More Australian retailers are set to join in 2012 the online bandwagon. The shift to e-commerce over traditional bricks-and-mortar stores confirms the truth behind the cliché - If you can't beat them, join them.

Besides the shifting consumer preference as more shoppers opt to buy items online, what made Australian retailers think of a shift is the refusal of the Gillard government to lower the general sales tax (GST) threshold of $1,000 for Aussie purchases done on e-commerce sites.

The reason behind the refusal by the federal government to lower the threshold is that it would cost Canberra $2 billion to implement it versus the $550 million expected revenue if the GST tax would be reduced to goods worth over $20, according to a Productivity Commission report.

In the report, while the Commission recognised the value of the retail industry's contribution to the Australian economy with turnover at $242 billion, then Assistant Treasurer Bill Shorten at the same time said that the government supports consumers' decision to shop in whatever manner they choose, including online.

In lieu of lowering the threshold, Minister for Home Affairs Brendan O'Connor said the government would instead put in place in 2011 a compliance campaign to ensure GST and customs duty concession for imports with $1,000 or less are not abused or exploited.

Online retail continues to expand. According to a report released by the Minister for Broadband Communications and the Digital Economy, online retail sales by Australians in 2009 was between $19 and $24 billion or 3 per cent of total retail sales. The report estimates between 50 to 80 per cent of the amount was spent with Australian online retailers.

For 2012, PayPal Australia forecasts the country's online retail industry would grow by 40 per cent to a turnover of $33.8 billion from $24 billion in 2011. Although the industry continues to expand - to the detriment of the traditional retailers - it lags behind other online retailers such as those in the U.S. and U.K., said Frerk-Malte Feller, managing director of PayPal Australia.

Mr Feller said that there is still a wide opportunity for Aussie retailers to take advantage of the growing online marketplace in the country since in the last six months the average consumer spent $1,223 on online shopping, up by $130 from the second half of 2009.

"As Australian retailers struggler to build effective online presence, overseas competitors are taking advantage of the gap in the Australian market and are currently taking around 40 per cent of Australia's online retail spend," The Australian quoted Mr Feller.

Not anymore, said major Australian retailer Harvey Norman which announced on Tuesday that for 2012 it would not open any bricks-and-mortar store in the country. Instead, Harvey Norman would focus on the Asian retail market and launch more offshore Web sites, said the retailer's chief executive, Gerry Harvey.

"It's got to the stage where there's no incentive to open a major new store in Australia. None. Our rate of expansion in Australia would be lower now than it's even been in Harvey Norman's history," Mr Harvey told the Australian Financial Review.

He forecast that 2012 would be a turning point in Australia's retail sector with some surviving and some shuttering. To survive the tough retail environment, Harvey Norman opened in late 2011 a Web site based in Ireland which allowed its customers to buy computer games sans GST.

However, Harvey Norman is not abandoning the bricks-and-mortar model because it plans to open 10 new traditional stores by the end of the year in Malaysia.

"We are not doing this with a great deal of joy. We have been able to do this for a long-time, we have held off. But you get to a point where you can't hold off," Mr Harvey added.

Although he is riding on the online bandwagon, Mr Harvey warned of the repercussions of Australians not paying the GST in exchange for lower prices of items.

"Either jobs will go or wages will be cut, or it could be both... If we want low global prices, then we will most likely have to accept low global wages and working conditions. That's the rarely mentioned dark side of the GST-free bargains we are getting online," he stressed.

Mr Shorten agreed that online retailing is something that Australian retailers would have to learn to embrace, whether they like it or not.

"It is something every Australian consumer and every retailer is going to have to come to grips with, and sooner rather than later," Mr Shorten said.

"Online trading is a two-way street - consumers can benefit from using the global marketplace and Australian businesses can also benefit from being part of that same marketplace," added Minister for Small Business Nicholas John Sherry.

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