Retailer campaign blurs lines for local e-tailers

Australian e-tailers fear the campaign launched by brick and mortar retail giants against online merchants has blurred the lines between international online shops and local ones.

Alfred Milgrom, founder of Melbourne-based deal a day site zazz.com.au and Australian multimedia pioneer, told CRN that the negative campaign launched by retail giants has created a misconception.

“People have lumped online sales and overseas online sales into the one basket and there’s a huge misconception out there because Australian companies pay GST," Milgrom said. 

"We have GST included and people are buying with the GST from us."

In an open letter to the Government [PDF], local retailers including Harvey Norman head Gerry Harvey complained that foreign e-tailers enjoyed GST-free sales on goods and services sold for less than $1000, while local bricks-and-mortar outlets were taxed for a purchase of the same value.

Milgrom, who launched Zazz in 2006 after selling the games company Melbourne House he founded said he, too, competes with overseas e-tailers but rather than pursue a negative campaign, he preferred to focus on services and benefits to consumers.

“The benefit that we have is there is a GST invoice so businesses can claim back the GST. They’ve got a local point for returns and they know they’ll be supplied pretty quickly.

“Local [brick and mortar] retailers had an even better argument because the purchase is immediate. But they’re just focusing on price without focusing on the negatives on purchasing overseas."

He said the retail coalition should have pursued the Government to drop the GST for goods under $1000 for all rather than promote the competition, he said. 

Nick Shelomanov, director of CRN Fast50 2010 No.14 Megabuy online technology e-tailer, said he competed with overseas retailers and had seen a drop in smaller consumer electronics sales.

"This is expected as you’re not going to buy large items like [universal power supplies], printers or monitors from overseas because of the high shipping cost for large items and warranties," Shelomanov said.

"You’re not going to buy computer components [overseas] because of warranty issues and relatively little price difference," he said. 

He sympathised with Harvey but was also concerned the debate was getting blurred.

"[The debate] seems to be getting into bricks-and-mortar versus online, when it is actually Australian retailers versus overseas retailers," he said. 

"There isn't a level playing field for Australian retailers but all Gerry Harvey has done is upset his customer base, who are now going to go looking online for better prices.

“This is, of course, good for us as people will quickly realise they can’t or don’t want to buy many of the things online for overseas but will buy them online from local online stores."

Mwave founder Victor Lee feared the campaign stalled the development of the ecommerce in Australia and "that's not good for the future", he said. 

Lee said retailers should look at the US as an example, which  had a similar debate between its states.

"They have a state tax but when goods are purchased from an outside state, the consumer doesn't pay the tax.

"The debate was in the US for years. The government there decided to leave the law unchanged."