Ombudsman takes on Australia Post over small business rates

Australian small businesses are struggling to compete with big business and multinationals because of the rates charged by Australia Post.

Small Business and Family Enterprise Ombudsman Kate Carnell wants to level the playing field after hearing the concerns of small business operators about the cost of sending parcels.

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"It appears that Australia Post provides volume discounts to big customers who send large amounts of parcel mail," she says. "The SME sector is just struggling to compete with some of the offerings being made with the big guys and the multinationals. I am examining options to level the playing field for small business to compete fairly with big business when it comes to sending goods within Australia. One option may be to establish a buying collective."

Carnell wants Australia Post to come to the party.

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"We will talk to Australia Post about whether they are interested in doing some bulk deals for the SME sector," she says. "I would hope they will see it as a business opportunity and if they don't maybe somebody else will."  

Carnell says she fully accepts there are a range of players in the space but if small businesses can't be competitive because of delivery costs, that's a problem. 

"With the current competition in the space it means we are encouraging SMEs to get online and grow their markets and that's not possible if they can't compete in the delivery space and we particularly see that in rural and regional areas," she says. "It would be cheaper to get something from China in terms of cost of delivery than from inside Australia. That's a huge issue." 

Greg Drage, the owner of Flinders View Music in Port Pirie, is one of the small businesses that has been stung by Australia Post. 

"We have an internet presence like most businesses do," Drage says. "I sold a guitar to a customer who was in Cooktown up the top of Queensland and because most people offer freight free I had on my website to be freight free."

When Drage went into Australia Post to ship the item he was shocked.

"To go to a post office box in Cooktown they wanted $75 or $200 for express delivery and the cost of the item was $275," Drage says. "I asked the customer if they would go halves on the freight cost with me and they wouldn't so I lost the sale." 

Drage says he and other small businesses are being gouged by Australia Post's delivery charges. 

It would be cheaper to get something from China in terms of cost of delivery than from inside Australia.

Kate Carnell

"Big business are sending very big items around the place freight free and I have to assume Australia Post is giving them a very good deal for that and it's something we can't compete with," he says. "It's not just a one off. I've wanted to send small parcels to people, a few guitar strings, and Australia Post wants between $8 and $10 and they are not much bigger than a letter."

Flinders View Music is the last remaining music store in the Port Pirie area and Carnell is concerned high delivery costs are impacting on the survival of small businesses. 

"In many cases, the online presence of a small business enables a physical store to remain open in suburbs and regional towns where it might otherwise not be viable," she says. "A physical store contributes to council rates, vibrancy and economic activity, which are all vital to the sustainability of local communities."

A spokesperson for Australia Post said it offers discounts to both small and large customers depending on their requirements.

"Our commitment to our customers is to keep our pricing competitive and ensure that they have access to products and services that offer value for money," the spokesperson says.

Australia Post pointed to offers on its pre-paid satchel ranges when buying in packs of 10 or 100 and its Business 250 offer for businesses sending over 250 parcels per year.

"As customers continue to grow, they may be eligible [for] further pricing offers," the spokesperson says. "Australia Post provides customers with a number of competitive advantages that our competitors cannot match."

Drage is not holding his breath for changes. 

"It comes down to whether they really want to help small business or be seen to be trying to help," he says. 

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