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Media Release

January 5 2011

Push for online GST just “bad business”

Campaign against GST free online sales may backfireAustralian retailers pushing the Government to introduce GST on goods purchased online from overseas are shooting themselves in the foot, says a University of South Australia marketing expert.

Senior Research Associate at UniSA’s Ehrenberg-Bass Institute for Marketing Science Dr Svetlana Bogomolova says the campaign is likely to backfire for retailers.

“So far this retailer campaign has done a great job of reminding the Australian public that buying online from overseas is much cheaper,” Dr Bogomolova says.

“It is well known that Australians are yet to catch up to the rest of the developed world in online shopping.
“More Australians might now consider overseas online shopping as an alternative to their traditional shopping from Australian retailers. Clearly, this is something those retailers did not factor into their marketing plans,” she says.

The brand expert says it’s also creating a public image issue for big business.

“The heavy media campaign could portray Australian retailers as greedy giants prepared to go a long way to eliminate their competition,” Dr Bogomolova says.

“That won’t help them in a battle against the growing popularity of overseas online venders, who may now appear friendlier than ever due to their flexibility and the convenience of shipment options, not to mention a much wider range and lower prices,” she says.

Dr Bogomolova says the retailers’ campaign is based on a flawed argument that’s more likely to annoy consumers than boost sales.

“The tax proposed could only affect a tiny portion of sales, one and a half per cent at the most, or even less if a portion of the three per cent of online sales is worth more than $1000 and is already taxed, so, contrary to what the big Australian retailers are asserting, this measure is unlikely to save many retail jobs,” she says.

“The cost of creating infrastructure to enable the Australian Government to charge the tax could be much higher than the potential gain of its introduction.

“The retailers’ media campaign is trying to persuade the Australian public to pay an extra 10 per cent for their online purchases for a chance of saving retail jobs, but any marketer would know that media campaigns have slim chance of changing consumer attitudes, especially if it sees them out of pocket,” Dr Bogomolova says.

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