The explosion of online retailing has opened Australia’s eyes to the price difference charged in-store compared to online, but many may not be aware of the price disparity between Australian and international websites.
Shirts, books, jeans, shoes and music are just some of the products that are cheaper on international websites, although Australian online retailers insist they are not ripping off consumers.
A quick look at the business shirt retailer TM Lewin shows the brand’s Australian website offers four shirts for $180 with free delivery, however TM Lewin’s UK website offers five shirts for the equivalent of $175 including delivery to Australia.
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That’s a whole extra shirt, or a 20% better deal just for shopping through TM Lewin’s UK rather than Australian website.
Gerard Crawford, TM Lewin’s country manager for Australia, told SmartCompany the UK website was not consistently cheaper and pricing was generally aligned between the UK website, Australian website and TM Lewin’s concessions in Myer.
“If you add it all up it is about parallel, depending on the exchange rate and what else is going on, such as whether Myer has promotions, as Myer is quite promotionally driven,” says Crawford.
“There will be differences depending on the time of year. We want the customer to have the choice; if they want to go to the UK site they can, if they want to go to the Australian site they can, if they want to go to Myer they can.
“We do our best to make sure the prices are aligned but it is not always that easy.”
About 80% of TM Lewin’s Australian customers order from the brand’s Australian website, which appears ahead of the UK website in a Google search, while the remaining 20% order from the UK website.
Although TM Lewin’s shirts are primarily made in China, Crawford says that should not make the shirts any cheaper to buy in Australia than in the UK.
“Logistics and supply chain is around volume; at the moment what we ship into Australia is quite small in comparison to what we ship to the rest of the world,” says Crawford.
“We sell TM Lewin in Singapore as well, but ship to there from London. At some point we do have a plan to have an Asian hub.”
Dr Oliver Marc Hartwich, formerly a researcher at The Centre for Independent Studies, says TM Lewin’s argument that higher prices in Australia are based on supply chain volume is a “lame excuse”.
“The UK has 62 million consumers and we have 22 million in Australia – that should be enough. How many consumers do you need before you get good prices?” says Hartwich.
“It is not as if we are a tiny Pacific island, I don’t buy that.”
Hartwich says, historically, shipping costs may have been an issue, but not anymore: “It’s just a lazy excuse for high prices.”
“If you think about what shipping goods costs are, for example, it is negligible to ship a bottle of wine around the world and costs around 5c or 10c if you are doing it in bulk.
“Shipping goods around the world should not really make a difference. There is no excuse for high prices based on location.
“[TM Lewin] had a closer look at the Australian market and realised the price of shirts here was more expensive and so they have charged the price that is more expensive.”
The online shopping bonanza
While Australia’s bricks and mortar retailers cite exorbitant rents and high retail award wages as factors that stop them matching the low prices offered by international retailers, retail experts cannot understand why prices are still higher at Australian online retailers.
Online retail is a lucrative market in Australia, with IBISWorld tracking online spending by Australians as increasing almost 30% over 2011 and online spending expected to reach $10 billion.
Domestic retailers account for almost 70% of online sales but IBISWorld says the main growth is coming from international retailers, with sales increasing 40% in 2011 compared to 25% in 2010.
Naren Sivasailam, senior analyst at IBISWorld, told SmartCompany much of the growth in the online market is coming from overseas because domestic websites are more expensive, particularly taking into account the current high Australian dollar.
“There definitely is a price discrepancy in some categories exploiting the fact we are one of the few countries still spending money,” says Sivasaliam.
Even taking into account that Australian online retailers have to charge GST, while international online retailers can avoid charging the tax through the import low-value threshold, Australian websites are often still more expensive.
However, Australian online retailers say they are hamstrung by supply chain issues, outdated duties and legislation which makes it almost impossible for them to compete with international retailers on price.