Duty And GST For Online Shopping Is Wrong

Charging duty and GST for online shopping purchases is wrong. If our retail sector was run by smart businesspeople they’d have reorganised their business model to make online shopping a less competitive alternative, but most have failed to do that.

Despite almost 20 years of knowing that the internet would destroy business models that failed to adapt, most of the retail industry has remained stuck in 1960’s thinking.

Many retailers are moaning losers. They think that they should be able to dictate to consumers how they purchase goods and have failed to realise that the entire economy is geared towards making things better for consumers.

Smart retailers are rejoicing. They’ve realised that they can’t compete with Amazon or ASOS so have focused on creating high margin products that are just as expensive through online shopping or creating in-store experiences that can’t be replicated in a browser window.

Most retailers don’t think that way though. They think they are owed a living and owed protection of their traditional excessive markup by way of making online shopping harder than it should be.

What they fail to realise is that online shopping, save for reasons of convenience, is a last resort. When we really want something today we’ll happily pay more for the privilege by going to Lambton Quay or High Street.

But retailers are so poor at delivering what consumers want at a price they can afford, they’re actually shifting consumers discount rates. Consumers who previously would never have considered online shopping are waiting 2-3 weeks for online orders to arrive by courier.

If more consumers are happy to wait for substantial savings, the main way retailers make money is on the way out. If you want to increase your purchasing power, online shopping makes it far easier to stretch a dollar than baby boomer retailers would care to admit.

That’s why paying GST and duty for online shopping purchases is so wrong. Essentially, it’s taxing customers for having to resort to an overseas supplier. It’s punishing people who have lower discount rates and rewarding impetuous shoppers who are happy to get ripped off by retailers.

If domestic retailers weren’t so rubbish at running their businesses, they’d have started their own online offerings years ago. The smart ones have – and they’ll prosper while the moaning retailers cry over the loss of their rents.

An industry that is so poorly run it changes its customers discount rate doesn’t deserve any protection. The more retailers that go to the wall because they can’t compete, the better off New Zealand is in aggregate.