Whining retailers

December 4th, 2012 at 12:00 pm by David Farrar

Greg Harris at Stuff writes:

With Christmas just around the corner many kiwis will be purchasing online to take advantage of the strong New Zealand dollar and the lack of queues.

The rise in online shopping is putting considerable pressure on retailers’ slim margins. Various retail groups continue to lobby for and duty to be payable on all privately imported goods regardless of their value.

Customs imposes duties and collects GST on goods imported into New Zealand. If the GST and duty to be collected by Customs is less than $60 the charges are waived. Generally this means the maximum value of goods that can be imported tax free is $400.

The threshold was introduced as a practical solution to address the cost of collecting small amounts of GST and duty where it was outweighed by the revenue raised.

This is a key point. Customs would lose money if it tried to impose GST and/or duty on smaller purchases. They’d need a huge bureaucracy to cope.

The New Zealand Retailers Association believes that this “tax break” for online shoppers detracts from the retailers’ ability to compete in the market.

When I shop online, I prefer a NZ retailer as the delivery is much faster. I only go to Amazon (for exampe) if it is not on Fishpond.

With the effects of the economic financial crisis lingering, consumers are looking for bargains. Retailer loyalty does not rate highly amongst many consumers. It is not unusual for consumers to physically shop in New Zealand to find the desired item before purchasing online GST free.

I’d be interested to see any hard data on this. It sounds unusual to me. People may look at something in the shops and then buy it online – but that may be from a NZ website.

Regardless, even though it is an issue for some NZ retailers, asking the Government to lose money collecting GST on small purchases is just not a sensible strategy.

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52 Responses to “Whining retailers”

  1. Graeme Edgeler (3,262 comments) says:

    When I shop online, I prefer a NZ retailer as the delivery is much faster. I only go to Amazon (for exampe) if it is not on Fishpond.

    I have generally found that Amazon UK ships faster to New Zealand than Fishpond does.

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  2. dime (9,356 comments) says:

    You guys not using mightyape yet? great service.

    Fishpond is a shambles imho

    [DPF: Yes use them also]

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  3. hinamanu (2,352 comments) says:

    Can’t expect a record buying Christmas. Maybe online shopping will help.

    GST is certainly obvious as an anti business ploy to wreck the economy.

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  4. OneTrack (2,564 comments) says:

    “When I shop online, I prefer a NZ retailer as the delivery is much faster”

    Most people don’t care for a start and will just go to Amazon anyway – gst lost.

    “I’d be interested to see any hard data on this. It sounds unusual to me. People may look at something in the shops and then buy it online – but that may be from a NZ website.”

    But, usually, it isn’t from an NZ website – gst lost

    So, why should local retailers have to add GST when purchases off-shore don’t. The money was NZ money earnt in NZ. The purchased items are being used in NZ.

    “This is a key point. Customs would lose money if it tried to impose GST and/or duty on smaller purchases. They’d need a huge bureaucracy to cope.”

    We already have a huge bureaucracy in the IRD to collect local GST. Is that a reason not to collect GST? Customs already have to track purchases over $400. What difference would lowering the threshold have?

    Whining retailers – yeah they should just shutup and close down. We are now in the brave new world of the interweb. Oh wait…..

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  5. hinamanu (2,352 comments) says:

    @OneTrack

    Retailers are safe. People love malls and eateries and female watching

    getting out and mingling

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  6. wreck1080 (3,722 comments) says:

    When I was overseas, you’d have to collect overseas packages from the post office. They simply charge you the tax when you collect your item. It seemed pretty straightforward to me .

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  7. chris (556 comments) says:

    When I shop online, I prefer a NZ retailer as the delivery is much faster. I only go to Amazon (for exampe) if it is not on Fishpond.

    Hahahaha. Fishpond faster than Amazon? Good one.

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  8. dave_c_ (214 comments) says:

    “Whining” Thats not a strong enough word for it – these retailers have nothing but maximising their profits in mind – perhaps if they started to compete price / service wise, more people would not have to think twice about buying local !

    If they cant compete, dont expect to survive !

    Anyway, who says its the 15 percent GST which is the straw to break their camels back – these retailers usually have very high margins in the order of 30-40 percent and more to play with – Get real

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  9. Viking2 (11,125 comments) says:

    Didn’t we have this very same conversation a day or so back.

    With the effects of the economic financial crisis lingering, consumers are looking for bargains. Retailer loyalty does not rate highly amongst many consumers. It is not unusual for consumers to physically shop in New Zealand to find the desired item before purchasing online GST free.

    I’d be interested to see any hard data on this. It sounds unusual to me. People may look at something in the shops and then buy it online – but that may be from a NZ website.
    ——————————
    Ask the bike shop owners and the like. They have it everyday.

    You really should get out more and talk to real business people.

    The answer is a transaction tax that replaces al taxes.
    Especially now the much vaunted oil drilling program is stuffed.

    the Nats just continue from disaster to disaster. Don’t they.

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  10. Mary Rose (393 comments) says:

    >t sounds unusual to me. People may look at something in the shops and then buy it online

    Anecdotal, not hard evidence, but I’ve done it (and felt guilty about it), I know friends who’ve done it. I kind of thought it was common practice.
    You can’t see what you’re buying online as well as you can if you go into a store and pick it up.

    Online shopping – your example, Amazon, big warehouses with low overheads, cheaper to run than shops, don’t pay local taxes, can offer a much wider range – is bound to hurt high street shops. You’d whine too, if you were being put out of business. It may be inevitable, but don’t expect traders to like it.

    Real shops being killed off is sad, if you enjoy browsing in book shops, flicking through titles picked up at random. Online is functional shopping. Like fast food out of a takeaway carton, against the pleasure of a restaurant.

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  11. hinamanu (2,352 comments) says:

    Until the govt supports the middle class and business with tax relief they have no justification in raising GST.

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  12. Chris2 (754 comments) says:

    When I compare the pre-GST price of an item in NZ against Australia and the USA I have always found NZ much more expensive.

    I’m, looking to replace my 10 year old US-made Davis weather station. To buy it in NZ it is NZ$584 + GST. But I can buy it on Ebay from a USA retailer for NZ$335 + shipping.

    That makes the item a whopping 74% more expensive in NZ, and that’s without including the additional $84 in GST I would have pay the NZ retailer.

    If I included the GST as well, that make the NZ purchase exactly 100% more expensive than the identical item bought from the USA.

    You can guess who will be getting my order. I have no sympathy for NZ retailers when they add such markups on top of the retail price charged overseas. Sure, add something for transport, but adding on a further 84% is just a complete rort.

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  13. barry (1,317 comments) says:

    I orderred 3 books from a UK retailer the other day.
    Id been into Whicoulls but they couldnt give a shit about anything that they dont have in stock.

    So fo NZ$53 I got 3 books that would have cost me over $100 IF they were available in NZ. -or thru a NZ retailer.

    Whitcoulls have staff who are generally totally disinterested in serving customers and Whitcoulls are only interested in selling what theyve got in stock. All they could tell me was that they didnt have them in stock but they could order them – for delivery probably in Feb next year.

    i get them in about 7 days.

    The retailers have to get up to speed or they will be all left behind.

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  14. Cato (1,094 comments) says:

    The reality is that this isn’t a simple issue. I can sympathise with local retailers and I don’t think the fact that they want to ‘maximise’ profits is a reason to force them to play on an unlevel playing field.

    After all, there’s no principled reason for why e-commerce should be exempt from GST. The trouble is how to you efficiently enforce it without bogging down online buying – which has vastly improved our lives in terms of having access to the things we want, when we want. I would agree with DPF that having transforming Customs into a GST collection agency for all incoming parcels is just a non-starter.

    Perhaps we should look to the United States – where these issues commonly arise as between the inter-state commerce. I believe some jurisdictions have ‘use’ taxes which require consumers account for an amount equivalent to uncollected sales taxes. I take it that consumer compliance with these laws is quite low.

    I think that, short of getting Amazon to agree to collect GST on the government’s behalf, the experience shows that there is just no good ways to enforce collection of GST in these circumstances.

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  15. hinamanu (2,352 comments) says:

    “Especially now the much vaunted oil drilling program is stuffed.”

    Remember Muldoon and Think Big. I believe a strategy to make us independent from foreign oil and Labour sabotaged it.

    Sure there is some enlightenment out there about what Think Big was about

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  16. Chris2 (754 comments) says:

    I’m a Kiwibank Mastercard customer and they now offer a service called “YouShop” that provides you with a USA delivery address for your goods with NZ Post taking care of getting the goods sent on to NZ. Many US retailers won’t ship outside the USA, or if they do they use UPS which is outrageously overpriced.

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  17. Cato (1,094 comments) says:

    As a coda to the above, however, I don’t generally buying small items online so that I can avoid 15% on the purchase price. The reality is that that’s more than made up for in the shipping costs, usually.

    The reason I buy things online is that overseas vendors typically offer better selections than New Zealand brick and mortar businesses. If I want to buy a book on anything other than cooking, or a celebrity biography, or some bien-pensant rubbish then there’s nothing for me in New Zealand.

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  18. krazykiwi (9,189 comments) says:

    This is simply commercial evolution in action. The whining retailers will be those wedded to their business models, unwilling to change, looking for protection but destined for extinction. Smart retailers are adapting. Some of them will survive, and others won’t.

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  19. Sonny Blount (1,845 comments) says:

    Ticket To Ride boardgame at US retailer US$30 plus shipping US$25.

    Ticket To Ride at Toyworld NZ$120 plus parking, petrol, and time.

    It’s not the GST that is the problem.

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  20. Sonny Blount (1,845 comments) says:

    dime (5,165) Says:
    December 4th, 2012 at 12:15 pm
    You guys not using mightyape yet? great service.

    Fishpond is a shambles imho

    +1 to this.

    Been a long time since I’ve used Fishpond. Mighty Ape is kicking their arse.

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  21. hinamanu (2,352 comments) says:

    It’s not the GST that is the problem.

    Gud opportunity to vent about it though

    We accepted GST pushed on us in exchange for foreign aid. US I suspect in an arrangement with Henry Kissinger globalist well before it was actually instituted

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  22. Griff (6,699 comments) says:

    When I replaced my air breeze wind generator
    The quote was three months wait for NZ agent $1800nz
    Mail order from the states landed tax paid in 1week $800nz
    No service and more than twice the price from the local agent

    Why shop local when you are being ripped off?

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  23. Cato (1,094 comments) says:

    The ultimate solution is to relieve private businesses from being forced to be the tax-collectors for the state.

    If the government wishes to impose GST – fine. Let it do the work of collecting it.

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  24. Elaycee (4,286 comments) says:

    It is not unusual for consumers to physically shop in New Zealand to find the desired item before purchasing online GST free.

    Agree. Indeed, I suspect this is happening more and more – especially in the areas of shoes and clothing. People try on the products / get the correct sizes locally / get the correct SKU and then purchase offshore from someone such as Dr Jays etc.

    It’s not good for the retailer… because some people expect them to bear the cost of providing premises / paying staff / holding stock on their shelves only to have someone come in to their shop / try on the products held in stock / note the correct SKU and then bugger off and make their purchase online. And I have no doubt at all the biggest ‘whining’ will come from those who suddenly find they cannot try on products because the retailer has ‘mysteriously’ gone out of business.

    Its no different to those who bleat long and hard about the demise of the local butcher but who shop for their meat at the supermarket. You can’t have it both ways.

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  25. slightlyrighty (2,496 comments) says:

    Dave C, 30-40% margins may be true in some areas, but in the store I work in, it is definately not the case. We constantly run on single figure margins. We are being constantly shopped and compared to on-line stores and overseas stores. If the difference in the product is the GST, and that is the reason for the customer buying overseas instead of locally, then is it not in the best interest of the government to collect that revenue via the local retailer it already does so from, rather than forego that tax?

    As to the fact that imported products cost more, why should that not be the case? I know of high end consumer electronics that are NZ made that would cost $5000 in NZ, but $8500 if purchased in the UK.

    Barry, I c an sympathise with your experience at Whitcoulls, but many retailers have experience of customers who use staff as a database before buying elsewhere where the service may not be as good, but the price is better. Many of us want better service from our shop assistants. My request to you is, when you get it, reward it. The service is part of the product and reflects the price.

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  26. dave_c_ (214 comments) says:

    Elaycee – You really do sound like the very people we are discussing here ! A true Whinger – my hear bleeds for them – Yer right

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  27. Sonny Blount (1,845 comments) says:

    If it ever became a problem for them I am sure Amazon and co could start up sites to get measured for clothes or to see and touch any products that benefit from it.

    Otherwise the suppliers of the products will do it a la Apple Stores.

    I buy most of my clothes and shopping online. I almost never have any need to go to a retail store to look at it first.

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  28. dave_c_ (214 comments) says:

    Slightly Rightly et al – Me thinks you are all crying wolf over the actual number of people who prefer overseas source of product simply because of the 15 percent GST – perhaps you have a personal barrow (business) to push, but dont make it sound like ‘everybody’ is out to ‘get the retailer’. At the moment I think its the retailer ‘out to get the customer’ big time

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  29. hinamanu (2,352 comments) says:

    ‘At the moment I think its the retailer ‘out to get the customer’ big time’

    Gud to know The warehouse has not been a menace to retailing as previously thought as a monopoly to communities.

    I do find small town diners spiffing as well.

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  30. andretti (127 comments) says:

    I only frequent retailers that have good staff who give a toss,most dont.The attitude of staff (mainly the young,but some older ones too)can be simply bad,dont smile,or even look at you when you walk in,not interested in helping.So I find myself buying off the internet more and more.the service is mostly great as you deal with the owner a lot of the time,of course its just about always cheaper as they dont need staff on $15 or more standing around waiting for custom,they have low fixed costs /overheads as they can run out of a garage.I bet the businesses that complain the most have these staff issues and cant offer good service,they are doomed to fail (as they should).

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  31. rouppe (913 comments) says:

    I’d be interested to see any hard data on this. It sounds unusual to me. People may look at something in the shops and then buy it online – but that may be from a NZ website.

    Recent experience:
    Kathmandu is having a sale. I look at a pair of Teva light day walking shoes. RRP $289. On sale for $189. Great savings, right? Get the same thing delivered from Amazon for $120. All prices NZD.

    The price difference, particularly to RRP is ridiculous. 240% more to buy RRP from NZ than RRP from Amazon.

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  32. hinamanu (2,352 comments) says:

    ‘The price difference, particularly to RRP is ridiculous. 240% more to buy RRP from NZ than RRP from Amazon.’

    got to get a debit card

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  33. Farky (7 comments) says:

    Elaycee – is the situtation any different from me shopping around different stores in NZ for the exact same pair of shoes? When we try on clothing/shoes in a store, there is no unwritten ‘contract’ that then binds you to buy that item from that particular store. Consumer’s prerogative, and so it should be.

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  34. Manolo (13,315 comments) says:

    I agree with you, roupee.
    Those retailers with over-inflated prices do not deserve neither my custom, nor my money. The greedy ones are condemned to extinction.

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  35. dave_c_ (214 comments) says:

    rouppe – I agree with you !

    Can anyone explain to me how the likes of Michael Hill Jeweller (and even Briscoes), can seem to be in continuous ‘sales mode’. I thought they had to have the products being on sale to those which have previously been on sale at the higher price for x days / months !
    Never seems to be the case to me !

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  36. Sonny Blount (1,845 comments) says:

    I think the rental pressures of zoning are probably as big an obstacle to competitive retail pricing as GST competition.

    Minimum wage laws don’t help either.

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  37. dave_c_ (214 comments) says:

    Indeed Sonny -
    I am a simpleton, and consider that even if I am forced to pay GST on overseas imports, it is a) still in my interests to do so and b) more importantly because the import is still cheaper, it is my and only my choice as to where I spend my money.

    We dont owe anybody anything to be forced to purchase locally – after all the retailer is not forced to purchase at the wholesale level from a ‘NZ producer’ – I think it is the greedy retailer who wants it both ways ! They want to import cheap offshore products, and also expect us to buy them at hugely imflated prices ! Arseholes – they need to change this behaviour, then maybe a few of us would respect them more, and maybe consider local purchase

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  38. hmmokrightitis (1,506 comments) says:

    Wine, beer, books, DVD’s, shoes, running gear, cycling gear, swimming gear, jewellery, clothing, bags, acccessories, travel, accomodation, event tickets, meat – and thats just what the Mrs and I have bought online in the last 2 weeks. We had a laugh the other night in bed, iPads on the go, her buying shoes, me buying beer, wine and our Christmas meat order. Laughing at when we were younger we would be banging like monkeys. Finished and we did anyway :)

    As for the $400 threshold, most of my sports gear ordering is done on overseas sites, that when you get to around $NZD 250 the shipping costs are free. So I break my orders down, and never go over the threshold. Simple. If you are bricks and mortar and you dont have a web presence, youre losing.

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  39. Graeme Edgeler (3,262 comments) says:

    +1 to this.

    Been a long time since I’ve used Fishpond. Mighty Ape is kicking their arse.

    Big fan of Mighty Ape too. Service is really good. Buy something from Mighty Ape, then see it cheaper in store the next day, and they refunded the difference.

    The main utility I’ve found for Fishpond, who tend to be really slow, is that if they happen to have an item cheaper than Mighty Ape, I’m able to use that to get Mighty Ape to lower their price :-)

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  40. Dean Papa (707 comments) says:

    gst aside, there must be a huge mark-up on many items on sale in NZ. Even if you were forced to pay gst, it would still often be cheaper to import, including shipping costs, than buy local.

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  41. cha (3,779 comments) says:

    there must be a huge mark-up on many items on sale in NZ

    Looking at one of these as a gift and it’s easy to see why people buy offshore.

    List Price: $2,093.95
    Price: $1,079.00 & this item ships for FREE

    [...]

    NZ $4,649.00 incl GST

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  42. wreck1080 (3,722 comments) says:

    You can buy a coleman BBQ off amazon , and the cost inc. shipping is around $400. And, they’ll ship it too!

    The same BBQ, costs a little under $550 in NZ.

    But, in other cases NZ is not really so badly priced — apple products for example.

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  43. dime (9,356 comments) says:

    Some items are priced properly. Sometimes its just dam frustrating.

    eg Marantz CD6004 that Dime wants. 320 in pounds list in the UK. usually sold way cheaper. NZ price ON SPECIAL $999. That bugs me. That special is new too. $1299 is list.

    Some importers are just greedy i tells ya. I could go on and on arghhhh

    Blurays are getting better in price but still a touch high. CD’s are too high. Books are insane

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  44. Elaycee (4,286 comments) says:

    Farky:

    Elaycee – is the situtation any different from me shopping around different stores in NZ for the exact same pair of shoes? When we try on clothing/shoes in a store, there is no unwritten ‘contract’ that then binds you to buy that item from that particular store. Consumer’s prerogative, and so it should be.

    Fair enough. But if a customer tries on clothing / shoes and then buys online, I’d call them hypocrites – wanting all of the attributes (variety / styles / colours / sizes etc) normally found in a High St retailer, but will then buy the same goods online.

    I’m not in the retail business so I have no personal axe to grind. But I prefer to buy ‘locally’ where I know that (a) I can browse and handle the goods I am considering (b) I know the product is backed by the retailer (c) if something goes wrong I can take it back. If that means I pay a ‘premium’ for that experience (and the service), then so be it. My 2c anyway…

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  45. peterwn (3,140 comments) says:

    WW2 lesson here. Americans shipped vast quantities of stuff ready for D Day. Trouble was, if anyone wanted a spare part, etc, the quartermasters could not locate it. So they requisitioned the item straight from USA and had it put on the next plane. Incidentally IBM invented the hard disc specifically to meet the inventory processing needs of the US Air Force. Similar goes with electronic items today. Jaycar (for example) does its best but cannot hope to stock a big enough range and are stuck with huge stock overheads. So there are international companies who keep vast stocks at a small number of strategic locations and ship globally. It is essential that businesses, universities, schools, scientists, engineers, hobbyists and kids can get their hands on this sort of stuff reasonably quickly – and this is far more important than maintaining a local retail presence. The worrying thing is if the GST free values are lowered but the $30 or so import impost (where GST is collected) remains, such that this impost is a large portion of overall value. Personally, I do not mind paying the GST but would object like mad paying an extra impost.

    In NZ is is only retailers who are squarking, this is different from the Australian situation where the State governments are squarking too since they perceive that their GST receipts are being eaten into.

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  46. Thinker (12 comments) says:

    I’m about to do a wallpapering job. I need a few 20 metre rolls of lining paper. Ashly/Vision brands in the flash shops are up to $33.95 per roll down to $18.91 same stuff from small open-to-the-public trade shop. Flash shops are not friendly, the trade shops are bloody brilliant all round.

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  47. annie (537 comments) says:

    1. If I see something I want in a shop, I buy it there, or try to order it through them unless their prices are clearly profiteering – it’s pretty stink to take advantage of a retailer by choosing something in their shop then buying from an internet retailer who has smaller overheads.

    2. If I can buy what I want secondhand, I will try TradeMe first, then ebay, or Amazon second-hand if it is a book.

    3. If I’m primarily internet browsing and see something, I look at the local NZ prices. If the cost significantly exceeds internet price + postage + GST then I buy it online.

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  48. barry (1,317 comments) says:

    slightlyrighty

    If I went into Whitcoulls and the staff said something like…

    “Yes sir – we can get that for you, no problem. We can have it delivered in about a week. All I need is payment or a card and a delivery address…….. etc, etc”

    And then they use exactly the same system im using to do the job. And they can add their margin to make a profit.

    But no – you go in there and they piss around and eventually tell you that its not in their data base but that they can get head office to see if they can get it and if you leave us your phone number we will ring you (if we can be bothered….)

    Screw that.

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  49. Dean Papa (707 comments) says:

    In Oz it’s about $1000 before they tax your imports.

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  50. emmess (1,367 comments) says:

    Don’t feel bad about old business models dying

    It’s called ‘creative destruction’
    If it didn’t exist we still be in the middle ages

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  51. Colville (2,058 comments) says:

    I hunt. Optics (binos and scopes) are half the price from USA than here and the choice availible shopping online is 10 times as large.
    A forum site I frequent posts up discount vouchers from USA online retailers frequently that give 8 to 12% discounts and freight free is common. Quite possible to get a “special” where you get a scope for 1/3 of NZ price landed in NZ, from a last years model which probably hasnt even arrived in NZ yet.
    Also common for hunters to look locally and buy online as the massive difference in prices show that NZers are getting screwed.

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  52. ben (2,396 comments) says:

    The problem for NZ retailers is that they are so far off the pace that their lobbying on GST looks like protectionism.

    I don’t pretend to understand the economics of NZ retailing, but the enduring mystery is why NZ retailers are so uncompetitive that an item posted on its own from the other side of the world can frequently and perhaps generally end up cheaper than one brought in and retailed in NZ. Often quality will be superior. Range of choice is magnitudes superior.

    Retailing in NZ is hopeless compared to the shopping experience in the US. NZ retailers by comparison are undercapitalised, staff lack training and service skills by comparison, prices are frequently 2-3 times higher, and the shopping experience itself is a fraction of what it is elsewhere. Retailers will say cost of labour and cost of capital is higher and they can’t help that. True, but I don’t care: they have to win my business, and they are a country mile off doing that. GST isn’t really in play here.

    I recommend Shipito as a cost effective and efficient freight fowarding service – about half the price I think from the NZ Post service. They consolidate individual items into a single package to save money on shipping. And they take photos and upload at every step of the process so you can see your goods. Super cool.

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