In one lunchtime walk yesterday, I saw both the past and future of retail.
“As seen on TV.” Seriously, they still use this tagline to hook people in? Does it still work? It’s never the name-brand products which used this — always the slightly dodgy ones. I walked past this display twice, and saw nobody actually looking. Perhaps they do when there’s a shouty person with a microphone spruiking it.
MX got to this before I blogged it.
This issue is around Myki Pass (the equivalent fare to a Metcard Monthly/Yearly, but available for any number from 28 to 365 days).
To calculate the Pass cost, you take the Myki Pass per day rate (eg zone 1 $4.02) and multiply by the number of days (eg 31). $4.02 x 31 = $124.62. This is the amount you’ll be charged if you buy the fare online using a credit card.
If you go to a Myki ticket machine however, it rounds up to the next 10 cents, eg $124.70. (Myki machines take notes, but do not accept 5 cent coins; this is permitted within the law.)
This rounding is as per the ticketing manual (page 65):
“If a myki pass fare is shown as, or is calculated to be, an amount ending in a multiple of one cent, that amount may be rounded up to the next 10 cents at the point of sale. In that case, the rounded amount is deemed to be the fare.”
Contrast this with the advice of the ACCC. I’m not clear if it’s merely a recommendation or outlining the legal position, but here it is what it says (referring, obviously, to rounding to the nearest five cents, not ten):
For cash transactions:
1 & 2 cents — rounded DOWN to the nearest 10 cents
3 & 4 cents — rounded UP to the nearest 5 cents
6 & 7 cents — rounded DOWN to the nearest 5 cents
8 & 9 cents — rounded UP to the nearest 10 cents
Rounding is on the total value of the bill. Individual items should never be rounded.
And where a consumer pays by cheque, credit card or EFTPOS there is no need to round at all.
Businesses who round prices outside these guidelines may be in breach of the consumer protection provisions of the Trade Practices Act and State/Territory Fair Trading Acts as it suggests that items are not available for the advertised price.
So the first problem here is that Myki’s rounding is always up. This contradicts normal practice, and advice from the ACCC, which says rounding may be up or down, not always up.
The second problem is the rounding takes place if paying by credit or debit card, which again contradicts the ACCC, which says rounding should not take place unless paying cash.
Obviously it’s only a few cents each time, but could add up to a substantial amount of money given a large number of users.
Regardless of the legalities, it is clearly not in line with common retail industry practice, and is out of step with community expectations.
And there’s enough anti-Myki sentiment out there as it is without them putting even more people off-side with silly stuff like this.
Tough talk from the retailers, who continue to demand GST be applied to all purchases.
It’s rubbish of course. 10% GST is not why people are shopping online.
Let’s take the example of my last Amazon UK order, which I placed when the AU dollar was at its height, about two weeks ago.
- Book: Neil Gaiman’s “Neverwhere”. UKP 4.46 (AU $6.96). Cheapest AUD price (via Booko, looking only at Australian outlets) $15.95
- Book: “Wiped! Doctor Who’s Missing Episodes”. UKP 12.69 (AU $19.81). Cheapest AUD price (via Booko, looking only at Australian outlets) $27.51
- DVD: Red Dwarf series 1. UKP 4.58 (AU $7.15). Cheapest AUD price (via DVD Plaza, excluding postage) $35.55.
- DVD: Red Dwarf series 2. UKP 4.58 (AU $7.15). Cheapest AUD price $35.55.
- DVD: Red Dwarf series 5. UKP 4.17 (AU $6.51). Cheapest AUD price $35.55.
So, the total Amazon order cost was UKP 30.48 (AU $46.87 — may not match prices above because this is what I actually paid; above is the UK price I paid, converted using the exchange rate from a couple of days ago), and because it was more than UKP 25, I got free postage.
The total Australian retail price if I’d bought from the above, and assuming I’d been able to get the cheapest online DVD price at a retail outlet (and therefore avoided paying for postage) would be AU $150.11.
In other words, ordering online was less than a third of the cost of buying locally.
Now, of course this is influenced by many of the products originating with UK publishers. But even so, we’re talking about a factor of three.
Even if the AUD to UKP fell back to, say, 50 cents to the pound, and even if 10% GST was applied to everything, it’d still come out at AU $67.06; still less than half the Australian retail price.
So, sorry Australian retailers. GST is not the problem here. The whole pricing model (including the publishers and distributors) needs looking at if you want to get competitive.
Where bricks and mortar retailers should have an advantage
Obviously this’d be much easier if it had been bought retail, but I’ll be interested to see how Amazon UK handle it. I know that earlier in the year, SendIt.com sent my cousin in the UK an incorrect birthday gift (some book about WW2 instead of the Donkey Kong Country game we’d ordered for him), and there was some difficulty in getting it all resolved (in fact I’m not even sure if it was all resolved).
Retailers’ advantage is in customer service, particularly in cases like this where things go wrong. Face-to-face service can be worth a lot, and could help save market share. But only if they can figure out how to actually provide good face-to-face service.