GST on international purchases!

[ponyride]

I hope I'm not getting under anyones bonnet on a personal level (it isn't my intention) I just like presenting both sides of the argument.

Very wise Foresight, trouble is with this topic there are so many sides you couldn't even count 'em.

[mach70]

Shareholders run businesses which satisfy markets. Your example shows that it was the market that lost you the sale not any shareholders greed. Regardless of the intentions of the other supplier (whether they actively undercut you or fluked it) it was the customer who decided to pull the business and take it to the cheaper option. The cheapskate market seems to be the pattern.

I hope I'm not getting under anyones bonnet on a personal level (it isn't my intention) I just like presenting both sides of the argument.

We were targeted, they even said so once they had bought us out. It was the cheapest and easiest way to get into the market quickly.

Also having said that they also knew who they were buying. My Old man stayed on and his knowledge, customer service and who he knows is second to none.


Takes a lot to get under my bonnet and having said that there is always many ways to look at something and everyones perspective is different, if it wasn't this world would be a boring place..

The other thing that can be said is that a lot of people have a general idea of what something is worth. If your price is around what they think is fair chances are they will buy it.

Cant tell you how many times I've had people turn their noses up at a cheap item for a more expensive one and they are out the same factory .

Shawn

[hybrid]

The problem is that on orders under 1k people aren't paying GST so the local businesses are at a 10% disadvantage instantly which is unfair.

This is the argument that Hardly Normal and his cronies are pushing and it's plain and simply BS. If there was really only 10% difference in the price we wouldn't be shopping overseas. With the markups that these guys are making, they could easily reduce their prices by 10% and still be making big margins. The cost of shipping an item is often more than the 10% they are whining about, so I don't buy it for a minute.
Many people seem to be happier shopping online now, and that's what the big change has been.
So instead of Hardly Normal having massive lavish retail outlets in shopping centres, why not reduce that footprint and go for a larger online presence to compete with these other lower cost options?
Nothing is ever about reducing prices for consumers with these guys. It's all about making more money. I don't feel sorry for them, and I hope the government nor the Australian people fall for their BS.
In a capitalist society, if these backward old mens businesses fall down, some smart savvy young fellow will start a new business and fill the void that the old men couldn't/wouldn't fill. These new businesses will have to employ people too, so the jobs argument doesn't work for me either.

[xpconnor]

I hope I'm not getting under anyones bonnet on a personal level (it isn't my intention) I just like presenting both sides of the argument.

Mate that is the good part about this forum, we can all have our own opinion without worrying about people getting too sensitive about it.

[ponyride]

The problem is that on orders under 1k people aren't paying GST so the local businesses are at a 10% disadvantage instantly which is unfair.

This is the argument that Hardly Normal and his cronies are pushing and it's plain and simply BS. If there was really only 10% difference in the price we wouldn't be shopping overseas. With the markups that these guys are making, they could easily reduce their prices by 10% and still be making big margins. The cost of shipping an item is often more than the 10% they are whining about, so I don't buy it for a minute.
Many people seem to be happier shopping online now, and that's what the big change has been.
So instead of Hardly Normal having massive lavish retail outlets in shopping centres, why not reduce that footprint and go for a larger online presence to compete with these other lower cost options?
Nothing is ever about reducing prices for consumers with these guys. It's all about making more money. I don't feel sorry for them, and I hope the government nor the Australian people fall for their BS.
In a capitalist society, if these backward old mens businesses fall down, some smart savvy young fellow will start a new business and fill the void that the old men couldn't/wouldn't fill. These new businesses will have to employ people too, so the jobs argument doesn't work for me either.

I agree completely. This is a free market system and although many dislike cheap imports etc etc, that is the eceonomic model we are in, to try to use the GST as a tool against online purchases is just protectionist and that sort of protectionism only aids the greedy and inefficient. The market forces have a way of working things out without government intervention and that's what is supposed to happen. Otherwise we go back to the dark old days of whopping tariffs slapped on imported goods just to protect local industry which was greedy and inefficient.

I have seen first hand what Mach 70 went through, large business can and will open up shop right next door and sell at below cost just to put the small guy out of business. It is the same big business that is trying to use the government to protect themselves. I am not against business and profits, quite the contrary, I am a capitalist through and through but I like competitiveness and efficiency and good value and service for consumers.

My son works at a car parts import business and I am astounded at the markup on parts, often over 100%. Why the hell wouldn't you buy overseas? I say more power to the consumer, the money you save buying goods online is only going to be spent here in enriching your lifestyle anyway, plus there's the boost to postage and delivery services etc. The government knows all of this full well. Don't forget we haven't always had a GST. Making up new taxes and increasing those taxes also promotes inefficiency in government. Having said that I think it's inevitable, if they can find a way to do it.

[Frank70]

The problem is that on orders under 1k people aren't paying GST so the local businesses are at a 10% disadvantage instantly which is unfair.

This is the argument that Hardly Normal and his cronies are pushing and it's plain and simply BS. If there was really only 10% difference in the price we wouldn't be shopping overseas. With the markups that these guys are making, they could easily reduce their prices by 10% and still be making big margins. The cost of shipping an item is often more than the 10% they are whining about, so I don't buy it for a minute.
Many people seem to be happier shopping online now, and that's what the big change has been.
So instead of Hardly Normal having massive lavish retail outlets in shopping centres, why not reduce that footprint and go for a larger online presence to compete with these other lower cost options?
Nothing is ever about reducing prices for consumers with these guys. It's all about making more money. I don't feel sorry for them, and I hope the government nor the Australian people fall for their BS.
In a capitalist society, if these backward old mens businesses fall down, some smart savvy young fellow will start a new business and fill the void that the old men couldn't/wouldn't fill. These new businesses will have to employ people too, so the jobs argument doesn't work for me either.

The reason Gerry Harvey doesn't want to change his business model is that he made his billions from selling franchises - not retail goods.
Harvey is essentially in the real estate business. Same as the guy who started McDonalds.

Cheers,
Frank.

[Cameron]

There is a third player in this issue whoms brand reputation remains unscathed but are as equally responsible for the greed related consumer backlash and that is the brands themselves. Although retail price maintenance is technically illegal it still exists in a “passive” form. The best example that I can give of this is in the electronics consumer market where major brands can directly influence the actions of a retailer.

The easiest brand to bash – simply because they did it so regularly is Apple. It is no coincidence that the advertised price for their products remains within $5 or so irrespective of where you buy the item . Unfortunately it is not retail competition that has derived the price but maintenance from the brand itself. If – and as Myer (Australias largest Apple seller) and other retailers found that they lower the price below a designated margin deliveries literally stop until the sale has passed or the price is reverted. Market share - not price, not GST is the battle here.

I am not saying that the hands of the retailers are tied in every aspect. God knows that the mark-up on clothes, Manchester and cosmetics are huge but as previously stated – these are businesses and as such operate for one sole purpose. But the mark up has to be there on some items as to cover the overall running costs of the business.

I am not “for” putting a GST surcharge on every item bought.. well.. anywhere but I can see the plight that large business are placed under.

[Frank70]

I think you will also find that the overall model is changing - consumers buying direct from wholesalers/importers/manufacturers.

Any why not ? Often the retailer does nothing to add to the service.

cheers,
Frank.

[xpconnor]

I still can't see how they can even claim the GST is the 10% difference that is hurting them when the mark up on goods in OZ is well over that.

Yesterday I was looking for sneakers online the exact same pair is $160 at the US nike store and $250 at the Aussie nike store. How can this price difference be justified with the way the Aussie dollar is?

[Frank70]

Yeah, the 10% GST is not going stop it - if prices were 10% more, I would buy locally.

P.S. If you still want sneakers - go here :

http://www.retailmenot.com/view/footlocker.com.au

that first one worked for me - 20% off first purchase. Save $50 !

Cheers,
Frank.

[xpconnor]

Thanks for that.

I got told to check out www.eastbay.com They deilver to OZ for $20-30 and there shoes are close to half price of most Aussie stores. Genuine supplier also, so you are not getting rip offs. Apparently you can even exchange if they don't fit.

[Frank70]

No probs.

I guess it goes to show - Footlocker will give 10% for signing up to their club , and 20% off your first purchase with a valid coupon code.

so to take 20% off so readily, their markup is probably 100%

Cheers,
Frank.

[Foresight]

The products might be marked up 100% but that doesn't mean that they are making 100% profit. It is impossible to tell a business's profit margins without looking at their accounts but I can tell you right now you will be surprised. Businesses market themselves by making offers like 10% off and have sales to build customer loyalty, bring in new customers, get rid of old stock etc and often at a loss. It has also hard for businesses to pass on savings of a stronger AUD because they have minimised their profit margins to survive the gfc and now they are being expected to drop them even more. Maybe if the running costs were directly proportional to the performance of the dollar that logic may be justifiable but most of the costs are not.

For example a business has $200 worth of costs it needs to cover (which aren't affected by the dollar). If they bought a tv for $1000 and had a 20% mark up on it ($1200) then they would make $200 to cover the cost. Now if they bought the same tv for $500, for them to make the same amount they would need to mark up the $500 tv 40% to $700. So you can see that a 50% difference on purchase price doesn’t mean that they can pass on a 50% saving to the customer.

You can't compare prices in other countries either. Shipping costs aren't just how much it is to chuck it on a boat (how many times have we found that out with our cars). You also have to take into consideration operational cost differences like the cost of labour which in the states is as low as $2.50 in some US states for employees receiving tips (you won't see that reflected in the price as tips are paid separately). The cost of labour follows through in other aspects such as maintenance costs as well. There may also be other costs that may differ geographically like rental prices, equipment costs and the list goes on.

I agree that if a business model doesn't work in a fair environment then it should not be protected. What I don't agree with is being aware that there is an unfair environment and doing nothing about it. You could argue that since the imbalance was created by the government then doing nothing to rectify the situation is a form of protectionism. As for big business vs. small business that is something for another day as both big and small australian businesses are on the same boat in this case.

[Frank70]

I hear what you are saying. Not all of the markup is profit obviously.

But chains like Footlocker, I would imagine they make a healthy profit here. They would ship straight out of Asia and land the shoes quite cheaply.

The rent in shopping malls would be high, but the US would be similar - maybe a bit less.

I can see where in the US they would sell much more pairs of shoes and the wages may be lower, but when I went into Footlocker the other day it was really busy - there were only 2 staff there and I would say there were under 18 years of age. So I think the salaries here are low also. I had to wait 10 mins at the counter just to get served. Many would call that bad service.

Cheers,
Frank.

[HappyOne]

I don’t think the debate can be won or lost as there are just way too many facets to it.

But it sure been great reading it all and informative too.