
And making a profit is a tough call even for the established bricks and mortar retailers like Coles Myer and Harvey Norman. On top of this is the GST. What is certain is that it will start at midnight next Friday, 30 June.
What is not certain is what will happen to prices overall -- retail, e-tail or any other 'tail.
Open any newspaper, tune in to any radio news bulletin and watch any TV business program and will find a new interpretation on the GST.
E-tailers trying to convince shoppers to buy from them already face a tough time. This week ahead will prove just how tough it can get.
