There’s been a lot of hoo-ha of late on the telly about Aussie retailers making a big deal about us consumers shopping online and avoiding the GST. For my international readers who aren’t aware of this, here’s a summary. In short, Gerry Harvey, the executive chairman of Harvey Norman Holdings Ltd, is playing the leader to other retailers, whinging about how unfair it is that people are shopping online, how unfair it is that they are not paying any GST, that it’s unfair that other online retailers can charge lower prices because they don’t have any overhead to deal with. At the time of writing, GST only applies to orders over AU$1000.
Now this really got my (and my husband’s) blood boiling. Other than the fact that the fellow is a billionaire moaning about people not paying GST (i.e. not shoving more money into his already very fat wallet), it just insults our intelligence as consumers to have to listen to this dribble. How much overhead and import taxes do these giant retailers like MYER and David Jones have to pay to justify massive price hikes in the goods they sell? They make millions every year. What savings are passed on to the consumers? Nothing.
Right, let’s not talk about electrical goods. We’re beauty fanatics, so let’s talk about beauty products. Friends who haven’t the opportunity to visit Australia frequently request that I get them certain beauty products, in hopes that they are cheaper in Australia, especially if the item was an Australian brand. I often had to tell them the sad truth, that it’s probably cheaper to get them anywhere else BUT Australia. Even Aussie brands.
Here are a few examples of price comparison between the same products sold in Australia, and in the US. Some prices are not significantly increased, but most are. With the strong AUD, the price difference is ridiculous.
Benefit Benetint – AU$55, US$28
NARS blush – AU$62, US$26
Bobbi Brown Modern Classic Lip & Eye Palette – AU$160, US$75
MAC Duo Fibre Brush #187 – AU$85, US$42
Clinique Turnaround Concentrate Visible Skin Renewer – AU$68, US$39.50
Bloom (Australian Brand) Lip Gloss – AU$24, US$19
Becca (Australian Brand) Beach Tint – AU$42, US$25
That is just the tip of the iceberg. Is it any wonder that most of us prefer to shop from websites like Kissandmakeupny.com, Strawberrynet.com, etc rather than Mecca Cosmetica? We even go through the hassle of employing the services of mail-forwarding sites like HopShopGo just to buy from Sephora. Wouldn’t it be so much easier if we could just buy them from a shop locally and be done with it? Of course it would. But to have to pay over-inflated prices for it, we’d rather trust our semi-reliable Australian Post with our packages from the US. Get my drift?
I wasn’t at all excited when I heard rumours of Sephora launching in Australia. I had the strongest feeling that the prices will be massively increased compared to their American counterparts. What’s the point? It would just be another Mecca Cosmetica or Kit Cosmetics selling pretty much the same products, at the end of the day. Not much competition there, since product prices are controlled.
They say we have to support Aussie retailers, support Aussie-made products. As much as I want to, I don’t think I can, when it’s so much cheaper to get them elsewhere. It’s my hard-earned money, I have the right to spend it wisely, to stretch my dollars as far as I can. We’re savvy consumers. Where it’s cheaper, we go. It’s only common sense.
I would love someone from the beauty industry’s take on this, as to why prices of cosmetics are so high in Australia, and some facts and figures to support the claims. If you are, please share with us in the comments, or feel free to email me anonymously.
So until these giant retailers reduce their prices, we will continue to shop online where it’s cheaper. After all, it’s only fair that we get the most out of our money.
Fair’s fair, right, Mr Harvey?
Note: See Miss Prissypants‘ take on this issue.
Like you, I was extremely angry when I heard Gerry Harvey’s comments. If the prices in Australia weren’t so crazy I’d happily shop here. It’s much easier (and more fun) to go into a store, play around with products and buy what I want, but when I can get things for half the price online why would I waste my money?
IMHO the other issue we have here is customer service. Retailers here very rarely give samples, getting a sample is like pulling teeth. Maybe if there was better customer service and I could try something before I bought it I might be more willing to buy instore.
Even if there is a GST added I’ll still be shopping online because it’ll still be cheaper.
GlossQueen: I actually thought Aussie retailers are pretty generous when it came to samples! In Malaysia, beauty counters are incredibly stingy, and unless you actually buy something from them, the chances of getting free samples before buying are close to zero. When I was given samples here to try without having to purchase anything, I really thought it was a huge upgrade to where I was from 😛
I’m with you. Even with GST added, I’m certainly more inclined to shop overseas online. Heck you can add 20% and it’ll still be cheaper elsewhere.
Hannah: Uh oh. Then go! Go get it online! 😀
Here here Tine! Couldn’t have said it better myself~ I’m especially disgusted that Australia brands are charging less overseas. Talk about being Unaustralian :/
I’m with you girl! GST means Goods & Services Tax yea? So why should I pay tax if I’m not getting service?
Also, I don’t understand why the retailer is making noise when he is the one who is making the most money. I’m in the FMCG industry and I can tell you, among the manufacturer, distributor (if any) and retailer, the retailer earns the MOST. Like up to 45% of the retail price! The manufacturer and distributor earn peanuts!
It’s a fair world in business… if others are willing to earn less profit but more transactions, you either match it or shut up about losing business to others. Geez… he’s such a sore loser!
Well said! Amen! Hallelujah! (etc etc)
The only problem with this article is that you are highlighting the price differences on some products that I really want. Now I feel like shopping… online, of course 😉
Celina: Imagine my shock when I saw that Australian brands are cheaper overseas! I really did not expect that at all.
Daphne: Harvey’s business model put a lot of small retailers out of business. And now he has the cheek to make such a big deal out of this. As for service, I don’t mind getting no service if the price is justifiable. Unfortunately that is not the case. Shit service, shit prices. And we have to put up with it? Hell no.
Hear, hear! Australian GST is ridiculously high. I understand the reasoning for it but 10% on everything is a bit too much. I once calculated on how much I was spending on GST a month and nearly hit the roof when I saw the total.
Another thing which irritates me is how tourists are only allowed to claim GST on ONE receipt with a total of AUD300. Like, oi! People run around looking for bargains, ok. Tourists can spend AUD300 in a day on shopping but they are not going to buy from just ONE place. What kind of idiot reasoning is that?
If I am not mistaken, the retailer doesn’t have to pay GST. Only the end consumer does.
I agree with GlossQueen. Getting samples from Australian retailers is an awful experience. I only get samples when I purchase something and even then, it’s only one tiny sachet of a product I am not interested in. In Malaysia, its like I get samples thrown at my head left, right and centre.
Eli: Retailers pay GST if their annual turnover is over $75k. That’s why they charge the 10% to the customers. See, I don’t mind paying the GST if the prices are comparable to the US. But to have to pay GST on top of the over-inflated prices? They can kiss my yellow backside.
You get samples in Malaysia? Easily? Damn. Penangites have a thing or two to learn then, because getting samples from beauty counters is like squeezing blood from the sales assistants. Ugh.
this boils my blood too! you have say all my thoughts about this online gst saga. it’s not 10% gst saving why we buy online. it’s the ridiculous pricing! do retailers do their maths? even if 10% gst applied, it’s still cheaper to buy online! and yes, it’s really shocking that even aussie brands are cheaper overseas. makes me want to move overseas. harvey norman is the first store i’m boycotting.
Coco: I felt so embarrassed buying electrical appliances from Harvey Norman on Boxing Day. I really should have boycotted the store then. Sigh.
The Internet allows you to easily compare products and prices, so you can be sure that the item you purchase is the exact item you want. Its not only time saving its help you economycally too.
the situation in australia is just horrible! i cant believe that they are actually trying to earn more money from australians than from international customers. that’s just plain weird.
malaysia really do give samples out this freely? i usually got my samples online.
Isn’t consumer choice the entire point (and beauty) of a free market economy? it makes no sense to rail at consumers for doing the obvious common sense thing (to purchase online where prices are significantly lower). If your business is suffering because shoppers are becoming smarter, then these retailers are the ones who should be reflecting and coming up with ways to ensure customer loyalty. But it seems like all they want right now is legislation that would help re-establish the monopoly they once had and reduce consumers to helpless minions once more. Well, if they can’t keep up with the times and the proliferation of internet shopping, then they deserve to die out.
Swati Sur: I agree. What’s the point of the Internet if it doesn’t allow you to save time AND money?
Wendy: I didn’t think Malaysian beauty counters gave samples that freely, without you having to purchase something first, that is. Hopefully the situation has changed (I remembered it being exceedingly difficult for me. Samples are hoarded like gold).
Lynne: Exactly! And now the bugger’s calling us unAustralian for not paying more. *facepalm*
I agree with GQ about the samples and the attitude from SAs. They work in a freakin’ shop – they’re not curing cancer. I hardly ever go to a counter to buy something because I hate feeling like someone is looking down their nose at me.
Awesome post. Agree 100%. BRING ON THE REVOLUTION.
Dee: I know, right? I feel that way every time I walk into MAC. The sales staff behave as though they’re above everyone else, just because they work at MAC? Every single time I go to MAC, I’m always the last to get served. Sometimes I don’t know if it’s because I’m Chinese or something. Oh well, that’s another story for another day 🙂
Well, I’m not Chinese and I get the same treatment. I think they’re just snooty cows, frankly.
Dee: Hahahaha I couldn’t agree more!
I still stick by our stand “our money, our choice where to spend it” No one should ever tell me how and where to spend MY money! Geez.
I’m not from Australia but the price mark-up is ridiculous in Canada as well. (I don’t even know what good the Free Trade Agreement is if we still get the same ridiculous mark-ups.) I get my friends from the States to ship me things all the time. (Even with the shipping I pay and the currency exchange, it still ends up cheaper.) Online shopping has really kicked a lot of retailers in the butt and let them know that they have to start providing cheaper goods and better service or else we’re not buying. Keep shopping online! And try things out in stores in the meantime. 😉
Hear, hear! Absolutely disgusted by Harvey’s comments! If costs of products were justified and reasonable in Australia, why would we go to all that trouble of scouting stuff online and having to wait two weeks or more to get it? As smart, knowledgeable consumers, we obviously want the best value for our money and the retailers in Australia simply aren’t offering it.
Great post, Tine!
I’m not Australian, but in Spain the situation is pretty much the same. People in the past were extremely reluctant to buying online, but there are certain products that are not available here at all, or if they are, at over-inflated prices.
I’ve only started ordering certain products, such as cosmetics online myself, but I’ll continue to do so. Governments have already realised customers are not stupid and the European Union changed the custom laws. Any orders exceeding 22 €, shipping included, may be subjected to inspections and held in ‘custody’ until you pay the corresponding taxes, fees or whatever. Argghh.
This bloke kind of reminds me of the CEO of the Spanish clothing manufacturer Mango, speaking against workers working for state institutions like teachers, doctors, etc. He claimed that we were priviledged and had no right to complain about our useless idiot of a President cutting down our salaries to keep on wasting the country’s money coffers. Let me tell you something, my friend, it’s been years since I convinced myself that your clothes are crap, you falsify prices during sales, etc. Pity my not buying from you won’t make much difference.
Daphne: Hear hear!
Aaryn: Awesome! I wish the US was that near to be able to ship stuff over. Package-forwarding services to charge an arm and a leg if you’re buying on your own and not sharing with a group of people. But what’s that telling you if we’re more willing to do that than to buy locally?
Haha, we try in store and then buy online. Go online shopping!
Nadia: Thanks sweets. Harvey’s just crying foul and bloody calling us out because his business model’s no longer working for him. Like Daphne said, it’s our money. No one can tell us what to do with it, least of all him!
Marox29: I think I heard that story about Mango! And that bit about orders exceeding 22 euros being subjected to inspections, etc is just terrible. I feel for you, I really do. That’s just not on.