Online shopping, intentional GST loophole or convenience?

So over the last few weeks, there’s been a bit of an uproar over the fact that GST is not applicable for overseas online purchases under $1000. Some of the bigger sized retailers have even gone on a campaign saying that it is unfair to local retailers. But are we really shopping online intentionally to avoid the GST or are there other factors behind it?

Seemingly the internet is against what Mr Harvey is saying, the term ‘Dear Gerry Harvey‘ even making one of the top local trends for Twitter and I actually agree with the majority in this respect. Sure I do shop online (internationally and locally), but I also do shop in traditional bricks and mortar stores as well.

What makes me shop online? It’s definitely not because I don’t have to pay GST on my international purchases. In fact I couldn’t really care less if the GST was slapped onto my international purchases as it wouldn’t have played much of a difference in the end anyway. The reasons I shop online are pretty straightforward:

  • Price is significantly cheaper. And by this I mean an amount big enough to make it worthwhile. If this is the only factor in the purchase, GST plays little part, as tacking on 10% for the import is going to make little difference if anything. E.g. 10% of $1000 is $100, but if you’re saving 50%, you’re still $400 better off. If the end saving is only a small margin say $100 or less (in the case of international purchases), I often will just end up buying it from a local retailer, as it’s too much effort with shipping, delivery, extra charges etc.
  • Product range. Let’s face it most of the goods stocked by retailers in Australia don’t cover a wide range. E.g. walk into any brand name technology retailer and they most likely won’t have the most recent products on display/sale, or with clothing try finding petite sized clothing in Australia, again a limited range.
  • Customer service. I choose to avoid certain stores where I can because customer service is poor or missing. Lack of staff to help with purchases, staff who don’t know what they’re trying to sell, staff who just want their commission. E.g. I was in a major sport retailer in the past year needing to buy some soccer gear. I checked the product out myself, picked my size myself then a staff member comes over asking if I need help. I decline and let them know I’m okay as I’ve already worked out what size was right. They then proceed to stick their ‘sticker’ on the box, so when I purchase the sale gets credited to them (even though they clearly did not help me in deciding on my purchase).
  • Convenience. Why would I go to a physical store if I know exactly what I want and can buy it online and get it delivered in the next 1-2 days? This is especially true if any of the above listed factors also apply. And this is not just for international purchases, as I’ve purchased from local retailers online before mainly because of the price and product range factors. And let’s bear in mind that I do pay GST for these purchases.

And whilst I have listed the above factors for online shopping I do have experiences where I have chosen to go to a physical retailer/store because my past experiences were positive. Sure I may be paying a little more in the end, but I leave a happy customer and the experience was better than had I done it online.

I think the big retailers need to reassess their operating model and the market they are operating in today. It’s vastly different to 10 years ago with the uptake and advent of technology. And it’s not not possible as there are many local retailers out there (some even with physical stores), who are surviving and have got my business if I need to look for a certain product. They’ve served me well each time, so why would I change and spend my time hunting across Sydney for a particular product?

And let’s face it, it’s not just online shopping that is taking a chunk of the big retailers customer base. Pick any digital camera on sale at a big retailer in the Sydney CBD. Go to all the major retailers in the CBD area (between Town Hall and Circular Quay), and check their prices. Now go visit all the other stores in the same area that sell digital cameras. I guarantee you will find a better deal in an actual store for either a newer or the same model.

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