Retail experts have reacted critically to Myer and Harvey Norman’s ambitious plans to launch China-based websites in order to deliver GST-free goods to Australia.
Myer announced late last week the company is working on an international retailing website which will sell goods to Australian customers, shipping them from a warehouse in southern China to provide a GST-free transaction for consumers.
According to Myer chief executive Bernie Brookes, the company is creating the new site as a result of the Federal Government’s failure to address GST-free online shopping.
Retailers have called for the current $1000 GST-free threshold to be lowered to curb shoppers from making online purchases from overseas suppliers.
Myer’s China-based website, which will be operating by February, will source products from the company’s factory hub in Shenzhen, and use China Post and Australia Post for distribution.
Brookes says if the Myer website proves successful, he believes other retailers such as Woolworths will create their own sites, further eroding GST revenue for the government.
Harvey Norman chairman Gerry Harvey has already announced his own plan to launch a China-based website.
Harvey, a vocal supporter of the push to lower the GST-free threshold, told the Channel News website that he will follow in Brookes’ footsteps.
“We may even beat Myer to getting our shop up… We may not make a lot of money, but it’s better than making no money at all,” Harvey said.
Assistant Treasurer Bill Shorten has said there is no immediate plan to lower the GST-free threshold, but the government acknowledges retailers’ concerns.
National Retailers Association spokesperson Michael Lonie is critical of the motives behind Myer and Harvey Norman’s plans, saying it could be a ploy to get the government’s attention.
“They could be trying to put pressure on the government [to lower the GST-free threshold],” Lonie says.
He says smaller retailers would struggle to set up and operate China-based websites because they lack the necessary infrastructure and workforce.
Brian Walker, managing director of retail consulting company The Retail Doctor, is also critical of the retail giants’ plans, describing online retailing as a “modern day gold rush”.
“Everyone is running [towards online retailing]; the cowboys are stampeding in… Would businesses like Harvey Norman and Myer seriously look at doing this? It’s a game of margins – a 10% margin in this case,” Walker says.
“If they’re suggesting that investing in all this [China-based] infrastructure is going to save them 10%, that’s a questionable proposition.”