Small retailers unfazed by GST threshold

A survey of small retailers reveals 62% do not believe the Federal Government needs to change the $1,000 GST threshold on overseas online purchases, contradicting many of their larger competitors.

Online business directory hotfrog surveyed 470 small retailers about the issue, and found 53.8% believe the GST threshold has had no impact on their business.

This compares to 26.8% who believe the rules have “considerably” impacted their business, while 12.3% say the rules may have had an impact “but not enough to make a difference” and 7% say they’re unsure.

Of those that did identify the rules as having an impact, 53.7% claim the GST threshold has led to a decline in their overall sales, while 18.6% reported a decline in specific product categories.

The survey shows 67% believe customers are deterred from buying locally due to price, while 32% say product availability serves as a deterrent.

A total of 57% believe the strong Australian dollar has impacted their customer base in that it has increased the decision to purchase goods overseas.

With regard to whether businesses have adapted their marketing strategies, 41.4% say they have boosted their online presence, while 16.3% have adapted their strategies via advertising.

When asked whether they think the existing tax rules give overseas online retailers an unfair advantage, 49.8% said no, while 40% said yes and 10.2% said “perhaps”.

According to hotfrog, the survey shows small retailers are a “resilient lot” who understand competition is “the name of the game”.

Hotfrog marketing director Jeff Perlman says small retailers are more accustomed to adapting to changing markets, which means they have a different mindset to their larger counterparts.

“The biggest single outcome of this survey is that small businesses don’t see the threshold as something that has to change because they’re more accepting of the fact that they have to find ways to adapt – they’re not seeing this is an issue that should even be a headline,” he says.

Perlman says unlike traditional retailers, small online retailers can rely wholeheartedly on their website as their primary driver, leaving them less worried about their internal competitors and focusing more on boosting their online presence.

“Small retailers are looking at ways to improve the depth of the data they post on secondary websites, improving their SEO optimisation, and looking at different advertising models,” he says.

Meanwhile, retail giant Myer has launched its online shop myfind.com, which will offer merchandise to Australian consumers and then fill the orders overseas to avoid the GST threshold.

Myer boss Bernie Brookes has been a vocal opponent of the threshold, claiming traditional retailers are under threat from overseas online retailers who can dodge the tax.

A Myer spokesperson says myfind.com will target a different, growing consumer segment.

“Myfind.com is a value-focused online business that is quite different to the existing Myer department store offering,” she says.

“Myfind.com also presents Myer with the opportunity to test new merchandise and the potential for product and range extensions of our existing department store offering at a lower cost of doing business and working capital investment.”