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.