Retailer anger at sales being lost to overseas websites has flared again, with Myer and Harvey Norman saying they will both investigate opening Chinese-based websites in order to sell goods to Australian consumers without adding GST to the price.
The move comes after several retailers and industry groups have said the GST threshold for online sales should be dropped from the current level of $1,000, with bricks-and-mortar chains saying they are coming under increased pressure due to the high Australian dollar and ease of shopping online.
But one retail expert says the timing of the move is telling, and suspects it may be more of a lobbying move than a genuine effort to satisfy customers.
This morning, Harvey Norman chief executive Gerry Harvey told Channel News that he will consider setting up a site in China to avoid GST.
“We may even beat Myer to getting our shop up… We may not make a lot of money, but it’s better than making no money at all”.
The comments are a far cry from Harvey’s usual attitude towards online retail, with the retail veteran previously calling ecommerce “a dead end”. He has also recently been at odds with Australian internet retailer Ruslan Kogan, with both retailers attacking each other over their differing strategies.
The comments come after Myer chief executive Bernie Brookes told a business lunch last week that it will consider setting up a Chinese site in order to avoid losing more money through GST.
”If we can’t beat them we will join them,” Brookes said.
‘We just want a level playing field. We will take jobs offshore and we will ship product out of China through our internet site, it’s a bloody shame.”
Brookes said the site could be running as early as February and could form a respectable part of the company’s overall internet revenue.
Brookes added that the reason for looking at such an operation is due to the lack on the Government’s part. Last week assistant treasurer Bill Shorten said the Government is currently considering the GST issue but it does not yet have any plans to issue a tax on online sales.
But Brian Walker, chief executive of the Retail Doctor, says the timing is suspect given the two retailers’ hesitant approach to retail in the past.
“While I do have the greatest respect for the two retailers, I do question the timing of it a little bit. And I wonder how much of it has to do with lobbying,” he says.
Walker points out that moving websites to China to compete with other online retailers may not be the best move, considering the cost savings might only be minimal.
“Let’s think about what this could mean for Australian shoppers. You go online to shop at Harvey Norman in Beijing, or whatever, and order from them directly and receive a cost savings – but if all levels out to a 10% saving? It’s a big question market from me.”
“We need to consider the logistics of it all is well.”
Retail expert Phil Bonanno says the move appears to be more of a political one than a commercial strategy.
“As the former it may force hands, as the latter it feels rather reactive”.
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
