A National Retailers Association report last week suggested that thousands of Australian retail jobs will be lost because offshore shopping sites don’t have to pass on the 10 per cent GST required of local stores. However, it’s hard to square off that claim against the reality that goods purchased from overseas are often cheaper by a much larger margin. Here are seven examples (one for each day of the week).
Picture by Charlie Brewer
The theme of GST being the reason retailers locally are doing it tough is a familiar one. Harvey Norman founder Gerry Harvey, for instance, is always banging on about it, though that hasn’t stopped him launching his own offshore store for games.
The NRA report contains some questionable numbers, and many news reports made the sloppy assumption that the 118,000 retail jobs it mentioned disappearing as a result of all possible factors were purely the “fault” of the low-value threshold, which exempts purchases of under $1,000 from overseas from GST.
But the real sloppiness is the assumption that GST is the only reason buying online is cheaper, and that otherwise we’d be paying much the same without going offshore. It doesn’t take much work to demonstrate that isn’t the case. Even leaving aside issues of customer service and range, buying online is very often cheaper by more than 10 per cent.
A new release copy of The Hunger Games costs $12.95 from most stores. However, a quick search on Booko shows that you can get it delivered for much less; $8.07 from the UK Book Depository, or $9.99 from New Zealand-based Fishpond.
3. Mobile phones
We noted recently and with some astonishment that the official list price for the Samsung Galaxy Note in Australia is $899. Local grey importers will sell it to you for at least $200 less. Can’t really blame the GST for that one (and even Samsung didn’t try that argument).
5. Computer games
6. HDMI cables
Kogan is currently selling a 42-inch LED TV for $339 (plus delivery). There’s a catch — it won’t be dispatched until May — but given that the product actually attracts GST, it seems hard yet again to argue that this is the problem.
It’s a hard truth: the retail world has changed, and retailers have to adjust. Business models evolve; no path to profit is guaranteed. Complaining about the GST won’t improve customer service or business credibility.
Noticed other examples of this kind of price gap? Share in the comments.