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GST on online purchases? All good things must come to an end, except for online shopping

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Love your online shopping? So do many Australians. With an estimated growth rate of 12.6% per year,Australia’s e-commerce is growing fast. Online spending is on its way to reach $21.7 billion by 2015, putting Australia within the top 3 online spending positions worldwide over the last two years.

One big factor that makes online shopping so attractive is that the waiving of the 10% GST on international imports and exports under $1,000. The allure of tax-free international online purchasing, partnered with national inflation rates, and topped off with GST being imposed on all online transactions within Australia, has inevitably resulted in shoppers looking towards foreign businesses for purchases rather than choosing to keep their spending within Australia.

Must all good things come to an end?

Lingering threats to lower the GST threshold so that tax is applied to all online transactions, including those under $1000, have provoked inevitable dissatisfaction amongst consumers.

Despite the indignation (and dread) that goes hand in hand with paying tax, considering the ways in which Australia and its citizens could benefit from the proposed changes to GST would hopefully soften the blow.

Australian retail giants such as David Jones and Myer have been actively lobbying to have the GST imposed as soon as possible, predicting that it will only benefit the Australian economy and improve the nation’s retail industry more generally.

It is believed amongst supporters of the change that giving online shopping a more local focus will boost jobs, increase revenue (estimated net $1 billion each year)  and create a space in which more time and money can be spent on creating more innovative omnichannel shopping experiences that will improve local brick-and-mortar stores by bringing them into the world of the digital.

Local retailers are hoping that as a result of the new taxation, shoppers will be discouraged from buying so frequently from overseas via the internet, and begin contributing to Australia’s e-commerce more on a national level.

Physical or Digital? The pot of gold lies in both.

Paul Greenberg of the National Online Retailer Association predicts that omnichannel services – that is, brands and merchants who offer a variety of both online and offline services – are the next big step in Australia’s e-retail evolution.

“There’s a real sense that the new honeypot of Australian retail is an intersection between physical and digital,” Greenberg observes, “any retailer in Australia that has responded to customer needs in offering them multiple platforms will do very well.” Bringing online shopping back into Australia therefore provides a platform for more cross-channel shopping experiences, as consumers will be dealing with merchants that physically operate on Australian soil.

At the AOPEN Gen 2 Retail Evolution Lab in Melbourne, some interesting new omnichannel innovations are on display that are set to soon hit Aussie stores. For example, electronic labelling, digital mirrors with virtual dressing options, as well as interactive, touch-screen window displays.

Stephen Borg, CEO of AOPEN predicts that this is the start of a new chapter for retail worldwide: “Stores as we know them will not disappear in the future” he states, “instead, they will integrate technology to add value to the in-store experience, as consumers now expect to be engaged in an interactive way.”

The changes in GST can therefore be viewed (work with me here!) as an opportunity for Australia to get more involved in these kinds of omnichannel innovations. Innovations that will enrich the consumer’s own shopping experience whilst simultaneously improving the Australian economy of both online and brick-and-mortar stores.

Katie Paterson is a Researcher for global money-saving platform, Flipit.com. Analysing digital advertising and marketing trends in Asia and Oceania, Katie works with a strong focus on social network, e-commerce and m-commerce trends.

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