The Overseas Purchasing Debate

Questions about purchasing bicycles and parts

Re: The Overseas Purchasing Debate

Postby silentbutdeadly » Tue Jan 08, 2013 10:53 am

ThePhil wrote:No, the whole discussion is about GST, duties and import charges, I started the thread. Duty on bike parts is 5%, IPDC is $55 and gst is 10%. Take a $500 item for example, with a 30% mark up from crc it's $650. But if an Australian version of crc wanted to get that special thingo in for you it's $500 wholesale, then $25 duty, IPDC $55, then 30% mark up, $754, then add this immaterial GST, comes to $829, $179 over $650, thats 27.6%.


It still has to be balanced against the cost to the Oz Governemnt associated with collecting the aditional duties and charges. I just purchased parts (two cranksets, stem and headset spacers) from Bike 24 in Germany for which my credit card was charged just shy of AU$250. If duties and GST were charged on that then it would have added $99.25 to the bill and there'd have to be a mechanism for the Gov to collect this money from me either via Customs or AusPost and they'd both charge for the service (the latter quite considerably). There's no way they could collect that money at the point of purchase.

However, if I'd have bought those exact same parts locally from one of my preferred suppliers TBSM then the exact same parts delivered to my door would have cost me $423...that's another $75 on top of my Bike24 purchase plus its mythical local charges. So I'd STILL make the purchase from Bike24 anyway!!!

Frankly, the Gov would get no significant financial benefit from the investment required to reduce the import threshold and enforce these conditions (though it would be an economic windfall for whichever agency was charged with the collection of funds) AND it still wouldn't provide the consistent disincentive function that you still expect it to perform which would make it a double policy failure.
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Re: The Overseas Purchasing Debate

Postby jcjordan » Tue Jan 08, 2013 10:57 am

ThePhil wrote:No, the whole discussion is about GST, duties and import charges, I started the thread. Duty on bike parts is 5%, IPDC is $55 and gst is 10%. Take a $500 item for example, with a 30% mark up from crc it's $650. But if an Australian version of crc wanted to get that special thingo in for you it's $500 wholesale, then $25 duty, IPDC $55, then 30% mark up, $754, then add this immaterial GST, comes to $829, $179 over $650, thats 27.6%.

You seem to be getting confused or purposely lumping a whole lot of items into one big discussion, I'm just making sure that people know about the duty and taxes issue.

As I have said many times does not explain mark ups of 50-300%, there are other big changes going on as well.

With the duty I mentioned, it's not a tangent it is linked up with the $1,000 threshold, all the same thing, very important that if changes are made it is not just to the GST threshold but includes the duty and IPDC as well, you know that stop trying to ignore it.

I know the same few people have pointed out that they don't agree with me many times, but please show me your figures, I'm here showing how it is duty and taxes wise, others are making comments like, "and that's the end of the discussion", trying to re-write the discussion.

I would guess that those who are keen to kill off the discussion have a vested interest in keeping their current protectionism.


The fact that seems to be forgotten in this argument is that Wiggle/PBK have paid import duty as well. These duties are not all that different from what an Australian distributor will pay and neither will have to pay Vat or GST as they are not the end consumer.

Check out www.dutycalculator.com
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Re: The Overseas Purchasing Debate

Postby rkelsen » Tue Jan 08, 2013 11:01 am

ThePhil wrote:comes to $829, $179 over $650, thats 27.6%

Again, maybe it's just me, but if the difference on a $650 item was 28%, I'd pay it if it meant that I could walk out of the shop with the item on the same day and receive good back-up service, etc. I would regard that as immaterial versus the benefits I can receive by paying it.

The problem is that most of the time, the price differences are far greater. You appear to have no answer for this.
ThePhil wrote:please show me your figures

To pluck one from the air:
http://www.wiggle.co.uk/vittoria-rubino-pro-folding-clincher-tyre/
http://www.torpedo7.com.au/products/VITYRNNP3/title/vittoria-rubino-pro-iii-folding-road-tyre---700-x-23c

Same product. 87% difference in price. I'd happily walk into an LBS and pay $30, which would easily cover the cost of GST, import duties, etc... BUT I refuse to pay almost double for the exact same product.
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Re: The Overseas Purchasing Debate

Postby gdt » Tue Jan 08, 2013 11:05 am

Wiggle do pay GST and duty on a lot of their product. They just don't bill it to the Australian customer, but take it from the savings of moving from qty=1 international shipments to batched-international, domestically-posted shipments.

For firms the IDPC is irrelevant, as it applies per-shipment and not per-unit. Even with twice-weekly shipments a firm could present a responsive service whilst limiting shipment payments to brokers and Customs.

I do agree with you that a lot of the push to lower Customs' $1000 GST-free threshold is a knowledge that the IDPC will make a much higher percentage markup on qty=1 shipments. This, of course, makes for a high level of protectionism for local distributors and retailers from direct Internet sales.

Treasury is well aware of this and you'll see in their proposals like a currency-exchange tax their search to find a way which doesn't forgo revenue, provides equal incidence of taxation, whilst not leading to protection of inefficient Australian distributors and retailers.
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Re: The Overseas Purchasing Debate

Postby Ross » Tue Jan 08, 2013 12:46 pm

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Re: The Overseas Purchasing Debate

Postby ThePhil » Tue Jan 08, 2013 1:17 pm

silentbutdeadly wrote:It still has to be balanced against the cost to the Oz Governemnt associated with collecting the aditional duties and charges. I just purchased parts (two cranksets, stem and headset spacers) from Bike 24 in Germany for which my credit card was charged just shy of AU$250. If duties and GST were charged on that then it would have added $99.25 to the bill and there'd have to be a mechanism for the Gov to collect this money from me either via Customs or AusPost and they'd both charge for the service (the latter quite considerably). There's no way they could collect that money at the point of purchase.


They collect it when you pick up the gear at the post office or customs, like commercial importers do and every other country in the world does, there's no other way. System is already in place, if you do it a lot you get an account. It won't cost them $99.25 to collect $99.25.

However, if I'd have bought those exact same parts locally from one of my preferred suppliers TBSM then the exact same parts delivered to my door would have cost me $423...that's another $75 on top of my Bike24 purchase plus its mythical local charges. So I'd STILL make the purchase from Bike24 anyway!!!


Yes, and the best deal will always win, that's good shopping and the two companies have competed fairly for your business, may the best man win.

Frankly, the Gov would get no significant financial benefit from the investment required to reduce the import threshold and enforce these conditions (though it would be an economic windfall for whichever agency was charged with the collection of funds) AND it still wouldn't provide the consistent disincentive function that you still expect it to perform which would make it a double policy failure.


I'd say it would cost about 10% of the money collected in collection costs, say in your case $99.25 one guy should be able to collect say 200 of those transactions in one day, that's $19,850 collected, might be a problem getting a warehouse big enough to store all the cash. At 10% that's $1,985, not bad for a days work.
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Re: The Overseas Purchasing Debate

Postby boss » Tue Jan 08, 2013 1:29 pm

ThePhil wrote:
Frankly, the Gov would get no significant financial benefit from the investment required to reduce the import threshold and enforce these conditions (though it would be an economic windfall for whichever agency was charged with the collection of funds) AND it still wouldn't provide the consistent disincentive function that you still expect it to perform which would make it a double policy failure.


I'd say it would cost about 10% of the money collected in collection costs, say in your case $99.25 one guy should be able to collect say 200 of those transactions in one day, that's $19,850 collected, might be a problem getting a warehouse big enough to store all the cash. At 10% that's $1,985, not bad for a days work.


With a threshold of $0, Treasury says that it will cost on average $12.06 to collect duty and average revenue $7.28. So it'd actually cost 165%. You're wrong by what, 155%? Never let facts get in the way of a good argument eh.

Source: http://theconversation.edu.au/new-gst-f ... s-say-9408

Cause you know, smart people use sources when they are trying to make a point rather than making things up, right?
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Re: The Overseas Purchasing Debate

Postby ThePhil » Tue Jan 08, 2013 1:34 pm

The fact that seems to be forgotten in this argument is that Wiggle/PBK have paid import duty as well. These duties are not all that different from what an Australian distributor will pay and neither will have to pay Vat or GST as they are not the end consumer.


It's pretty hard to know what all the rules are for different countries, but in the Australian context, they have been given a green light to avoid duty and taxes under $1,000, whereas the locals have not.

The aussie consumer pays GST if he buys off a local retailer, but not off an overseas retailer, so yes it's not the Australian distributor that actually pays the tax, but he has to collect it.
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Re: The Overseas Purchasing Debate

Postby ThePhil » Tue Jan 08, 2013 1:47 pm

rkelsen wrote:
ThePhil wrote:comes to $829, $179 over $650, thats 27.6%

Again, maybe it's just me, but if the difference on a $650 item was 28%, I'd pay it if it meant that I could walk out of the shop with the item on the same day and receive good back-up service, etc. I would regard that as immaterial versus the benefits I can receive by paying it.

The problem is that most of the time, the price differences are far greater. You appear to have no answer for this.


I completely have no answer for this and don't even want to get into it, it is exactly what I do to. The only long bow I could stretch is that the retailer has no incentive to get into the discount game when he knows he can't be competitive. Still if he had of stocked decent products in the first place you should not need to much back up (on that individual product).

To pluck one from the air:
http://www.wiggle.co.uk/vittoria-rubino-pro-folding-clincher-tyre/
http://www.torpedo7.com.au/products/VITYRNNP3/title/vittoria-rubino-pro-iii-folding-road-tyre---700-x-23c

Same product. 87% difference in price. I'd happily walk into an LBS and pay $30, which would easily cover the cost of GST, import duties, etc... BUT I refuse to pay almost double for the exact same product.


Me too, but if the Govt' was collecting the duty/gst then it would be closer to the threshold you are happy to pay.

And hey, I know I am being quite cheeky with that answer, but reality is they did decide that this was a way they would collect revenue from us punters, so if they don't get it from the consumer tax then they have to get it from somewhere else.
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Re: The Overseas Purchasing Debate

Postby jcjordan » Tue Jan 08, 2013 1:50 pm

ThePhil wrote:
The fact that seems to be forgotten in this argument is that Wiggle/PBK have paid import duty as well. These duties are not all that different from what an Australian distributor will pay and neither will have to pay Vat or GST as they are not the end consumer.


It's pretty hard to know what all the rules are for different countries, but in the Australian context, they have been given a green light to avoid duty and taxes under $1,000, whereas the locals have not.

The aussie consumer pays GST if he buys off a local retailer, but not off an overseas retailer, so yes it's not the Australian distributor that actually pays the tax, but he has to collect it.


No they have only been given the green light to avoid GST.

They still pay duty and taxes, just not Australian ones.

If the manufactures were smart they would find ways to better support the LBS and go to a direct supply method.

This would more yo enhance sales the protectionism would.

Don't forget that should we impose a system of protection then our treaties with other counties should be defunct. This would allow European and US subsidies yo be leveled at Australian companies and farmers
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Re: The Overseas Purchasing Debate

Postby ThePhil » Tue Jan 08, 2013 1:59 pm

gdt wrote:Wiggle do pay GST and duty on a lot of their product. They just don't bill it to the Australian customer, but take it from the savings of moving from qty=1 international shipments to batched-international, domestically-posted shipments.


You've lost me there, please explain.

For firms the IDPC is irrelevant, as it applies per-shipment and not per-unit. Even with twice-weekly shipments a firm could present a responsive service whilst limiting shipment payments to brokers and Customs.


Yea its tough to apportion this one, but if you look at it as the customer is getting it from an overseas retailer maybe because they have greater range, then the Aussie shop is being excluded from being able to offer you the same service. Basically it's a comparison between a one off import through an overseas retailer, or a one off import through and Australian retailer. If it was a new or obscure product then there is no way that the Australian guy would have stock of it and have had the benefit of pro-ratering out his IPDC.

I do agree with you that a lot of the push to lower Customs' $1000 GST-free threshold is a knowledge that the IDPC will make a much higher percentage markup on qty=1 shipments. This, of course, makes for a high level of protectionism for local distributors and retailers from direct Internet sales.


The rules would be the same for both, those overseas guys could still land and warehouse stock in Australia if they wanted.

Treasury is well aware of this and you'll see in their proposals like a currency-exchange tax their search to find a way which doesn't forgo revenue, provides equal incidence of taxation, whilst not leading to protection of inefficient Australian distributors and retailers.


I hope so because it is the overseas retailers they are protecting at the moment.
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Re: The Overseas Purchasing Debate

Postby ThePhil » Tue Jan 08, 2013 2:02 pm

Ross wrote:http://www.smh.com.au/business/dont-be-fooled-by-retailers-who-cry-wolf-20130108-2cdyi.html


There's a lot of issues there, but say take woolies, it's a totally different scene. Besides fresh food has no gst.
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Re: The Overseas Purchasing Debate

Postby ThePhil » Tue Jan 08, 2013 2:18 pm

boss wrote:With a threshold of $0, Treasury says that it will cost on average $12.06 to collect duty and average revenue $7.28. So it'd actually cost 165%. You're wrong by what, 155%? Never let facts get in the way of a good argument eh.

Hey finally some figures, I just guessed the 10%, how could anybody reasonably know? So $12.06 to collect duty, well then if you round it off to say most things are 5% duty then 10% GST, that's say $15 on a $100 item, then you start the threshold there. This seems to correlate to what a lot of other countries have done.

Cause you know, smart people use sources when they are trying to make a point rather than making things up, right?


Hey I really had no idea there was a source, but really who's to say how accurate it really is, one of the items they looked at was getting overseas retailers to collect the GST, there as much tax experts as I am.
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Re: The Overseas Purchasing Debate

Postby MarkG » Tue Jan 08, 2013 2:19 pm

Another positive for over seas - ordered some clothing from J Crew last Monday and it arrived today.
Ordered wheels from Nashbar in the US last Thurs, should be here this Thurs.
Both orders with DHL Express.
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Re: The Overseas Purchasing Debate

Postby Mulger bill » Tue Jan 08, 2013 2:24 pm

ThePhil wrote:...a way they would collect revenue from us punters...


Call shenanigans...
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Re: The Overseas Purchasing Debate

Postby ThePhil » Tue Jan 08, 2013 2:28 pm

jcjordan wrote:
No they have only been given the green light to avoid GST.

They still pay duty and taxes, just not Australian ones.


Green light to avoid Australian GST, duty IPDC, what does it matter what other countries do to them?

If the manufactures were smart they would find ways to better support the LBS and go to a direct supply method.


They are being smart by, holding on to the last remaining high margins they can, but as the same time by going direct(ish), and avoiding our duties etc. Even if they went direct supply to the LBS they would still get stung with our charges, why not avoid them if somebody will let you.

Don't forget that should we impose a system of protection then our treaties with other counties should be defunct. This would allow European and US subsidies yo be leveled at Australian companies and farmers


Nobody, upon nobody, least of all me is asking for any protectionism whatsoever, just a level playing field, I hate protectionism. Just put the threshold at the same level those countries do, I think it's about $30 in the UK.
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Re: The Overseas Purchasing Debate

Postby boss » Tue Jan 08, 2013 2:28 pm

ThePhil wrote:
boss wrote:With a threshold of $0, Treasury says that it will cost on average $12.06 to collect duty and average revenue $7.28. So it'd actually cost 165%. You're wrong by what, 155%? Never let facts get in the way of a good argument eh.

Hey finally some figures, I just guessed the 10%, how could anybody reasonably know? So $12.06 to collect duty, well then if you round it off to say most things are 5% duty then 10% GST, that's say $15 on a $100 item, then you start the threshold there. This seems to correlate to what a lot of other countries have done.


You're doing it wrong.

Treasury says it will cost $12.06.

Treasury says that, on average, they expect to receive $7.28 in revenue. They did not calculate the average revenue to be $15.

Therefore, by lowering the threshold to $0, the government would be losing $4.78 per parcel.

That is $4.78 of my money, and presumably your money, that could be contributed to something worthwhile.

You know. Hospitals. Education. The nice things.
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Re: The Overseas Purchasing Debate

Postby rkelsen » Tue Jan 08, 2013 2:29 pm

ThePhil wrote:I completely have no answer for this and don't even want to get into it

The simple fact is that this has nothing to do with import duties or taxes. Increasing taxes on businesses selling goods to Australian customers will not achieve what you seem to think it will.

You seemed to understand this in your response to my post, yet you keep on pushing your tired old wheelbarrow.
Mulger bill wrote:Call shenanigans...

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Re: The Overseas Purchasing Debate

Postby ThePhil » Tue Jan 08, 2013 2:36 pm

boss wrote:
You're doing it wrong.

Treasury says it will cost $12.06.

Treasury says that, on average, they expect to receive $7.28 in revenue. They did not calculate the average revenue to be $15.

Therefore, by lowering the threshold to $0, the government would be losing $4.78 per parcel.

That is $4.78 of my money, and presumably your money, that could be contributed to something worthwhile.

You know. Hospitals. Education. The nice things.


Yea then don't lower it to $0, that's crazy.
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Re: The Overseas Purchasing Debate

Postby boss » Tue Jan 08, 2013 2:42 pm

:roll:
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Re: The Overseas Purchasing Debate

Postby gdt » Tue Jan 08, 2013 5:32 pm

ThePhil wrote:
gdt wrote:Wiggle do pay GST and duty on a lot of their product. They just don't bill it to the Australian customer, but take it from the savings of moving from qty=1 international shipments to batched-international, domestically-posted shipments.


You've lost me there, please explain.


Sure. Let's say you're Wiggle sending hundreds of boxes to Australia. The Royal Mail will bill you for each one, and costs are high as they are individually handled at each stage of export/import.

What you can do instead is to put them all in one pallet box and export/import that. Then once it is in Australia, break down that pallet and send each of the items by national courier or mail. You set up your IT system to limit double-handling (eg, the boxes are printed with consignment notes for the Australian courier when the item is boxed in the UK warehouse).

If you can lower your costs 16% by doing that then you're ahead, even though you are paying the GST and duty on those items, a cost which you didn't recover from the customer when you made the sale.

In short, just because Wiggle, etc aren't charging the GST+duty doesn't mean that they aren't paying it for some proportion of their sales.
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Re: The Overseas Purchasing Debate

Postby dynamictiger » Tue Jan 08, 2013 5:42 pm

I haven't followed all this thread for a while...However I do have some relevant input.

6 months ago our retail shop was being hammered by 'imports' being near half the cost of our retail offerings - No I am not in the bike trade, I can't say what we sell as it is a very small market and too much information may give more away than I am comfortable with. Put it this way we are as specialised if not more so than a bike retailer.

As a company we got more than annoyed at 'fly ins' being sold often at prices below what we were purchasing items for.

So over teh last six months we applied pressure on our suppliers and now we can not only compete with any online price but often undercut them and make more money than before.

As the retailer we have not had to drop our margins (not that we could anyway) all we did was pressure our suppliers and we haven't seen any of them not buying new cars, or putting more staff on still. Yes someone was making a lot of money off our product, but it sure as heck wasn't us. Can an Australian retailer compete with these overseas companies, our experience would suggest they can...if the suppliers and manufacturers support them. However why would the suppliers support the retailer unless they are forced too?
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Re: The Overseas Purchasing Debate

Postby Ross » Wed Jan 09, 2013 11:56 am

I think most LBS' just accept the prices that suppliers charge them and don't try to negotiate better prices. Sounds like the supplier was ripping you off!
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Re: The Overseas Purchasing Debate

Postby ThePhil » Wed Jan 09, 2013 12:14 pm

With our suppliers we had a huge meeting and they agreed to basically set one world wholesale price in $US, you can't ask for more than that, but they are not then going to start adjusting it for each individual countries importing regimes.
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Re: The Overseas Purchasing Debate

Postby biker jk » Wed Jan 09, 2013 1:56 pm

ThePhil wrote:With our suppliers we had a huge meeting and they agreed to basically set one world wholesale price in $US, you can't ask for more than that, but they are not then going to start adjusting it for each individual countries importing regimes.


So if the wholesale price is fixed globally why are retail prices in Australia at bike shops often 50% or more above that of overseas competitors? Please don't suggest it's Australian import costs or GST as I will start laughing.
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