Online Tax

[ChrisW]

Daggnabit.

http://au.finance.yahoo.com/news/Retail ... 79370.html

There goes another short lived freedom, buying online for a reasonable price, especially after parity, and often faster delivery than buying locally.

Logic Studio $499US vs $749AUD?
Both from official Apple stores.

[waitup]

Oh well, on the brigt side, maybe this will generate a few extra sales for local retailers and they will in turn be able to lower their prices to be more competitive with OS

[Kurt]

I typed out a big rant but it boils down to this I think.

We pay too much because we are used to paying it, and retailers/importers are used to making large profits.

[rob]

or possibly we are too used to paying too little and expecting too much.

on the GST on imports argument, then I think that it is pretty simple. If you object to the GST then take your fight to your local federal member, rally in the streets etc. Simply discriminating Australian shops against OS shops is hardly a consistent morality nor financial philosophy.

[musikwerks]

I'd love to see them try and enforce that.

An online transaction is done between the buyer and an OVERSEAS company. It's an international transaction. If I do business with a company in NZ they don't charge me GST because I am an Australian company. I can also get GST back at the international airport on my way home.

They are not obligated at all to charge a tax for the Australian Govt. Can you even imagine the groan from o/s retailers having to send the Aus Govt GST payments?

Never gonna happen. It's completely unenforceable. Even if they try there are ways to hide your online presence and buy without even coming up on their radar.

Harvey Norman is just pissed because the dollar is so good and people know they can get a better deal elsewhere. It's a fact that they're still posting hefty annual profits. Crying poor when you're driving a Ferrari just doesn't wash with me.

[wez]

Love the "struggling retailers" bit. Poor old Harvey Norman.

absolutely buy local where you can. but Gerry Harvey is a greedy son of a bitch. furthermore, this is the man who described giving money to homeless people as "helping a whole heap of no-hopers to survive for no good reason" because they "are not putting anything back into the community". i have made a point of never crossing the threshold of a Harvey Norman store ever since.

[Sammas]

Consider me dim, but doesn't the dollar reaching parody benefit everyone importing goods purchased with US dollars?

I don't really get it. Goods that I purchase from the US for under $1000 and import usually have over $100 in shipping costs anyway. Why can't
local retailers compete with that? The hypothetical 10% already exists. In a lot of cases it exceeds 10% on the goods I import.

The real kicker is, I purchased a few new items from the US over the last few months, all were over $1000, had 10% GST added when they
arrived and between 5%-10% of the item price in shipping costs... and it still worked about 20%-30% cheaper than buying the same product
locally!

I can only imagine that the Australian consumer market, particularly for items heading towards slightly niche territory are riddled with ridiculous
distribution complexities and too many people taking their cut on what should be a simple process in the 21st century.

Why can't more companies work like Elysia and deal direct with the consumer? I send Elysia €650... Bam! Xpressor at my door in Sydney 4 days later. No
middle men to add their cut... no ridiculous complications. Retail for the 21st century.

It really is no wonder people are shopping abroad at the moment.

[Ausrock]

You will not get anyone associated with an importer/distributor of any goods to do anything other than whinge about how unfair it is that people choose to purchase direct from o/seas. They conveniently ignore the fact that they have (for too long) been marking items up by amounts which at times border on the obscene. I wont quote (real) facts and figures here for fear of offending someone, but believe me I had reason to analyse this issue a few years ago and the results didn't paint a pretty picture then and I've seen only a token effort to improve things since.

Only today I enquired about a replacement motor for a dust collector........the cost was equivelant to buying a complete new collector........the justification from the brainwashed dope on the phone......."yeah well that's what it costs us to bring extra motors in". I felt like suggesting he look on evilbay for a dose of reality.

[Alistair]

From the dark side.....

I run a small business importing guitar stuff- effects pedals, parts, that kinda thing. We've only been around about 18 months, but have traded fairly well and I'm happy with progress. When we started up, I was very naive to the way things worked, but always aimed my prices to be within 5-10% of US online prices- if you source products from the right places, there is enough money in that to make it worthwhile, whilst still giving your customers a good price.

This works great for most of my line, as the 5-10% extra does even out with the extra US postage costs, hassles of importing, and the fact that most people DO want to buy local if possible.
However, I was approached by a couple of Australian distributors to sell their products- they were in my niche market, and good quality stuff so I signed on. The maths didn't look great, but I thought I'd at least get a couple of sales.
In the end, as the dollar got closer to parity, my WHOLESALE prices were more expensive than buying these items from the US, with shipping and GST/Duty included. Obviously I never sold any of these items, and in the end had to sell them for less than I paid wholesale just to move the stock.

Moral of the story for me is that the US pricing model that we see now is based on very few links in the chain, so not too many people need a cut. Sadly, there are a number of sharks in Australia that get exclusive importing rights, create a monopoly on items and drive up the prices, and then complain when people avoid the monopoly and exercise their right to purchase for a better price. As far as I'm concerned, all this could be solved fairly quickly if manufacturers stopped having exclusive agents in countries- if there are multiple importers, competition exists and prices will drop.

The one problem that I do see is that people compare US online prices with Australian in store prices. The fact of the matter is that having a bricks and mortar store drives up your costs dramatically, which does lead to price increases. If I ran a physical store and kept my prices in line with US/ebay prices, I'd would have been bankrupt a long time ago.
I'm not sure what the solution to keep that sort of retail alive is- it's less important in a 'high-end' bracket, as a lot of retailers are happy to offer in home trials, but how do you go and play 20 Telecasters and pick the best one? Or audition a stack of monitors next to each other?

[Hybrid88]

Talk about changing the rules to suit yourself, if you ask me this is a good thing as it encourages more choice and greater competition.

It's hardly logical or fair to let the consumers take the brunt of the charges as the first solution they come up with, yet quite unsurprising. They don't seem to mind when the consumer takes the fall, but when their bottom line suffers for once, you get this. Small business, I understand, but Harvey Norman? Give me a break...

And I don't get it, why can't they get the goods at the same cost price as overseas companies??...

...As far as I'm concerned, all this could be solved fairly quickly if manufacturers stopped having exclusive agents in countries- if there are multiple importers, competition exists and prices will drop...

...This is one reason, I think you're onto something here. Wholesalers are few and far between on some brands, and they must take a good cut of the price, cause almost nothing high-end is even close to overseas prices, and thats even before the dollar reached as high as it has.

The dollar increase has just been the catalyst, to make people realise just how much difference in cost there is.

And on the $1000 threshold thing, youre already getting shafted on items over 1k by getting charged GST on top of Customs Duty, I wonder, do they now want to impose this on sub 1k purchases? If so, ridiculous... No wonder people aren't so keen to buy local.

[Thirteen]

It can't happen... Customs is already swamped with collecting duty on postal items over $1000.00, they don't have the capacity to deal with much more. What is the cutoff value then? $800.00? $500.00? $100.00? At $500.00 the number of extra processing staff that customs would need would be huge. What happens at Christmas time? Grandma in NZ sends a gift to Granddaughter in Australia. Currently to import an item over $1000.00 by post, if you want to self-import rather than using a broker you have to fill out 2 customs forms, one for the goods, including looking up the correct category, and one to register yourself as an importer, and one to register the sender as an exporter (who you sign for on their behalf). Then you pay a $48.00 processing fee and duty and GST. If this was brought down to goods worth $100.00, it would cost you nearly as much to import as the goods are worth. No Christmas gifts from Grandma then.

[Ben M]

No Christmas gifts from Grandma then.

[musikwerks]

Case in point....

I want to get myself a Mesa Boogie Transatlantic amp.

$900usd at any retailer in the USA.

Australian price?

$2,495.

Tell me that's fair.

[Milo]

Kristian;

Just to be on the side of the Good and True Australian importers for a moment: they have charges, too. There is the dollar (parity for the US, but not others including Europe), then they pay customs, too. Fedex will charge by weight, but if they think there's not enough weight to make it worthwhile, they'll charge by size - whichever is the greater. I'm no accountant, but I have access to orginal UK price and our landed cost here, and its a significant difference. Also, there has to be a figure factored in for the changing dollar, because many bills to suppliers are paid up to 3 months later, some yearly, depending on the deal /product, and you can lose heavily without factor X in place

If some stuff is slow-moving, we may sell it at cost - which is still significantly more than, say, US price.

[Milo]

Another small point: The Aus selling price has to be at a certain level so they are able to offer their dealers 30-40% off. This makes the retail price higher, but you may get a better deal for the same product from another source.

I was shopping around local dealers a few months ago for expensive mic pres, and there was a spread of $700 between them for a $3,000 item

[Chinagraf]

Maybe globalisation has reduced the available profit in selling electrical good and furniture through a local outlet.....
Hey Mr Harvey, try running a music studio for a while, then complain to us. Ohhhhh...Boohoo.

[Alistair]

To be honest, I do think it's unfair to have a $1000 limit on Customs. This does disadvantage retailers of goods in the lower price range, but remember that especially in pro audio/musical instruments, a large number of items are USA made from USA sourced parts, which means they qualify for the Free Trade Agreement (no duty), and while GST isn't "free" for retailers, it's a bit messier and not really 10% on top of the price, just 10% in tax on their sale price, worked out over two different payments, so don't necessarily fall for the 10% GST + 15% customs argument.

Still, if you want to encourage a strong internal economy, it is silly to have people that buy in bulk charged more added costs on items than people that buy 1. It's not good in the long term...BUT- I do find a sense of entitlement with a lot of the other business owners I deal with. At the end of the day, if you can't provide good service and products at a good price, and make a good profit for yourself, then the business just isn't viable. A lot of retailers in this country need to MASSIVELY restructure if they wan't to stay afloat.
Case in point- I update my prices on average once a month to reflect the US dollar. Yes it's boring and it's a pain, but that's a necessity to do business in a Global age. How many shops do you see updating their prices more than once or twice a year?

Interestingly enough though, I heard an interview on the Triple J current affairs show, Hack, the other day about the effect of large mineral exports on the dollar. It was full of people calling in with the classic whinge "I own a dress shop and people can buy my dresses for 1/3 the price online, let's shut down online sales so I can keep my 250% markup", but someone mentioned a northern European/Scandinavian country (cant remember which one) who a little while ago found massive gas deposits. They realised that this was going to make them an extra few billion $ every year in exports for the next 50 years, and that that was enough to affect their currency and send it up.
They applied a hefty minerals tax on the companies drilling and exporting this gas, but instead of sending it into the coffers of the government for short term spending, they used it to subsidise industries that would be affected by the price of their dollar rising quickly. This meant the dollar was strong, but all the industries that benefited from a more stable currency were also kept happy, giving them a very powerful, robust and even economy. The two industries most likely to suffer were exporters and end of the line retail locations.
A pretty good idea really....

[Dallas]

And I don't get it, why can't they get the goods at the same cost price as overseas companies??...

That's where part of the problem is - the cost to an Australian wholesaler is the same as the cost to a US retailer (for US goods anyway!!) - then add shipping, storage, warranty (which is usually significantly longer than that required by law in the US)

Love the "struggling retailers" bit. Poor old Harvey Norman.

absolutely buy local where you can. but Gerry Harvey is a greedy son of a bitch. furthermore, this is the man who described giving money to homeless people as "helping a whole heap of no-hopers to survive for no good reason" because they "are not putting anything back into the community". i have made a point of never crossing the threshold of a Harvey Norman store ever since.

Ahhh the great "WalMart syndrome" - lets get rid of all our manufacturing industry by buying cheap crap made in 3rd world countries.... whoops, the peasants have got no jobs - how will we make money out of them???

[musikwerks]

Milo... I get that, but I would be up for those charges too if I bought it online.

Even with say, $150 for Fedex and at worst, another 20% for GST and customs I still come in over $1,000 cheaper than local.

Say I'm buying from a retailer (Sweetwater for example) in the USA who buys from a wholesaler, same chain as here in Aus. Only difference *should* be shipping and customs/GST. So why the $1,000 difference?

If that's not gouging, I don't know what is. But Mesa Boogie has always been like that in Australia.

On the other hand, I just bought a Strymon guitar pedal. I looked around online and the local price was only about $50 difference. I thought it well worthwhile to pay another $50 for local support. If the pedal can be pretty much even on the o/s price, why not the Boogie? It would *appear* the only difference is the way the dealers structure their prices. One keeps the margin fair, the other decides to charge people twice as much. When that happens, people vote with their feet.

I have absolutely no problem with someone earning a good living... I would love to be back in that realm.... but the most I can ever "mark up" my price is by 10%-20% before someone cries foul. People will only tolerate it for so long. The economy and the consumer are reaching a tipping point, in my opinion. There's going to come some civil unrest soon enough with the way we're taxed on almost everything. Maybe a few weeks of protests like the French and the government might get the message.

[Milo]

Kristian, I understand, but there is a difference, and the difference is, Australia is small.
Our price from a European, Chinese or japanese manufacturer is higher than to a US wholesaler, because of volume. Many manufacturers manufacture and cost according to the US demand, because that can be most of their market. Compared to them, we are a small fish, and we pay the price by not being able to buy ina s much bulk as the US

[jkhuri44]

yeah, this topic drives me batty...

found a good price for an Apogee Firewire Card...355US + 40 shipping.

Aussie shops, wants 480+ for it...and this is a cheap item.

[Alistair]

Say I'm buying from a retailer (Sweetwater for example) in the USA who buys from a wholesaler, same chain as here in Aus. Only difference *should* be shipping and customs/GST. So why the $1,000 difference?

I seriously doubt Sweetwater buys many of their items from wholesalers, I think they are big enough that they would demand wholesaler prices direct from the manufacturer for a lot of product lines. And they'd get it, because they can probably afford to buy in lots of 1000.

Interesting you mention the Boogie/Strymon thing.

Boogies have always just had the one importer (someone in Canberra, can't remember name), whereas Strymon are direct from the factory to the retailers- no middle man at all, and enforced worldwide MAP.

And on this -"lets get rid of all our manufacturing industry by buying cheap crap made in 3rd world countries."
As far as I can see, this is going to happen whether we like it or not. Even if we buy Aus made, they source their parts from O/S as it's the only way to keep costs down and stay afloat. In the short term, it's going to be fantastic, and then when we run out of jobs and money, it's going to hurt. But then our dollar will collapse compared to the Yuan, and China will be rich and we will be poor. Then there will be Chinese owned factories in Australia, due to our 'cheap labour costs'. It's a pretty simple system, the rise and fall just plays out over 100's and 100's of years.

[musikwerks]

Milo, Then I would say it's not worth stocking it, it's not viable.

Even you guys could buy them from a US retailer and then re-sell them. If Boogie is making it too hard for you then complain. Tell them you're losing customers because they won't give you a comparable wholesale price. I'm not trying to screw you out of a buck but there is no way I am paying an extra $1,000 for that amp. (Not that I can afford it right now anyway... but when times are better....)

[musikwerks]

Alistair, that's a fair call re: Sweetwater. And to be fair again, my Sweetwater rep has told me he cannot ship the Boogie outside the USA. But I have a US postal address so....

[Alistair]

Yeah I've got a US postal address too. Love it!

The only issue with the boogies is power transformers- they are hardwired for the location (unless the newer ones are different!) so you've gotta stepdown it/get it replaced. But apparently this $3-400 cost is worth about $1.5k on their bigger and more powerful amps...

"Milo, Then I would say it's not worth stocking it, it's not viable." And this is what get's me the most. It's business 101. Not everything should be viable for sale everywhere, in all situations. Some things just don't work!
I'd rather not sell guitar pedals, and only sell pre 1980's (preferably 50's + 60's) high quality archtop guitars. It ain't gonna happen....

[musikwerks]

Or a $120 step-down transformer from Jaycar.

[Drumstruck]

Kristian, I understand, but there is a difference, and the difference is, Australia is small.
Our price from a European, Chinese or japanese manufacturer is higher than to a US wholesaler, because of volume. Many manufacturers manufacture and cost according to the US demand, because that can be most of their market. Compared to them, we are a small fish, and we pay the price by not being able to buy ina s much bulk as the US

That only answer the part of the question where wholesalers compete against one another
- what about big organisations (e.g. Roland) who would pay exactly the same price as their overseas counterparts yet slug us with ridiculous prices using the poor excuse of the support cost (which comes from Japan anyway....).
- not only that, freight from Asia to Australia should be considerably less than freight to the U.S.A. or Europe due to reduced distance.
- and with our dollar at near parity they have no excuse for not coming somewhere near to the overseas price.

and rant rant rant and a bit more rant

This is a money grabbing act by the govt to skim their 10% under the guise of supporting local retailers - they must think we're stupid to fall for any other guff. And I don't care which flavour of govt is in power, they all do the same.

The message to us is to get in quick with the overseas orders and give the ripoff retailers the present they deserve (no sales). I hate to come out in favour of buying offshore but what can a poor boy do?

Thankyou for your time - now back to our regular programme.

[musikwerks]

Milo, just thinking....

I read a newspaper article recenlty which outlined how 3 RSL type clubs in the suburb of Mosman here in Sydney were losing a lot of money. They have since decided to get together and use the same cleaning contractors to get a better deal, buy all their items for the 3 locations at once, thereby increasing their bulk discount. Things like that. These are 3 separate companies but are working together to beat the tough times and reduce their costs.

Perhaps this is something Aus/NZ retailers could work on together, joining forces to order stock so as to achieve a better wholesale price?

[jkhuri44]

@ kris, you can ask them if you can use a freight forwarding service...

They will ship it to you, no need for US postal addy in that case.

[Alistair]

Perhaps this is something Aus/NZ retailers could work on together, joining forces to order stock so as to achieve a better wholesale price?

I've tried to do similar things in the past... the distribution stops this quickly.

Case in point. FMR products (RNC, RNLA etc). I was interested in stocking their new guitar pedal compressor, and thought whilst I was there I might aswell stock all of their little products. Average US retail for a Real Nice Compressor is $175, including free shipping and 2 patch cables. Average in Australia is $395, plus $16.50 shipping.
Shipping on them would be cheap, they are small and not that heavy. I think you could get a box of say 20 shipped out to Aus for around $200- or $10 per item.
No duty as they are FTA items. 10% GST and a couple of funny customs fees.
Costs of warranty very small- they are tiny, and cheap enough you would just replace the unit and ship the faulty ones back to the US.
No electrical safety tests to be done- they use a plug pack and US standards are reciprocal in that instance.
Staffing/warehousing costs- have to be met in US or Aus.

Assuming we are on pretty close to parity, you could buy them at retail price in the states, and get them into Australia for about $210 each. That gives you almost a full 100% markup- ON THE RETAIL COST FROM THE STATES!
Average US wholesale to MAP price is about 30-40%, although as low as 25% on some items, so in all likelihood, they are cheaper than $122.5 each wholesale (probably more like $100 each), so you could get them into Aus for around $150-160 each as a maximum.

But FMR just directs me to the Aussie distribution, and wipes their hands clean of it... The system is broken.