Editorial / Insights

Whistlin’ GST: Australian Retailers Trot Out the Same Old Tune

Retailers use GST straw man

Perhaps it’s time for retail bodies and industry figures to come up with a new line, as NRA’s Executive Director Trevor Evans blames high delivery prices on GST avoidance.

Just when you think you were safe from the Australian media and retail bodies overstating the impact of GST, another fiasco blossoms.

Recently, Experian Hitwise data on local shopping charges has been released, and its caused a stir among some local retailers. Apparently, the average amount that Australian retailers charge their customers for shipping is between $25 and $30.

According to The Herald Sun, General Manager of Experian Marketing Services Matt Glasner said that he believes retailers are “making a margin on delivery”.

Don’t Blame it On the Moonlight

Of course, National Retail Association Executive Director Trevor Evans doesn’t see things quite the same way. Instead, he denies any gouging claims, citing that “local operators were burdened with higher costs, while foreigners escaped GST and other charges for goods less than $1,000, making it easier for them to offer or discount shipping”.

Do the terms whipping boy, straw man or scapegoat come immediately to mind? I’m beginning to wonder just how many issues in our local retail space can be blamed on the GST. Maybe we should rename it the GSE (Goods and Services Excuse)?

To compare Australian delivery costs and expectations to what overseas retailers have access to is verging on ridiculous. The UK has three times our population distributed across a landmass only slightly bigger than the state of Victoria. The US has 12 times our population, while their landmass is only just larger.

To put it in perspective, Australia is home to roughly 2.8 people per square kilometer, whereas the US has 33.8. This highlights the problem with distribution and fulfilment in our country, as the levels of demand simply cannot outweigh the tyranny of distance.

Give the Whipping Boy a Break

How can we even begin to compare the cost of delivery here against that of the UK or US? These countries have better infrastructure, higher demand for services and greater carrier choice than what exists in Australia.

That’s before we even consider international deliveries, where countries like the UK or the US have quick and easy access to entire continents packed with people. We make do with our own island continent, and let’s be honest; we would struggle to price anything competitively enough for our proximal local markets (except for a few, rare exceptions) anyway.

In one sense, I agree with Evans’s sentiment; online retailers aren’t likely to be gouging consumers on shipping and handling fees. However, trying to draw a link between the cost of logistics and offshore competition via GST and duty avoidance shows that he was either quoted out of context, or that he doesn’t understand Australian retail and logistics.

The internet certainly offers more choice for consumers; this, combined with a lack of local supply options in combination with the high dollar value encourages more consumers to spend with offshore retailers. However, that in no-way entails that shopping rates would be cheaper if those same retailers had to collect tax on low-value items.

If Trevor Evans were to point a more informed and honest finger, he would point it at the pressures of choice, demand and infrastructure that results in the cost of delivery, rather than resorting to every retailer’s favourite GSE.

3 Comments

    • james
    • 7th October

    It may not be the GST but I would like to know how much Australia Post receives from foreign postal services for delivering small parcels within Australia? I would bet it is a lot less than the $6.60 and up it charges local businesses, which means local businesses are subsidising the delivery costs of their overseas competitors.

    Reply
  • Hi James – no idea on what the difference would be – and I imagine that like many businesses Aus Post have products and services that have different profit margins in them. With such a large country to cover – deliveries to destinations far far away maybe subsidised more by local deliverers. Australian eCommerce would certainly benefit for more specific logistics services, and increased competition.

    Reply
    • robert
    • 9th December

    There was an article a while back where Australia Post said that it was bound by an international treaty on what it received from overseas postal services to deliver items within Australia and that it was too little and they were going back to whoever administers the treaty to put forward a case to increase payment. The other point was made that it was becoming more of a burden as more and more parcels arrive from overseas.
    From memory it was stated that Australia Post receives less than $2 per item for small parcels (the $6.60 range James mentions above). If that is correct then it is yet again another case of local retailers and taxpayers funding overseas retailers.

    And Robert, it is very convenient to say “no idea on what the difference would be’ so as not to let the facts get in the way of being able to knock Australian retailers. You’re a journalist (supposedly), so ask the question and you might even find a story worth reporting on, even if it doesn’t suit this publications obvious bias against local bricks and mortar retailers.

    Reply

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