Buy local or shop online?

The often tense relationship between  ‘bricks and mortar’ retailers and proponents of online shopping has come to the fore again this week.  NZ Post and Customs will be devoting more resource to screening goods being brought into the country by online shoppers, to assess liability (or not) for GST.

The issue is not new, nor is it unique to New Zealand, but there is significant  potential for our retail sector (and the many thousands of people directly and indirectly employed within the sector) to take a big hit if the trend towards online shopping continues unabated.

On one side of the argument are claims of anti-competitive ‘price-gouging’  by local sellers, taking advantage of a captive market and so charging whatever the market will bear. Allowing consumers to purchase overseas, the argument goes, is a good way to ensure local suppliers are pricing goods fairly.

The other side of the equation however is that retailers routinely see people in their stores who inspect, try out, try on and generally inform themselves, using the retailers’ time and expertise, and then walk away from the store and buy online  straight out of an American wholesale warehouse with a dramatically different cost structure. 

I’ve personally heard people bragging of having spent time in local motorcycle accessory shops getting advise and taking advantage of the opportunity to inspect and compare goods on offer, then buying directly from the US or Australia. We all like a bargain, but one can question the ethics of such a practice, and the likelihood that in time we will simply drive the local suppliers out of business which doesn’t really help anyone’s cause.

Being a bit more diligent about applying GST to such purchases is only fair, according to retailers, both to level up the market a bit and to provide much needed funds to the government’s coffers.

It’s a tricky equation.  Retailers need to be on their game, making sure that the ‘shopping experience’ for in store customers is as positive as it can be.  Many of course are adapting, by offering both direct in store sales while also getting into the online game themselves (if you can’t beat ’em…).

For consumers, there is the risk that if online purchases don’t measure up to expectations, getting refund or other recompense can be difficult, or not viable financially.

The political challenge is to find the right level of regulation to protect the legitimate concern of local business people and their employees, without denying people the right to make their own choices as consumers with access to a global marketplace.

10 Comments Posted

  1. I operate a NZ based online business. I make no apology for charging more.

    1. Most of my products are in stock ex Auckland to satisfy those “urgent requirements”.

    2. My products are a known quality and I stick by them.

    3. I answer my emails and phone calls in a local timezone.

    4. My company pays tax in New Zealand and supports the local economy. I can not under emphasise this point. A *considerable* amount of stuff sold online from overseas comes via “tax efficiently” structured companies.

    I suggest any move by NZ Post to screen packages is too little too late. Most of the stuff that comes in (especially from China/Hong Kong) is double invoiced – ie: massively under declared in value by the sender for Customs purposes – and unless the people doing this know the real value (which they can’t keep track of as it is a too wide field), it is a lost cause.

  2. I’ll often shop online for things like DVD and book purchases (the few times I buy them), but I’ve sometimes found that for more expensive things, it’s worth a reasonable extra amount for me to wait for a decent sale and buy through a local retailer. The main reason is warranty management, and the ability to just dump those problem on someone else nearby if something goes wrong without having to mess around with posting things back and such, and bearing the cost and inconvenience of all that. (eg. Things like tramping boots are frequently not manufactured to the advertised specs, possibly because few people actually use them to that extent, so I usually expect to take them back for a warranty claim or three.)

    Getting direct personal advice about options from someone who sells more than one option is also important for me, and I tend to develop a loyalty to shop assistants who are nice to me, but I feel less loyalty generally to the chained brand outlets that’ve become popular in the last few years because I don’t see any reason to trust their advice anyway.

  3. Totally agree with Chris and Andrew, retailers here need to be more realistic with prices and then reap the benefits of more sales. But can they with all the costs of running a business ?

    Even the chinese imported goods on TradeMe (Android Tablets, CREE Torches, MP3 Players, Memory sticks etc etc), anyone can import directly for 30-50% less money. eBay is also a source for goods that are typically 20-40% cheaper.

    Dont even get me started on car parts, local dealers are ripping the NZ public off on OEM car parts. Why would I pay $1000 for a set of top hats for my Toyota, when I can get uprated TRD ones from UK at $600 ?.

  4. Example:

    By brother recently got his prescription glasses online. After getting the prescription from an optometrist (about $80), he went to the included sight and paid about NZ$30 for the glasses including postage.

    They were delivered in less than a week from USA and are perfect. He saved a fortune.

    You just type in the parameters (to the sight) from your prescription.

    Note: Make sure your optometrist includes the DPI in the script. They know what you’re doing and will try to screw with you. This was my brothers experience.

  5. I don’t think it should be applied to goods ordered from overseas. For a start, you usually have to pay shipping for overseas purchases and second, you aren’t covered by the Consumer Guarantees Act. If it breaks, you have to send it back to Idaho/Darwin/Shanghai. You pay less money and take the associated risk with overseas online shopping, as far as I’m concerned. It’s up to New Zealand businesses to be price competitive and/or pick products and services that people are loathe to take a punt on buying from overseas.

  6. Let the market fight it out. If traditional retail becomes nonviable in some areas then so be it. The money consumers don’t have to spend on traditional retailers will be redirected to other areas, leading to growth, while traditional retail recedes to a given degree. That’s just part of economic development.

    I predict in the future retail will morph into more of a showcase industry, where showcase stores are funded directly for their marketing role by the companies whose products they advertise. This will be reinforced by a “physical internet” which is coming soon – that is, tiny auto-cars that can post any item instantly. Branding will become critical for trust in the further development of online purchasing.

    Should we stand in the way of this probable evolution? Surely not. More efficiency means more resources for other things – like GREEN things, etc.

  7. There is a place for both.

    I don’t think there is a political challenge here; the laws are in place for charging GST and should be exercised appropriately and the principle of “buyer beware” applies to all purchases, though the risk profile is obviously different when purchasing offshore.

    There is a somewhat of an ethical dilemma but in reality, international vs. local shopping for what are generally foreign manufactured goods, is no different from going into one store and trying something out then going to another local store to get a better deal.

    If we applied this logic then all supermarkets should be held accountable for stocking goods more cheaply than the dairy, butchery and greengrocer does.

  8. Just for some clarity, it should be noted that in any cases the price difference isn’t small, it’s massive. I’m looking at buying Leatherman knives for my groomsmen gifts. These knives cost $110 here in NZ shops. I can buy them for $45 each, landed, in NZ dollars, from Amazon.

    Similarly an ordinary tungsten ring from Michael Hill will cost me $700, or $50 landed from Amazon.

    No amount of GST or shipping charges can account for these differences. We get shafted routinely in NZ and I offer no sympathy for the retailers in this country.

  9. Being a bit more diligent about applying GST to such purchases is only fair, according to retailers, both to level up the market a bit and to provide much needed funds to the government’s coffers.

    Agreed but the solution isn’t to enforce GST on privately imported goods but to drop GST altogether and replace it with other taxes such as a FTT.

Comments are closed.