The cost of online shopping

THE explosion of the digital marketplace underlies a growing trend that seemingly has no limit.

Predictions for online spending by Australian consumers continue to show an ever-upward progression — but at what cost?

Last year federal Treasurer Scott Morrison introduced legislation to “establish a level playing field for our domestic retailers”.

From July 1 this year GST now applies to all overseas online purchases.

This latest change, to apply GST on low-value imported goods under $1000, was the result of years of lobbying and advocacy by Australian retailers, most notably Harvey Norman boss, Gerry Harvey, who took the Australian government to task for not doing enough to protect the Australian retail industry, and the many jobs associated with that sector, from the major threat that overseas online retailers posed.

Enter Amazon — the world’s largest digital marketplace.

In 2017 Amazon set up its Australian warehouses and offices to service the Australian market and therefore avoid having to develop systems on their US site to become GST compliant.

With considerably fewer products on offer than their parent site in the US, but still offering about 60 million lines, Amazon was viewed with interest by many in the retail sector and greeted with joy by many online shoppers who could now purchase their favourite goods in Australia.

But the honeymoon soon ended when Amazon geoblocked their international site to Australian buyers, a strategy that was later reversed, but they ultimately got their way by allowing shipping only to a US address.

Treasurer Scott Morrison was not happy with Amazon’s strategy in response to the new GST legislation, stating that “the second biggest company in the world, run by the richest man in the world, shouldn’t get a leave pass from paying tax in Australia”.

“The government doesn’t apologise for ensuring multinationals pay a fair amount of tax here in Australia. That tax revenue is used to fund essen- tial services. If multinationals aren’t forced to pay their fair share of tax, they will have a competitive advantage over retailers here in Australia, on our own main streets and in our shopping centres.”

Australian online enthusiasts were disappointed by the smaller product range on offer through the Australian Amazon site and also the fact that prices were considerably higher than those offered on Amazon’s US site.

Even factoring in GST and shipping costs, prices on the international site were still much less than on the Australian site, but this avenue was now closed to Australian consumers. So, will these changes bring Australians back to shopping locally?

In 2017 an estimated $24.2 billion was spent online by Australians, with about 80 per cent of this spent with domestic retailers, which are subject to GST.

Of the $24.2 billion spent, this represents just 7.8 per cent of the amount spent in bricks and mortar shops.

While online shopping is massive, Australians continue to buy the majority of their retail purchases in domestic stores, however Australian retail sales growth has been sluggish over the past year, showing only moderate growth.

Are online sales to blame? In a regional city like Geelong, is there more of an impact to local retailers from overseas or domestic online retailers?

The Geelong Chamber of Commerce actively supports local businesses and provides opportunities and programs to encourage people to support their local business community, ensuring there are more local jobs created and that economic returns go directly back into the local community.

The Chamber is a partner with Localised, the digital platform that provides greater visibility for the diverse range of local suppliers of goods and services that operate within our region.

The Chamber has also recently implemented changes to its own digital platform to provide greater visibility of its 900 members to the Geelong and region marketplace.

The public now has access to searching for a wide range of local goods and services via the Chamber’s website.

This initiative provides smaller businesses with an opportunity to expose their brand to not just the local marketplace but global customers. Bernadette Uzelac is Geelong Chamber of Commerce CEO. Twitter @GeelongChamber