Thank You Gerry Harvey

Earlier this month Gerry Harvey went public about his distane for overseas online retailers being exempt from GST for purchases under $1000. Even though I'm on the internet quite a bit I had never really considered buying products online for anything other than computer equipment. The GST exemption debate that Gerry Harvey became quite vocal in inspired me to have a look online for products other than computer equipment. What I discovered has now changed the way I shop. It's probably also been influenced by a fellow colleague who before xmas was getting a delivery almost every day from online purchases.

Mr Harvey is claiming that overseas online retailers have an unfair advantage because their products don't incur the 10% GST. He also claims that this is one of the reasons that Australian retailers had a lack luster xmas sales period. On point number one it does seem a little unfair that no GST is charged. This does give overseas retailers an unfair advantage. The tough question is how do you go about charging the GST for overseas purchases. It would be costly and time consuming to process every package coming into the country in order to apply a GST amount.

On point number two. From my recent experiences people are not choosing to buy online because of a 10% price difference, they're choosing to buy online because the prices are often 30% to 40% cheaper. If you don't believe me here is a list of purchases that I've bought lately with the price differences. The OS prices include shipping. Clearly the difference between these items is more than 10%.

Product	Price in Aus	Price OS	% diff
Rock Band 3 with Pro drum set.	$299.95	$229.95	23%
On Food And Cooking	$70.95	$33.56	52%

One of the reasons why prices are more expensive in Australia is because global companies see us as a specific channel with which they can choose to inflate prices. I've been looking into buying a mountain bike recently and have been researching bikes online. One of the bikes I've been looking at is a Specialized Rockhopper. On the Specialized website the retail price for Australia is $1299AUD where as the US price is $799USD. Given the AUD is almost at parity with the USD you would have thought the prices would have been a little closer. I'd expect shipping to be somewhere around $100 and GST to be $80. Even taking this into account the bike is still over $300 more expensive in Australia.

I hope this inspires you to consider online purchases in the future. My advice to Mr Harvey is start making prices in Australia comparable with OS prices if you want people to consider buying products from your store.