Dear Australian Retailers

Your recent campaign to get GST levied on all Internet transactions has some rather major logical flaws.

1. Your prices are much more than 10% higher than overseas prices.

It's interesting that Angus & Robertson and Borders are part of your campaign. The book business is probably the easiest area where the massive price differences can be shown, thanks to the awesome Booko service which allows consumers to find the cheapest source for books, taking into account delivery charges and exchange rate fluctuations.

Cheapest foreign sale, AUD$10.61 delivered.
Cheapest Australian sale, AUD$18 delivered.
Price difference: 41%.
Price difference without delivery: 8% (though to be fair, the cheapest price without freight was 44% cheaper).

Cheapest foreign sale, AUD$38.15 delivered.
Cheapest Australian sale, AUD$56.39 delivered.
Price difference: 32%.
Price difference without delivery: 58% (clearly The Nile loads their "free" freight into the book price).

Cheapest foreign sale, AUD$18.33 delivered.
Cheapest Australian sale, AUD$25.57 delivered.
Price difference: 28%.
(both sources load freight into the price)

Cheapest foreign sale, AUD$4.02 delivered.
Cheapest Australian sale, AUD$18.04 (for the Australian edition).
Price difference: 78%.
(both sources load freight into the price)

Here we see two examples of books that are only really of interest to an Australian audience cheaper overseas, a science fiction novel with international release also cheaper and a mass market bestseller. All dramatically cheaper bought from overseas. My experience having ordered from Australian online retailers is that they also take much longer to deliver than the overseas vendors. 6-10 weeks for delivery from Australia versus 2-6 weeks from Book Depository US or UK.

So book retailers, come back when the difference between your prices and those overseas is less than 10%, and your service is at least on par.

Now I know that the book industry is difficult. The local publishers are absolute idiots, and the sooner they die the better for everyone involved. But what about consumer electronics?

Example 1: D-Link Boxee
Price difference: 34%.

Example 2: LG BD570 Blu Ray Player
Price difference: 38%.

So even if they charged GST on these sales, they'd still be cheaper overseas. Why's that Gerry?  Should it be a legal requirement that Australian consumers subsidize your horseracing hobby?

2. Your online sites are woeful

Have a look at the sites of the retailers sponsoring this advertisement and see how many will actually sell you a product online, or have most of their product range online. Now before I did this little audit, I figured none of the retailers listed would sell anything substantial online. Surprisingly, there's more than I expected selling their full range online. Interestingly the fashion sector seems to have gone into this in a big way, and fashion is the sector many have regarded as very difficult to sell to people outside of stores.

But the big, noisy players in retail, the ones complaining the loudest about competition from overseas online stores, have conspicuously crap online presences. David Jones, Harvey Norman, Myer and Target hang your heads in shame!

Retailer Online sales? Full range online?
Angus & Robertson yes yes
Borders yes yes
David Jones no no
Dotti no no (but an impressive effort)
French Connection yes yes
Harvey Norman no no
House no no
Jacqui E no maybe?
Jay Jays yes yes
Just Jeans yes yes
Mimco yes yes
Myer yes no
Nine West no maybe
Peter Alexander yes no
Portmans no no
Seed yes no
Smiggle yes yes
Steve Madden yes yes
Superchef Warehouse no no
Target no no
Witchery yes yes

3. Collection would cost more than it would raise

The final nail in the coffin here is that the cost to collect GST on incoming mail, by opening packages, working out the cost, then having a mechanism to collect the money, would likely cost more than the tax that would actually be collected. Making it useless as a tax revenue. Let's remember that raising tax revenue for government and its services is, after all, the point of taxation. It's not designed as a way to protect the revenue of local businesses!

Of course, the retailers would suggest that in addition to the tax being levied, there also be a "collection fee" added to cover these costs. This would handily bring the price you pay online somewhere closer to their ridiculously overpriced goods. How convenient. And they wouldn't even have to compete on price!

Why don't we all switch banks?

The Prime Minister is telling angry bank customers to "take their money and their business somewhere else". For your transaction and savings accounts, this is reasonably easy. If you have a mortgage, it's quite difficult.

I attempted to move our transaction accounts to the ING Direct "Orange Everyday" account. It has some very compelling features: no fees from any ATM when you withdraw $200 or more at a time, free EFTPOS cash out for any amount (and they even pay you $0.50 when you get over $200 out this way) and no monthly fees.

The thing that stopped it? Actually it was the Federal Governments anti-money laundering KYC process.  I'd signed up without using Holly's middle name. Her middle name is on her identification. Australia Post would not validate the document unless it also included her middle name.  Erm.

That said, the PM's suggestion has got me thinking I should try again.

Some other things I'll have to sort out:
  • Automatic payments, including my mortgage and to my high-interest savings account (UBank have been the winners there for some time).
  • I handle the money for our fruit and veg co-op, so everyone there will have to update the details they use.
  • I'll have to learn to use a new Internet banking service.

All up, these aren't really show stoppers.  Changing mortgages, however, would be a big deal. We don't need to, as we have an excellent mortgage provider, but for those who do, the government needs to get involved to make switching easier.

For a comparison of low-fee transaction accounts, Choice has a review. I'll give a spoiler for those who don't subscribe to Choice: ING Direct Orange Everyday and NAB Classic Banking are the "Best Buys".