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.