Australian shoppers are being slugged extra by big retailers including J. Crew

APRIL 22, 2014
NEWS.COM.AU
IT’S being dubbed the ‘Australia tax’, the dubious honour of being slugged a premium price on everyday goods simply for living under the Southern Cross.
Australians have a love affair with online shopping. We love the convenience of clicking away rather than battling crowded car parks and apathetic shop assistants, parting with $15 billion online in the year to February, according to NAB.
And while local brands have cried foul over a perceived imbalance in GST collection against overseas sites, Australians are still spending most of their money at local e-commerce outlets, a dominant 74 per cent in fact.
So it’s natural for major international retailers to eye our sunny shores and look to grab some of that discretionary cash that consumers in a stable economy have to spend. But some of them are taking a little too much advantage.
It’s something most of us have probably encountered already — watching the price fluctuate wildly between the Australian price and the (mostly) American price.
For example, this morning on the Australian version of the J. Crew website, a major US retailer who started shipping to Australia in 2012, a “silk chiffon sweet meadow dress” was listed at $AU323.90. Switch over to the American site and the same dress is listed at $228. Accounting for the exchange rate, it’s a $AU79 difference, or a 32 per cent mark-up. Ouch. And that’s just one example.
Expect to pay more on the Australian site.
But why, you might ask? J. Crew has no Australian operations so no higher local wages to pay and shipping costs are a separate charge. Whole threads on forums including Whirlpool and Vogue have seen incensed shoppers gather to fume over the price difference.
A couple of posters included purported replies they received from J. Crew which said it takes into account the cost of doing business internationally and, “our prices are reflective of the value we deliver in the context of each local market.” In other words, J. Crew will charge Australians what it thinks local consumers will bear because we’re already used to high prices from local brands.
Our friends over the ditch in New Zealand have had similar experiences, notably with All Blacks gear during the 2011 Rugby World Cup.
Choice head of media Tom Godfrey said in a statement: “Whether it’s IT products, cosmetics or clothes, it’s never been easier for Aussie consumers to compare prices between Australia and overseas stores and it’s not pretty viewing.
“It seems the ‘Australia tax’ is the new black in the rag trade, with major international manufacturers and distributors working to block Australians from getting a better deal.”
Choice also compared a number of products from major multinational brands such as Uniqlo, The North Face and Coach, and found a significant price difference between what Australians pay versus what Americans pay.
J. Crew doesn’t have a physical presence in Australia, so why the huge mark-up?
J. Crew doesn’t have a physical presence in Australia, so why the huge mark-up? Source: AP
“We’re comparing online stores with online stores so there should be no reason Australians are being forced to pay more,” Mr Godfrey said. “This has nothing to do with higher costs of doing business in Australia and everything to do with slugging us with the ‘Australia tax’.
“Our advice is that if you’re being blocked by an international retailer from getting the best deal, don’t get angry, get savvy. Consumers using a virtual private network and a third-party delivery service that is happy to estimate shipping costs can navigate around the geo-blocks.”
Getting around geo-blocking can make all the difference. Many local companies provide a VPN service for a very small fee (starting at $2 a month) which tricks international sites into thinking your IP address is based elsewhere. Using VPNs to skirt geo-blocking is controversial in some circles but while he was in office, former federal attorney-general Robert McClelland said it wasn’t illegal.
There’s a smarter way to shop online.
While some sites will require an American credit card, some consumers have experienced a go-around by using their Australian credit card but pairing it with either an American billing address or a US postcode. Some people have also had success in signing up for a US PayPal account. Some third-party delivery services (which forward on your purchases through a US street address) also offer a personal shopping service in which they will make the purchase on your behalf.
Of course, the whole issue becomes even more complicated when you consider Australians are clamouring for more international retailers to open up here, lured by the variety and cachet. Each retail launch, including H&M, Zara and Topshop, has been met with enormous fanfare.
But it’s also led to complaints from savvy shoppers who’ve commented the range on offer locally doesn’t meet the same standards they’ve seen overseas or the prices here are just that much more. The price issue on international retailers with a local physical presence can be complicated by higher Australian wages.
Pottery Barn opened its first Australian store in Bondi Junction by then-premier Barry O’
Pottery Barn opened its first Australian store in Bondi Junction by then-premier Barry O’Farrell. Source: News Limited
But there is also another downside to when international retailers open shop here as services previously accessible to Aussie shoppers get blocked.
When US giant Williams-Sonoma set up its Pottery Barn and West Elm outlets in Sydney and Melbourne, it also established Australian websites. As a result, customers who have previously been able to purchase from the US Pottery Barn and West Elm websites found themselves blocked with those sites no longer accepting Australian shipping addresses.
The problem there is the American sites have a far greater range of products and the local stores won’t assist you in importing or purchasing products on the American sites that aren’t available through its Australian operations. Why would they when they have their own budgets to hit?
Of course, the upside is you can now buy the retailers’ furniture, which it didn’t ship internationally.
It’s a similar story with Amazon. If Amazon established an Australian version of their site, it might block the UK and US versions to Australian customers.
The lesson here? While Australian shoppers often get a raw deal, a little ingenuity will open a whole new world of possibilities for the savvy consumer.
J. Crew has been contacted for comment.