Seven Examples Showing GST Isn't The Problem For Australian Online Stores

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.

1. Books

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.

2. DVDs

Again using Booko, you can have a copy of I Don't Know How She Does It for $23.27. Locally, EzyDVD charges $32.97.

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).

4. Fragrance

Myer will sell you 125ml of Joop! Homme for $59. Strawberrynet has it for $50.

5. Computer games

EB Games is offering Star Wars: The Old Republic for PC for $78. Harvey Norman's Direct Import site sells the same product for $56. Even with $3.95 for postage, you're ahead by more than 10 per cent.

6. HDMI cables

Harvey Norman will happily rip you off $70 or more for an HDMI cable. Head straight to eBay and grab one for a tenth of the cost.

7. TVs

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.


Comments

    I purchased a telescope from the USA in Jan. It cost me $4,900AUD including international shipping, including a plethora of accessories to compliment the scope.

    I have seen the same scope in a local store for $10,450.00, not including any accessories (Eyepieces etc). it worked out to around $13,000AUD for the Scope + Accessories in AUS.

    GG Australia.

      What store did you use? I need a few new eye-pieces..
      Thx.

        you can have a look at www.ozscopes.com. Their service is not bad.

    I dont think 6 & 7 are valid points. What yo u find on ebay and kogan is not the same as what resellers are selling. Although there are plenty of examples of fragrance that have a bigger margin then the one you gave the example for. Makeup is another item that gets the australia tax put on top of it.

    Another point is the time frame. quite often its not available in australia or there is a delay. We live in a global economy people. News travels fast. We are not going to wait if we can buy it overseas and have it today.

      Define "not the same"...

      The HDMI argument is a valid one, as they are all made to a common specification (currently v1.4). The only difference between various brands of cables is their visual design, and materials used to plate the connectors etc - both of which have zero impact on the resulting digital video/audio quality.

      I do potentially agree that the Kogan example is a bit flawed. These days, user interface plays a big part in choosing a unit, and not all panels are made equal. Kogan's example is probably more one that flat screen TV's could be cheaper if the top brands wanted them to be.

        The harvey norman HDMI item opens another point. If you buy a $1000 TV from HN the sales person will tell you that you need $70 cables to get the best out of it. Complete nonesense of course, and a lot of people now know that. The staff are actively demonstrating that they don't deserve the customers trust, or their money. We know that staff at HN and others will just push the product they have the best margin on, or excess stock, regardless of suitability. If you want the best, research and buy online.

        I went to buy fridge from HN the other day and declined to buy the extended warantee and surge protector that recommended by the sales person. The sales person got pi**ed off and said that HN would lose money on the sale. So selling the fridge is essentially a lure to get you into the store so a sales person can scam you on worthless add on products... Great way to do business!

          man, I used to work at a Harvey Norman store in Southern Sydney, and during our staff meeting one morning, we were told that whenever we sold a laptop or desktop computer, we HAD to push to a certain anti-virus product (I forget which one now) due to the margin... the ticket price on the box was $140, but we were told that we could "make a special deal" for the customer and offer it for $80-90 in a larger sale...

          I found out later that day, that the discs were costing the store $3.48...

    The computer game prices are outrageous.

    I got the collectors edition of Final Fantasy XIII-2 for $60 something bucks from zavvi
    EB were selling the same thing for $120

    Our dollar has been riding high for long enough that its about time these greedy pricks adjust their prices to a more realistic level

    As a recent transplant to Australia I wish someone could give me a logical explanation as to why prices are so much higher here...as evidenced by this article and the comments so far.

      Mate, I've been here ten years and I still don't get it. We love to rip each other off.

    These are all very lenient examples, which is a good thing. There are many, many more extreme price diferences out there and once people realise they can pay 50% less and and even less in some cases, they will start shopping online even if that same store they got the 50% price from is selling for only slightly cheaper, they have won the loyalty by having many products much lower than retail.

    The retail markup in this country is disgusting.. decidely un-Australian.. the profits the companies are making, most of which are large global companies not local ones, and the same ones making all the noise are not interested in the 118k jobs.. they are interested in their bottom-line and they are losing money hand over fist because of online sales.. people are waking up to their overpricing, just like people are waking up to other things because of the internet..

    If they want to get back in the game they have to stop overpricing/overcharging.. it's that simple. Heck, even digital content sold through places like Steam have the prices jacked up for the Australian market.

    They only have themselves to blame and should stop whinging that they have finally been caught with their hands in the cookie jar.

    I almost wish they would introduce the GST for offshore online shopping, just so they could stop using that as an excuse.

    Key word being almost ;)

    Companies charge whatever the market tolerates. We *were* too tolerant. When the currency was bad that used to explain the bad prices of imported goods. Now the currency exchange rate is hugely in our favour and the retail shops are keeping the difference instead of passing on the currency saving to their customers. We're not stupid though and we fight back via online sales - it's good to give the big middle finger to the guys who are trying to rip us off. Great stuff.

      Looking the the market 10 years ago versus today:

      - Reletively low Australian dollar.
      - Significantly lower availability of online shopping (especially on an internation level).
      - Greater security concerns over fraud and theft from consumers about putting their credit card details online.

      While geographically we obviously haven't moved - Australia is pretty isolated from UK and America; we seemed to just "tollerate" that it contributed to higher prices here for so long.

      While I agree with you in the real world lowering the price will decrease their current profit which in turn effect the CEO's bonus at EOY...
      Solving this issue? lay off staff!

      Also the other big issue is the extremely inflated rents that landlords and westfields ask for but this isn't talked about.

    I just bought a guitar pedal from the states for $220 delivered.
    Same pedal would cost ~$400 here... and I'd have to pick it up!

    Sunglasses.
    http://www.sunglasshut.com.au - AU$289.95
    http://www.sunglasshut.com - US$134.95

    Same company in different countries, over double the price. Look around and you'll find them for less than US$100.

    Sure add $10 onto my sunglasses, It'll still be better than half price.

      The worst part about this example is that the same parent company (http://en.wikipedia.org/wiki/Luxottica_Group) owns both sunglass hut and most major sunglasses brands, so they can't even use the excuse of Australian wholesalers adding in their markup - it's just pure profiteering.

    I'm all for achieving the lowest price on my purchases - but there are a few concerns which will often result in me buying close to home...

    - Clothes and fashion; with the exception of t-shirts, socks and underwear - I'm not a fan of buying clothes I haven't tried on first. I know most sites give measurement tables to help with sizing, but that doesn't go far to identifying if it will actually look decent on.

    - Warranty concerns; if whatever I'm buying is expensive enough to concerned with warranty - I'm immediately edgy about buying foreign. Not only will a warranty claim result in having to ship it back to the source, there's a big grey cloud over the consumer rights I have when buying within Australia.

    - Damage in transit; touching again on shipping/warranty concerns above - there's an inherant risk in shipping products globally. If you buy something from a shop front, you can usually check if it's broken before you pay; if not, you can easily take it back. Problem is with the overseas market is they already have your money before you've even put your hands on your purchase.

    At the end of the day, if I'm buying a commodity item, where each of the above don't worry me, then eBay and co are an immediate candidate for shopping - otherwise I'm stuck with the rest of the chumps paying far more than I should have to.

      All good points but a counter argument is if the product is double the price like it is in many cases and it fails, you need to buy another half price product . Your not behind even then as you are only paying the same as the local price for two.

    And outdoors gear! I have been buying stuff from the US and elsewhere for years often at half the price and the price of shipping was easily justified. Compare prices on REI, Moontrail, and others you can find on http://spadout.com to prices from the outdoors stores here, even the online ones such as WildEarth.

    Philips SensoTouch 3D electric shaver:
    Harvey Norman - $429.95
    Overseas Ebay Seller - $190.60 including delivery.

    I think this article highlights the differences between brick and mortar vs virtual stores. The reason B&M stores have higher prices is they pay higher rent, wages, superannuation, insurance, import duties, shrinkage (theft) etc. Virtual stores don't have to pay these costs so can afford to take a cut in profits in return for higher volume. There are many more factors than just GST to take into account.

      Not so Mark. As I highlighted in my post above, even the online/virtual stores jack up the prices because "they can" and will continue to do so for as long as people tolerate it before going elsewhere. I used to think the same thing, that because it was B&M they were charging more because of the wages they need to pay, the rent, the maintenance.. but that isn't the whole story.

      Let's use a purely virtual store as an example then, Steam:

      Soldier Of Fortune: Payback
      US$54.99 if you happen to live in Australia, £6.99 if you happen to live in the UK.

      And loads more: http://www.steamprices.com/au/topripoffs

    LEGO!

    From the same site, just changing the region.
    Millennium Falcon - AUD$249.99 , USD$139.99
    Super Star Destroyer - AUD$699.99, USD$399.99

    last time I looked: 1 Australian dollar = 1.0482 U.S. dollars.

    WT!. Explain please LEGO?

    Preaching to the converted here. Perhaps you should be addressing this to and getting comments from the people making these claims in the first place? A rebuttal is rather pointless without submitting it for comment from the person/company/group you are rebutting.

    There is no reason that products made in China should cost more for Australians than they do for other countries - if anything they should be cheaper, because Australia is geographically closer to China. And yet we find a whole plethora of goods which cost a third to half (or even double!) the price Americans pay in our stores, and with the little retail competition we have here, prices are kept high.

    Why should we have to order something from America that was originally made much closer to home?

    I've been looking at buying a computer case here in Australia - AUS $265 + $15 shipping. Next I looked online, and Newegg are stocking the same case for USD $199 + $20 rebate! + free shipping! Then I looked at the origin of the case: Taiwan. A third of the distance, $100 more expensive. Do Australian businesses really think they can demand any price they want, and expect not to loose customers?

      The difference is that the "local" companies in America order in MUCH larger quantities and get bigger discounts on the wholesale rate.. but that only explains the price markup for the local companies.. it doesn't explain the price markup for the global companies, Woolworths for example, because they are buying huge quantities and shipping each of the different quantities to the different markets.. and shipping isn't THAT expensive.

      Someone told me a story about bananas once.. it costs less send an entire ship of bananas that have been vaccuum packed and refrigerated across the pacific ocean from South America, than it does to buy it locally from Australian growers... shipping costs peanuts.. so that can't be used to explain it away for these global companies.

      It's all greed. Whether you're talking about the global companies making a higher than average profit.. or the government over taxing imports and retail.

    Shoes:

    Keen Men's Shoes:

    Local Adelaide Shop: $200
    Online from Endless.com: $100 [including shipping from USA]

    I tried on the shoe locally and was going to buy it there, it had a pricetag of $100. When going to the checkout the assistant advised "that price tag is still left from our recent sale, the shoe is actually $200!" She then offered to call the main store to ask what she could do for me. Next I overheard her phone conversation that went something like"...okay, so I can sell it to him for $160!".

    AND THEN she turns around to me and says: "I spoke to the main store and they agreed that we can sell it to you for $180!". Fail! Hello Endless!

      Did you point out that Australian consumer law requires them to sell to you at the marked price? If they left the tag on from the previous sale then that is not your problem.

        No such law exists in such a black and white form. I seem to remember seeing an article on Lifehacker even where Gus spelled it out.

        That's not the law. Most stores do (unless the price ticket has what the item is as well), but there is no law on it.

    I started running 18 months ago and not having a clue what to buy, ended up paying $200 for a pair of good running shoes in a well known Australian retail store. I was happy with them so after doing a bit of research I ended up buying 2 more pairs delivered from the US for less than $170 TOTAL.

    Introducing GST on imported goods ain't gonna fix this - in my opinion it will highlight the massive price exploitation even further! The current business model is broken.

    Vehicle parts are another perfect example of this - 3 years ago I purchses some air springs from the USA - cost me $178 delivered to my desk in 7 days - the local supply was $350.( Identical item)
    Last week I purchased some parts from the UK - again delivered inside a week I paid 35% less than the local supplier wanted - and he did not have the item in stock, quoting a 2 week delay and wanting me to pay up front!
    There is certainly a lot more to the argument than simply GST.

    I work in gaming retail, and while the pricepoint variances are huge between Australian retail and overseas online stores, the reason why is different from some of those items listed.

    Take Modern Warfare 3, on 360. Cheapest retail price is around $78, the standard is closer to $90. Ozgameshop sells the title at $50.99. The issue though isn't that we're all paying $45 and the online store is choosing to sell for less. It's that publishers/distributors are cherry-picking prices and marking retailer purchase costs higher only for Australia. Retailers have not banded together to demand price drops, nor have the consumers, people are simply shopping where it's cheapest, which is online. That means retailers have no legs to stand on to demand equal region pricing, and that results in the mass price discrepancies we see now.

    It's disappointing because this is THE thing that is singlehandedly destroying games retail in Australia. Soon, and by the news about GAME it will be really soon, there will be less specialists left, less variety and less competition to ensure competitive pricing. The sad fact is when a distributor is charging $70 for a retailer in Oz to purchase, and yet only $45 for an overseas retailer both online and store, in my mind they are price gouging and if not illegal, to me it seems unethical. They must know they are choking the game retail industry and squeezing what they can out of it before it disappears just like the majority of the game development industry.

    And there's no reason for it besides the greedy fact that they can, and get away with it. This is not a rant to say that businesses should not want to make money, that's extreme. My point is publishers/distributors who sell games to Aussie retailers are choosing to hike their prices only for our region and purely because they can get more money out of us. They don't seem to care they are driving our industry to the ground or feel responsible for it, I just think there should be some kind of social responsibility for that. Because if retailers were paying as little as overseas reseller were, there would be NO SUCH price differences.

    I can only speak to my specific part of the industry, but so many customers come and ask us staff or make really rude disparaging comments about store prices compared to online, but the simple fact is we have to pay more - and someimes only just break even on price vs costs - and thats why you do too. Why not support action or campaigns targeting or even shaming publishers/distributors into aligning region prices and we woudn't have this situation.

      Well written mate and spot on the mark. I work in games retail too at a 'specialty store' and can sympathise.

      I think another example might help people here too:

      Modern Warfare 3 is $50.99 from Ozgameshop currently with FREE shipping.

      When it was released here, the RRP for it was $119.95 with most retailers having it on sale for $88-98.

      The actual COST of the game FOR THE RETAILER to buy (our company anyway) from the supplier was approx $90. In fact most new releases that have a RRP of $99-$120 have a cost of between $78-92.

      So as you can see, the margin that these retailers make on new games is very low! Especially since to stay competitive, games have to be on sale when they're released. Selling a game that costs $90 for the retailer to buy for $88-98 to the customer is insane.
      (Yes here $88 is less than $90 but many retailers like JB sell at a loss and make up the margin through other means.)

      Now continuing using our example of MW3, when it was released: ~$60 was the price that Ozgameshop were SELLING the game for (NOT their cost price). Given that a retailer BUYS the game for $90 (IS their cost price), you can see that the distributer/supplier is taking a HUGE chunk of that money due to pure greed! $30+ difference for a game is huge! And there is absolutely NO reason for this!

      Its no wonder grey imports are gaining more and more interest from companies.

      So it should make more financial sense to just grey import ALL your stock right?

      The problem that game companies have (and other retailers too!) is that if you grey import all your stock, you cut off the distributer/supplier and in turn piss them off! And so, in a games scenario, the company that grey imports gets cut off from bonuses and extras such as merchandising, support, advertising and bonus content (Read: NO pre-order DLC or Collector's Editions).

      This is the only part where I agree with you "Why not support action or campaigns targeting or even shaming publishers/distributors into aligning region prices and we woudn’t have this situation."

      Other than that the world has changed and retailers need to adapt not just expect consumers to pay, and while Its easy to presume it's bad to close up shop and move online the retailer will still require staff to manage the warehouse.

        I agree retailers need to adapt, and the proof is in the day-one markdowns on titles and massive push in online store offerings.

        I disagree that we, the retailer, expect you to pay. We kind of don't because we've marked the stock to cost price or $5 above it, the absolute lowest a specialist could go. Also, I pose the question as to how you would like to see retailers adapt? If the supplier demands a higher price and we don't pay it but grey import, as said before this angers the supplier, and not only can they limit pre-order bonuses and deals which endangers our future income, but they can at will choose not to supply at all because they have supermarkets to offload stock to. I'm not seeing a way apart from challenging suppliers on their pricepoints to help adaption along, and that's sad because we'd absolutely dance for joy if we could also sell MW3 for $51.

        The funny thing is the suppliers don't seem to realise that once specialists and indie stores start to go, they will then have to deal with the supermarkets turning the tables on them and being the ones to set the 'rules'. This would mean slightly lower prices for a short time, but inevitable less variety and less competition to keep prices lower longer term.

      Well said hummingbrid.

      This is simila to the response I received back from Lego Australia when I asked them about the price discrepancy between Australia and the US:
      "The prices of LEGO products vary around the world, and are determined by careful evaluation of local factors such as government taxes, transportation costs, exchange rates, market conditions and the cost of doing business. It is, therefore, inaccurate to look to U.S. pricing as a means of measuring anticipated Australian price equivalencies."
      So the price is set back in head office in Denmark. They still wouldn't explain to me the 75% markup of Australian products over US products.
      Super Star Destroyer – AUD$699.99, USD$399.99

      So until global companies stop the unwarranted gouging for the Australian market, I, as a consumer, will choose to source products from outside Australia.

        It's sad that the only way it seems to fight against the pricing issue is to not shop in Australia and strave the local industry, but I fully support you doing what you can, or have to, to get the best deal available.

    Sometimes retail prics are bullshit, recently, i purchased a new shaving head for my shaver, if i had gone to the shaver shop $80, but i managed to buy it from eBay $45 + $5 postage, and i purchased Uncharted: Golden Abyss for $50 + free delivery where it retails for $68.

    Thats the thing, with buying online and retailers unwilling to change, retailers are going to put themselves out of business.

    Is it the stores making all the money... probably not, the question is, is it the wholesalers or the brands that make up the high prices... apple has finally alined itself to more golbal pricing and I'm sure more will move soon enough... eg ATV3 US$99 AUD $109 (99+GST)

    Unless you work in the industry or have dealt with the Chineese Suppliers directly you have ZERO idea of how it works. The Chineese will not sell to Australia at the same price they sell to the US or Europe, and your argument is redundant about the dollar being high as the Chineese will increase the price in line with the rise of the dollar. These are the facts and Australian retailers are the one reported to be the next mining magnate, have a look in your street see how many people who own or run retail stores have flash cars or boats in their driveways or live in a mansion. The reality is that while we are held to ransom by importing everything we will always pay more than anyone else regardless of what you imagine

      If's that's the case why can I buy it so cheap as an individual from China. BTW I pay in AUD.

    Surprised no one has mentioned Adobe. For Photoshop CS5 extended:
    Australia: $1168 AUD
    USA: $699 USD ($664 AUD)
    Compare with Canada: $699 USD
    UK: £657 GBP ($990 AUD)
    Thailand: 24808 THB ($764 AUD)
    France: €1015 ($1274 AUD)

      I was reading thought the comments, intending to mention the atrocity that is Adobe Australia. They have moderated their stupidity somewhat with Lightroom, so why they haven't followed that with their other products is bewildering. (Yes, I bought a legal copy of Lightroom once the price became similar to the US price - you can't buy from the US store as it locks you out on the basis of geography.)

      The idea that the same software, downloaded from the same servers, is somehow worthy of a vastly inflated price here in Australia is obscene.

        Heh, like you I was wading through the comments to see if someone ANYONE mentioned Adobe so I could also tell them about the awesomeness of the new pricing of Lightroom 4 - AUD$187 as opposed to USD $149.

      Adobe Creative Suite was even worse... Until recently the price discrepancy (assuming US$1 = AUD$1) was more than double, even including GST. And this is for a product that costs thousands of dollars, and is a digital download coming via the exact same servers as the U.S.

      I should note that this pricing policy has been changed recently! For those who have been lamenting this stupidity, I just bought a legitimate CS5.5 upgrade for only about 20% more than US pricing... from a local seller (softwaretime.com.au).

      For those who had to stomach the pricing and had no choice but to upgrade sooner, my condolences.

    Prices are set on a wide range of factors. Aussies are amongs the highest paid people in the world. To put a product on the shelf it goes though a lot of people

    - The wholesale workers make more money, that adds to the cost
    - The distributor workers make more money that adds to the cost
    - The truck drivers make more money - that adds to the cost
    - The retail workers make more money - that adds to the cost
    - As petrol workers make more money , fuel is more expensive - that adds to the cost
    - As centre management staff make more money, rent is more expensive - that adds to the cost
    - As utility workers make more money, utility costs are higher -that adds to the cost
    - etc., etc.

    If you look at our prices compared to average wage, we not really any different to any other country. Teachers in some states of the US earn $31k in their first year, and $42k after 25 years. In QLD they get $61k in their first year.

    If Australia wants lower prices, campaign for workers wages to be cut in half. Prices will go down.

      You forgot to mention the interest rates the US pay? 4% or less?
      Europe around 5%?
      You can't compare apples with oranges

        Wages aren't the be all and end all of "what stuff costs".

        Fact of the matter is, retailers are there for consumers; the customer. Customers don't have a duty or responsibility to retailers - and if they can get a better deal else where, then they should be allowed to do so.

        Bleating about "online sales" killing their businesses won't make a huge difference in changing things. Changing their business model so they can be competitive will keep them in the game will.

      Bit of a chicken and egg thing to be honest.. if things didn't cost so much, the wages wouldn't need to be so high and if the wages weren't so high, then things wouldn't cost so much.

      The price of commodities should reflect that of the average wage earned in a country? I don't buy it.

        so what your saying is if a companies overheads are higher (due to higher wages and the knock in effect it brings) the cost of the component should still be identical to that of a country with cheaper wages?

        So every country including America and the UK (where the bulk of online shopping occurs) are getting ripped off compared to China for example.

        You need to compare like for like and the buying power of a dollar in its own country. An Australian dollar here less then a Dollar does in America. Just like some currency's have simple things like a bottle of coke cost houndreads or thousands of their currency.

        With my fuel price example where Australia were listed as the 4th cheapest you need to look at it like this. When you compare the average weekly income for a group of countries, then purchase 50 litres of petrol and look at how much that costs as a percentage of the average weekly wage, you can begin to understand how and why things are/appear cheaper in other countries.

        So are willing to take a wage cut to get cheaper pricing, take your head out of your arse it's exactly what the main reason is for pricing.
        The old "Big Mac" test is the best way to gauge what is true value aroung the world.
        It's about $4.50AU about $3.50US about $4 Euro's all relative to wages

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