Why Buying Games Online May Actually End Up Saving The Australian Economy

Buying video games is detrimental to the Australian economy, right? Well, not exactly, claims Leigh Williams, the founder and CEO of eStore Logistics - who has seen his profits and staff count triple in the last year alone. We spoke to Leigh about the rapidly growing online shopping sector, and how it may end up creating more jobs for Australians in the short and long term.

"Yes, you might have to pay more,” claimed Gerry Harvey. “But it's the right thing to do. You'll pay a lot more if we lose jobs and retailers close down."

Gerry Harvey is talking, of course, about the perils on online retail, and the influx of Australian consumers buying their goods online; regurgitating the standard line that shopping online is the harbinger of our economic demise - that the retail industry will collapse, thousands of jobs will be lost and we, the almighty consumer, will ultimately pay the cost of our online shopping sins with an inflated cost of living.

But does this assertion hold any real weight? And what are the real consequences of shopping online? As avid consumers of video games we generally punch above our weight when it comes to importing goods from overseas – are our actions detrimental to local industry?

Leigh Williams, Founder and CEO of eStore Logistics says no, quite the opposite. By shopping online, gamers are, in actual fact, aiding the Australian economy.

“Gerry Harvey and others will criticise consumers for going out and buying video games online,” he begins, “even if that online store is based in Australia - because there’s this perception that you’re contributing to the closure of regular retailers.

“But just because you’re not actually physically walking into your local EB or JB Hifi, that doesn’t mean you’re not supporting the local industry."

eStore Logistics is a rapidly growing company that helps manage the rapid increase in Australian online shopping – it’s their job is to help eStores like OzGameShop and PlayAsia move product from the manufacturers, to warehouses, to your home. In the past year they’ve grown by 288% - a growth rate that has led to a three-fold increase in staff.

“We work with a number of different online retailers who ship out thousands of products every day to consumers around the country,” he claims. “Just because you’re shopping online, that doesn’t mean you’re not contributing to the Australian economy in some way.

“Increases in online shopping is directly affecting the rise of auxillary industries in Australia – like logistics - just because the jobs are moving from retail, that doesn’t mean they’re disappearing from Australia. They’re appearing in new areas.”

It turns out that, even if you buy video games from eStores based overseas – such as PlayAsia or OzGameShop, you’re still having a positive impact on the Australian economy.

“If you happen to buy from an international web store, the goods have got to get to you somehow,” says Leigh, "and that’s still going through the Australian supply chain once it hits the country.”

Leigh Williams believes that the rise of online shopping has the potential to provide more jobs than retail – in new, rapidly growing industries such as logistics.

“More jobs will be created through the handling,” claims Leigh, “because handling is actually much higher in the logistics department for a consumer order compared to a retail order.

“It creates competition. Australians are getting better value for money and in most cases jobs are being created in other areas where they’re being lost at retail.”

And Leigh Williams’ assertions are being backed up by recent studies. Just two weeks ago the McKinsey Global Institute released a report stating that 21% of GDP growth in mature countries could be attributed to new industries driven by the internet - for every job lost offline, 2.6 jobs are being created online.

These are findings that go directly against the culture of fear being stoked by retailers struggling to adapt to what is essentially a rapid fire siege of competition in a territory where there was no competition before; a territory where, typically, one or two specialist retailers have been privvy to a monopoly over what was sold, and at what price.

Now there is competition, and traditional retailers must adapt to that competition - consumers aren’t suffering and, by all accounts, neither is the Australian economy. There is undoubtedly still a place for Australian retailers, but it’s up to the retailers themselves to work out precisely where that place is.


Comments

    Every time I heard retailers complain about lost jobs, I just think of the Industrial Revolution. That cost jobs too, but the workers found new positions in more efficient areas and the world was better off.

    Just because something takes more people to do does not mean that it is better. Really, it is just inefficient use of resources.

    Let supply and demand work its magic here instead of needlessly propping up dinosaurs.

      The industrial revolution did help contribute to some shocking unemployment though.

        Things did balance out in the end. It may have been unpleasant for those involved but in the long term, they either retrained in a new field...or died.

        Still, hard to find anyone who would argue that the industrial revolution was a bad idea.

      You know who's the real winner in all this? Australia Post.

      They masterminded the whole thing.

    Another that the Gerry Harvey's forget to mention is where the dollars we save on games end up going?

    Sure we might not be spending the full price of a game in the local shops, but the money that is saved by the consumer is largely spent elsewhere, perhaps even helps people to have a little extra cash in their pocket when the sales roll around.

      In Gerry Harvey's pockets so he can go spend the money in another country's economy on a lavish holiday.

    so, will this lead to a new renewal of things such as australia post?

      Funny you should mention that. My fiancée is a Postie in Canberra, and he often tells me how mail volumes (i.e. letters and such) are dropping because of the invention of email and social networking. However, he now has to deliver more packages than he did when he started the job nearly three years ago. So what I figure is that, if people didn't buy stuff from online stores, there would be a lot of Aus Post employees without work. In fact, a lot of mail facilities around Australia are actually short staffed. So what's that saying?
      And to answer your question - yes, it seems so. :p

        My wife's aunt is a manager as Australia Post and she's been stressing for years about the general decline in business, especially as she just bought a house recently - but apparently things aren't so slow that she's had to stop constantly working overtime.

        the problem there though, is that it's my understanding that the biggest profits that AP makes aren't from delivering packages, it's the hundreds of businesses that would ordinarily sent letters and small parcels within the same area, as opposed to larger parcels being sent interstate/international

    “Yes, you might have to pay more,” claimed Gerry Harvey. “But it’s the right thing to do. You’ll pay a lot more if we lose jobs and retailers close down.”

    ahhh no you won't because you will still be buying online....

    That's what I like to hear. Here's a few more jobs for you Australia. *submits payment to ozgameshop*

    Gerry Is just upset that the money isn't going to his pockets.

    that's all.

    Mr William's has just spelled out the process for the rest of us.

    Just bought Portal 2 for $35 from the UK. You guys can thank me later.

    An interesting perspective, and of course it is true that some Australian industries are benefiting from the increasing import market.

    Parcels are the only thing keeping Australia Post afloat since emails made letter writing redundant, for example. Give and take, all arising from essentially the same technological development: the internet.

    But it's a shallow argument in some ways, as the bulk of your money is still being sent overseas, even if some is finding its way back in to postal services and distributors. In this sense, it's a stark contrast to a purchase made from an Australian retailer of an Australian product, where the money remains in the country.

    Again, give and take. There are checks and balances. Swings and roundabouts. Pain and pleasure for the economy go hand-in-hand, whether you choose to buy locally or internationally.

    That said, I don't really care. On a purely mercenary scale, I go where the product is cheapest. If local industries don't adapt, they'll die, and IMO they deserve to die.

      I used to work at Dick Smith. We'd make, at most $10 off a $90 game sale. We'd bought the game from our purchasing group for $80ish, they'd claim to get it from international distributors for $70ish.

      So, considering the base price of ~$40, of the $50 less I'm paying, $30 would've gone to non-Australian groups, and $20 to Australian groups.

        Exactly. Whether you're buying from Australia or the UK, chances are the majority of the money is ending up in the hands of the multinational distribution company that is running the show - not the retailer, and not even the game developer.

        Someone can feel free to prove me wrong just by letting me know what Australian-owned, Australian-based distributor is losing out from all this importing.

        Also funny that Gerry Harvey was singing the opposite tune when he wanted to import foreign goods to sell in his stores at a massive profit, thus almost single-handedly destroying hundreds of jobs and an entire Australian production industry. Bottom line is the only thing Gerry Harvey cares about is the amount of money in Gerry Harvey's pocket.

      It would be nice if the people working at Australia Post remembered that my packages (and my taxes) are keeping them employed though. I get packages carded all the time and I absolutely hate it, because it always goes to the post office that's only open until 5pm and is staffed by horrible old people who appear to hate everyone and when you go to pick up the package they carded, you're personally putting them out. Apparently the postal service isn't actually a service.

        I don't mind my packages being carded. Apart from minor annoyance that I have to get up early on a Saturday morning to go get them, the plus side is that the PO has a handful of cute young Asian chicks working there :)

          We have a strange anomaly in our area, where they only card domestic parcels.
          Yet international deliveries, which are more frequent, and of higher value, are just left out the front, or in the mail box if it's a game or small book.

          Oh, and size doesn't seem to be a factor. When I got starcraft 2 mailed from an australian retailer, it also got carded.

        I began getting paranoid that the posties were just delivering cards and never goods on purpose, so I decided to sit in view of the post box and watch movies in the living room. Sure enough when the dog started barking, I saw the truck and wouldn't you know, the bastard leaned out of the truck, placed the card, and drove off.

        FFFUUUUUUU-

          To join in on the bitching about posties crew: My postie (when i was still in Aus) used to not deliver mail on friday. Full stop. It would be painfully obvious as well, because we would NEVER get mail on friday, and get two separate lots (bound with separate rubber bands) on monday.

          Not to mention the post office's horrible opening hours (either 9-4 weekdays when normal people are at work, or you can go on saturday and wait in queue for a half hour), and generally shitty service.

          Then there's the outrageous shipping costs they charge. Why does it only cost me $20 to send a package from Japan to Australia, yet it costs almost $60 to send a package of the same weight the other way? Wouldn't they be on the same fucking plane?

          I'll be glad when digital distribution puts those fuckers out of their jobs.

            I get my parcels sent to my work so I'm actually there when they arrive. I start earlier than normal (between 7 and 8), and the couriers usually come to our work at around lunch time. Australia Post however, simply leave a card. We were open (unfortunately I can't see the box from my desk) from about 7, and the card was left at 8:45 am. Didn't even bother. It wasn't even a big parcel, it was Portal 2. Just shits me.

          Really? Our Postie is a legend! We get a lot of parcels and he knows I sometimes work night shift so he told me a knock code system that he'd use to tell me whether or not I needed to come to the door to sign for it!

          He even went so far as to call me on my mobile when I was at work the other week cause he knows I would usually be home at that time, and asked if I was happy for him to leave the parcel at my door.

      What are you talking about? We don't manufacture anything. 99% of the time you are buying imported goods from an Australian retailer. So our money is still going overseas.

      It really doesnt matter where you buy your goods, from Australian Retailers, Australian online Retailers, or online overseas retailers, at the end of the day everything you buy is made overseas anyways, so no matter what you do, no matter where you buy, that money still goes overseas, so spend up and get yourself a good deal, its a catch 22 you're f****d no matter what you do...

    When people don't shop at Harvey Norman they hurt Gerry Harvey - reason enough for me to buy online, even if I weren't saving money in the process. Harvey Norman are consistently more expensive for goods (expecially electronic goods) that are of equal or inferior quality to their competitors - Harvey is just looking for reasons to justify his unrealistic pricing.

    I don't see the post office complaining (at least officially) about the rise of email and digital distribution, even though their business relies on people physically sending letters and packages to one another.

    Instead, they're adapting their business model and exploring other areas of revenue.

    People are using eReaders so Amazon started selling eBooks. People started using iPods so Amazon started selling downloadable songs. People started using Netflix so Amazon started selling downloadable TV shows and movies.

    You could argue that people won't buy downloadable media when they can just pirate it, but the success of iTunes, the Xbox Live Marketplace, Steam and Amazon would tend to counter that argument rather nicely.

    There's a place for brick and mortar retail, there always will be. But there's fat that needs trimming - we've already discussed how unfair Australian pricing is, and the retaillers claim they're not hoarding fat loot from charging us double what the US pays.

    Find the fat and trim it if you want to get people offline and back in your stores. It's gotta be there somewhere, and the more pressure we put on retaillers by going to online outlets, the faster they'll act.

    I don't feel so bad about buying from ozgameshop now. I know my wallet has never felt bad about it though. If retail stores get more comparable on price, then I will buy in store. But until then...

    "Yes, you might have to pay more,” claimed Gerry Harvey. “But it’s the right thing to do. You’ll pay a lot more if we lose jobs and retailers close down.”
    Who is he to tell us what is right? He has much more money than he will ever spend but he still charges ridiculously high prices and price fixes.
    By his own logic we should be buying from the small businesses he killed. Such a hypocrite.

    When you buy games locally, how much of that $80-$100 is actually put into the local economy after you factor in that the games store had to pay for the game at wholesale price, from the distributor who got the game shipped in after the disc was pressed and packaged in China (I assume they're not doing it locally).

    After everyone has taken their piece of the pie how much is left for Australia? The $10-$20 profit made by the game store? How about places like JB or Big W who sell at discount prices?

    Interesting - I wonder how many retail jobs may be lost though.
    If we buy locally, the retailers' money went overseas anyway. Some has to. Valuing every cash flow relating to both methods would be interesting indeed.

    This is how international trade is meant to work - production and consumption shift to wherever is cheapest. Countries with an advantage in certain areas produce certain things, because it's cheaper to do so.

    As well as creating jobs in service industries, it forces retail in Australia to be more competitive.

    Gerry Harvey has had ten years to react to the rise of internet shopping. He can't seriously claim that they can't reduce their margins or cut costs somehow. To argue against online shopping out of an appeal to jobs is both deliberately self-serving and willfully ignorant of economics.

    Retailers need to make themselves relevant by providing a service that online does not provide, e.g. by having knowledgeable sales staff - something that seems all too infrequent these days. If they don't, then they will wither and die because unless there is some motivation to choose a retailer over an online store, people will end up choosing the cheaper option. That's just the way the economy operates.

    F*** the retailers, I say. Especially the ones in Sydney. I can't find any clothes or shoes that I like, cos every shop in the CBD, and every shopping centre within 20km of the CBD has the same shit.

    10 years ago, I went shopping for something I wanted to wear or buy. Now its like you go shopping for what they want you to buy. Mass produced crap that they get for dirt cheap and they pawn off at top dollar, cos its 'the new season's style'.

    If it wasn't for online stores, I would be forced to spend money on something I don't want.

    Hands up who has stashed all the money they saved from buying games online in the bank... Anybody?

    So, importing games gets us stuff for cheaper, helps out guys like Leigh Williams AND still puts money back into the economy in other areas!

    That's a WIN/WIN/WIN situation!

      If I get you right then you spent the money you save on games somewhere else? That is (at least partially) true for me too. I've just received the Premium Edition for "Tactics Ogre - Let us cling together" from ozgameshop and a carton of wine from cellarmasters... this is where my money went and I know what I'm going to do tonight ^^

      Money saved on cheap games just means you buy twice as many games as you did 10 years ago when every game purchases was a BIG deal and money spent cautiously.

        Well that may have been true for me 10 years ago (ahh the heady wild days of pre-children) but since my game time is now significantly reduced I tend to only buy new games when the one I am currently playing is almost done which means extra saving since by that point the game I have been wanting has also dropped in price!

        The saved money then promptly goes on buying stuff for the kids... *sob*

          or occasionally on retro stuff at Game Traders! (darn lack of edit button)

    It annoyes me as a manager of one of the three "boutique" gaming stores to read some of the ignorance on this site sometimes.

    Its the F*%$ing publishers that are the reason retialers are losing to online beacuse they wont drop there cost price on games! No matter how much we ask.

    And screw you Leigh Williams i like my job why should i be made to move to a different idustry because NINRENDO, ACTIVISION, UBISOFT, SONY, MICROSFOT, EA wont drop there prices!

      How come the same boutique stores in america are selling games for $50.00 less on the day of release? Our dollar is stronger than the US!
      I'm not giving charity to the rich. The system is broken adapt or fail.

        Because they use they same excuses "we are a smaller market and it costs more to ship and produce." i agree a load of bull when our dollar is stronger then the U.S that is also why we have to focus on pre-owned... its the only way us "boutique stores" stay alive.

          Where does ozgameshop get their stock from? Surely there must be somewhere else you can get stock at the less inflated price. It has to be cheaper to import a pallet of games rather than one game at a time, or at least on par once import tax is factored in?

            Illegal

            there are import/supplier restrictions

          So why do the 'boutique' stores charge near new price on pre-owned games for months after release? We all know you are not paying 80-90% when you accept the second hand copy, yet we are expected to pay $5 less than the full recommended retail price (which has usually already been undercut by the local JBs anyway).

          I can see your point on new games, and yes I know the variety stores take a loss since they can make up the slack on other products, but I have never understood how a 2nd hand copy of a game can ever be priced at near new!

            ^^^^ this exactly... and same goes for them trying to sell you 'additional warranty' for your game when you buy itthe extra $5 you pay for that at the hyper inflated second hand price and you may as well have the game brand new!

            Ozgameshop is just the mirror site for 365games.co.uk, tailored for Aussie customers through things like listing the prices in AU$ (so you avoid conversion fees). Buying from Ozgameshop is simply buying UK copies of games, from the UK.

      Hmmm, anyone out there got the capital to set up a distribution company that sources the best deal for our independent game stores to provide an alternative product source that the existing distributors would then HAVE to compete against? By the sounds of it THEY are the ones that need to be hit hard to make a difference to the shelf prices in Australia.

      It may mean less stock on shelves for quite a while though.

      I'm genuinely curious - can you put pressure on publishers? If they're the greedy middlemen, surely it's better to try and influence them to drop the cost price?

      Or why not mobilise your consumers? People will sign a petition or write a letter when they know they'll get cheaper games out of it. Heck, any of the boutique gaming stores could get tens of thousands of consumers' attention over a sustained period of time.

      I understand your prices are in relation to what the distributor charges you, but do you really expect us to be screwed over because your distributors are screwing you over?

      On services such as Steam we see the Australian version of the game go to $90-ish the month before release. We're told that the retail sector demand it. Now if I see a game I know I want on Steam I pre-purchase it for $40-ish before it comes out, and before the price hike.

      The retail sector tell us that the Distributors demand $80 wholesale price so to make money to pay staff and rent we sell for $100.

      Now when you look at the situation the Distributors are claiming to be held to ransom by the Retail sector while the Retail sector are being held to ransom by the Distributors.

      How is this scenario possible?

      With the exception of Steam, my numbers are guestimation. For Proof? Look at Deus Ex 3, it's $45 US, when the game is closer to release I know it will go up to $90.

    The prices I can get goods at overseas compared to Australia, I could open a store and sell goods at 50% less than the shop next door and I'd still make 25% profit buying not from a warehouse or from the manufacturer, but from another retail store. Now, if the reason for the higher prices in Australia is because of overhead, logistics, oil, rising distributer costs or whatever, then how can I do the same thing and still make a killing buy just buying from overseas stores?

    It just doesn't seem to stack up, and the Aussie dollar is buying a ship ton more than it did a few years ago and yet prices are going up. When I can't even buy d20 dice locally, you better believe I love buying overseas. Better service, better variety, better prices and I don't even need to interact with a person! Brilliant!

    Now i feel really good buying $250 of games on the weekend from Ozgameshop and Thehut. Portal 2 for $27!!

    Ozgameshop must like the free advertising from this article if anyone has noticed:) Really effective. Hope this brings more positive sales to them A+!

    Something I never hear in these arguments: does anyone actually LIKE working retail?

    so my digital distribution still aint helping though right :P

    I laugh every time I see a Retail spokesman crying about buying online on the news. Seriously, they're just using "Support Australia" as an excuse. They don't give a rats ass about Australia or Australians. They just want to line their pockets and make their bottom line look good.

    Maybe be competitive for once instead of price gouging us, and we will give you our money. Until that happens, you will not see a damn cent from me.

    Couple of things not mentioned in the article which relate directly to it.

    1. We still have an outdated videogame rating system that bans or censors games which should be released here... This contributes to the importing of titles from overseas.

    2. Retailers of videogames in Australia tend to use half their shelf space promoting the "pre-owned" section of games which normally attract a higher percentage return on sale...

    3. Local gamers importing their games from overseas are then selling their games on in the pre-owned sections of the bricks and mortar stores on trade-in OR selling them on over Ebay which requires further usage of the postage system.

    4. The money spent on videogames in this country continues to rise year on year so the money we spend is going somewhere... not all of it overseas.

    What amazes me is that the retail stores dont take most "grey" imports as trade-in even though it is very clear they work in this country. Why else would we import? The market has just shifted due to an overall trend towards online shopping.

    The bricks and mortar stores would do better taking pre-owned titles and selling them in bulk online themselves instead of reserving space instore for them.

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