GST threshold change unlikely to impact overseas web purchases: Report
Almost 80% of Australian consumers oppose reductions to the GST-free threshold on overseas online purchases, but any change will do little to quell their appetite to spend, new research reveals.
According to a study conducted on behalf of MasterCard, increasing tax on purchases from overseas sites is unlikely to have much of an effect on Australian consumers’ shopping habits.
Of the 1,250 Australians surveyed, 79% oppose reductions to the current threshold of $1,000, despite calls from major retailers such as Myer and Harvey Norman for it to be lowered.
Assistant Treasurer David Bradbury has said the federal government acknowledges the current threshold is “very high” by international standards, but has rejected calls for an immediate reduction.
Even if it was lowered, it wouldn’t slow the desire of Australians to “search the world for a bargain”, MasterCard claims.
Of the online shoppers surveyed, 38% said a change to the threshold would have no impact on their behaviour, while 24% said the move would only cause them to buy online less often.
According to David Masters, vice president of strategy and corporate affairs at MasterCard, price isn’t the only motivating factor driving people to shop with overseas online retailers.
While 86% of respondents said price was important, Masters says Australians are “right at the forefront” of the modern retail experience, where online shopping has become the norm.
According to MasterCard, 12.6 million Australian adults have shopped online in the last 12 months, while two out of every three shop online at least once a month.
Masters also says Australians are “hard wired” to want to shop locally, so local retailers need to up the ante.
For makeup and clothing accessories, only 9% of respondents had a preference for overseas retailers. More than half said they were not concerned whether the vendor was local or overseas.
The most significant bias was for books, with 16% of respondents saying they prefer overseas vendors.
“The challenge for Australian retailers is to deliver where overseas retailers cannot – service, delivering a personal approach,” Masters says.
The Australian Retailers Association has a different take on things, describing the current threshold as an impediment on Australian retailers.
“While we don’t expect overseas buying behaviour to change, Australian retailers have a right to be able to compete equally in the online space,” executive director Russell Zimmerman says.
But Michael McRitchie, chief executive of local online retailer DealsDirect, insists reducing the threshold won’t stem the tide, declaring the current online market dynamic is “here to stay”.
“The onus is on local bricks-and-mortar and online operators to lift their game in areas where they can make a difference,” he says.
“After-sales service, delivery times, product knowledge and being a ‘trusted Australian name’ count for everything in the online world.”
In addition to price, respondents said they preferred overseas sites for ease of navigation, and for offering better information about a product or service, suggesting these are areas Australian retailers need to improve on.