A war is raging over how much we should pay for gadgets, writes Jennifer Dudley- Nicholson
Why Australians pay more than Americans.
WANT to buy a new laptop? In Australia, you could snap up a neat portable, mediasavvy computer for about $ 3900.
Buy the same laptop with the same specifications, the same form, made by the same company from a US store and you’ll pay almost $ 1500 less.
It’s one of many examples of a transPacific price gap.
Australians are paying a mark-up as high as 39 per cent for gadgets and software over US consumers, an E Guide sampling shows, with most priced more than 30 per cent higher than US equivalents.
It’s a trend that has gained more attention with the strengthening Australian dollar and proliferation of online stores, sparking a war between Australian consumers and retailers.
Many tech-savvy buyers have fled online to foreign stores to avoid the price gap and the trend is hurting retailers.
But the retail industry is fighting back, asking the Productivity Commission to recommend the 10 per cent GST be applied to all online purchases shipped to Australia; not only those above the current $ 1000 threshold. The reasons behind Australia’s high gadget prices are much more complex than a 10 per cent tax, however, and may not be tackled so easily.
E Guide ’ s sampling of five tech products found an average mark-up of 28.5 per cent at our end, and evidence shows more consumers are recognising this price gap and actively avoiding it.
The Australian Customs Service reported an increase in offshore online purchases of 43 per cent between June 2010 and March this year.
Similarly, PayPal Australia experienced a 74 per cent increase in money sent overseas in the past year.
National Retail Association executive director Gary Black says the trend is seriously affecting niche retailers and will expand to hit mainstream outlets within five years.
‘‘ Delivery times between Australia and the US aren’t that far apart so price is going to be the dominating factor,’’ Black says.
‘‘ Price differences will have a profound effect on consumer buying behaviour.
‘‘ If it’s a gap of 10 per cent or more, it becomes unsustainable that’s what our modelling says.’’
Black, who heads the recently established Retailer Coalition, says if the situation is allowed to continue some shops will be forced out of business and retail jobs will be cut.
‘‘ We’re forecasting that in five years’ time we will see a contraction in the Australian labour force of over 80,000 retail jobs,’’ he says.
It is why the Retailer Coalition is advocating adding a 10 per cent tax to all online purchases shipped to Australia, no matter how small. Black says the move would deliver ‘‘ a more level playing field’’ and would reap an extra $ 460 million a year.
He acknowledges there will be delays involved in such a system but says couriers and postal carriers could collect the GST from buyers.
But the gap between what Australian and US consumers are charged for technology is often much greater than 10 per cent, due to a series of factors.
An Australian retailer importing a $ 1200 camera, for example, would be charged 5 per cent customs duty, followed by shipping and insurance fees and would have the 10 per cent GST added to that. The final amount could be $ 200 more than a US online store would have to pay.
Another factor widening the Australian price gap, online store owner Ruslan Kogan says, is poor negotiations with overseas manufacturers. Kogan says many manufacturers do not set competitive prices for Australian businesses.
‘‘ If you look at the price of cameras, they are selling them cheaper in America than Australian retailers would be buying them for,’’ he says.
‘‘ Australia has 21 million people to America’s 300 million, so the economy of scale just isn’t as great.
‘‘ They’ll say an Australian retailer can buy this camera for $ 400 while Amazon can buy it from us for $ 250.’’
Kogan says retailers should seek deals with overseas distributors before adding a ‘‘ protectionist’’ tax that will raise the price.
The Productivity Commission will release a draft report on the issue next month and a final report in November.
Meanwhile, Black says the retail industry will seek to educate consumers about the benefits of buying in Australia.