NZ Herald Trained and Skilled Journalists Get Online GST Support Confused

mostdontsupportgstThe NZ Herald is ostensibly staffed by “trained and skilled” journalists.

But in the aftermath of the Christmas silly season, they’ve forgotten their 100 level mathematics.

If 4/10 of those polled support online GST then 6/10 don’t. Furthermore, this was an NZ Herald DigiPoll with just 750 people – so how pointless is a headline like this?

When you see the quotes from Labour MP David Clark and the Retailer’s Association, in contrast to what seems to be a measured approach on the part of Todd McClay, this seems like a hit job on the issue.

They’ve already trolled Kiwis with a regional accounting firm partner arguing that overseas retailers should be forced to collect GST on IRD’s behalf – that went down in flames. But now they’re being silly.

A “trained and skilled” journalist would be able to draw the parallels between protectionism and clamouring to “level the playing field”.

For further entertainment, here’s a photo of Unity Books – closed on Boxing Day, and with a website that needs an upgrade if it ever wants to compete with Amazon.

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I wanted to buy something from them – I really did – but their online shopping experience is best described as difficult and they were closed when I had free time to go into their store. Lovely people and lovely selection of books but this is 2013, when you’re in a hyper-competitive world no one gets much time off.

A lot of retailers simply suck at doing business. They have poor product range, poor pricing relative to online options and poor customer service. They then have the gumption to turn around and lobby for protection against firms that overcome the tyranny of fixed costs all the way down at the bottom of the Pacific Ocean.

There are many New Zealand retailers who “get it” and have invested in solid online shopping operations and staying on top of global trends that are now easily monitored on blogs, websites or social media. But most retailers are like Unity Books – they could easily improve their online shopping experience without cannibalising the in-store experience, but they don’t. It’s a shame, they are a great bookstore and even though I spend more on Kindle Books for niche stuff like art books or NZ fiction they are the place to go.

Business is not fair, it never was and never will be. Arguing for protection from competition when for decades you have taken the mickey out of New Zealand consumers with ridiculous markups in excess of what “adding the GST and a reasonable return on capital employed” would justify means that retailers who complain are obviously living a commercial lie – hopefully more of them bring in the liquidators next year. Their capital can be redeployed into more productive sectors of the economy. How many struggling retail stores does it take to add up to the sales of one “1-day”?

Read This BS Pro-Retailer Herald Article On Online Shopping Taxes

I was disappointed with the pathetic pro-retailer Herald article that seems like a rewritten press release from a Retailers Association moaner. I’m going to add my own comments and have some therapeutic ranting against stupid people who can’t figure out how to build sustainable business models in the easiest era to do business because of the internet.

Good news for New Zealand retailers now the Government has committed to look at taxing purchases made on overseas websites.

Oh really? Good news for a special interest group who suck so bad at business they can run to mummy & daddy government to prop up their failing business model, like Hollywood studios?

Inland Revenue and Customs will work together to review whether GST can be levied on international purchases worth less than $400.

They already work together. It’s called data sharing. Of course the government can impose a tax on all online purchases – we have one of the most excessively restrictive customs services in the world – which is why our drug market tends towards “home grown” products like cannabis and P.

A recent report found Kiwis have spent nearly $4 billion online in the past five years but more than a quarter of that is going offshore.

So this is a $200 million dollar per year “problem” for a special interest group? That implies 75% of online spending (before taking into account TradeMe purchases which includes Pay Now at actual retail stores who use TradeMe as an outsourced distribution channel) is with NZ retailers.

Retailers Association spokesperson John Albertson says that is making hard work for local retailers who are facing taxes on all sales regardless of whether they’re online or not.

Oh? So you finally get exposed to some competitive forces and your weak, inferior human being response is to have a moan instead of improving your business model? The internet has been around since the early 1990’s. Being a late adopter is not a reason to get protected from reality.

“It’s often quoted that some New Zealand retailers aren’t competitive, it’s far cheaper to buy overseas, etc.

“Well in some product categories that may well be true, but let’s start from the same starting point where we’re both paying GST.”

Part of the reason almost everything is cheaper overseas is because of fixed costs. When the UK has a population of 60 million and the US has a population of over 300 million then of course things will be cheaper there. The per-unit cost of a distribution centre or factory is negligible in larger markets.

Albertson says this is a fast growing problem for local retailers and it’s great to see something being done about it.

OK, this is exactly like the exporters vs consumers. But it’s the retailers vs consumers edition.

Everyone is a consumer, everyone can benefit from lower prices and higher consumer welfare. Most retailers are horrible people who suck at business management and on top of that do lame things to their employees like force them to purchase their products to wear. (Talk to girls who work retail fashion – and then be glad that ASOS is driving retail fashion out of business shipment by shipment).

The Retailers Association says GST needs to be introduced on purchases made on overseas websites immediately, or more Kiwi retailers are going to suffer.

OMG! Kiwi retailers are going to suffer! The humanity! A collective class of people who have failed to change their business model are earning a lower rate of return on their deployed capital! Oh wow! Sunset industries must be protected!

Albertson says the Government’s decision is a step in the right direction but the longer it takes to bring it into play, the bigger the problem will get.

“If you’re running a website in New Zealand, and selling online in New Zealand, you’re paying GST.

“It’s not a matter of bricks and mortar versus online, it’s actually within New Zealand versus outside of New Zealand.”

And there’s the kicker! 75% of online spending by your own figures is going to local retailers anyway. If you really dug into the “online shopping” data what you’d probably find is that those overseas purchases are for stuff that isn’t on sale locally or has such a price differential that it’s worth going through the hassle of registering at an overseas site and waiting however long for your order to show up.

What is so funny is that most of the biases are present in this guy’s deluded thought process: anti-foreign bias, anti-market bias and other indicators of economic ignorance.

There is also a stunning display of what I call “commercial ignorance” or inability to design a profitable business model when it is easier than ever to figure out how to make money on the internet if you have a quality product to sell.

There are a lot of online retail success stories that are New Zealand based including 1-Day, Torpedo7, Fishpond, TradeMe Stores, Barkers Mens Clothing and a lot of boutique clothing stores that sell brands you’ve never heard of but do hundreds of thousands of dollars a year in online sales.

This whole thing is so depressing. How weak and pathetic are these people that their solution to their problem of declining retail stores (but only if their product sucks, because some retail stores are doing really well) is to have a big moan to mummy & daddy government to “level the playing field”.

It’s disgusting. Every time a retail store closes because it didn’t have an active online presence, a beautiful unicorn is born and a child is saved from starvation in sub-Saharan Africa. If only “trained and skilled” Herald journalists could write about online retail success stories instead of giving airtime to a hater.

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.