Although ordering online from overseas retailers might save consumers money, it is a drag on the profits of national postage provider Australia Post, which has said that Australia's importing frenzy will set it back as much as $20 million per year.
In a submission to the Productivity Commission's inquiry into the retail industry, Australia Post noted that the amount it received for processing inbound post from overseas often didn't cover its actual cost of delivery. Because of this, the pricing of international parcels destined for Australia weren't priced as highly as they would be if the costs were taken into consideration.
The Productivity Commission inquiry will consider whether there is a need to impose the goods and services tax on items worth less than $1000 bought from overseas. Retailers say that this is creating an unfair playing field and causes customers to shop online for cheaper goods. One of the arguments those fighting against the imposition of the tax is that Australians ordering goods from overseas are hit with postage fees, levelling out the field again.
However, Australia Post said in its submission that the payments it receives under arrangements made by the Universal Postal Union are well below the cost of delivery for mail and packages up to two kilograms. With Australia receiving more than it sends, it put Australia Post in a loss position, according to the organisation.
"For example, in the financial years 2010 to 2012, Australia Post estimates that it will make a loss of AU$1.06 per inbound international airmail packet (parcels less than two kilograms) on a volume of approximately 39.7 million articles," it said. This works out at around $20 million for each of the two years.
The organisation also believed that its service provided faster delivery and cheaper prices than comparable services from other postage providers.
Westfield said in its submission to the inquiry that a possible reason Australian retailers have been slow to get into online has been that customers buying from overseas retailers are able to ship into Australia for low costs and, in some cases when the retailer is willing to absorb the cost, for free.
"Without knowing the full 'end to end' costs of the logistics supply chain, the items' purchase price and other factors, it is not possible to determine the true logistics costs and overall profitability of the transaction. From a shopper's perspective, however, it appears that it can cost as much to ship a product from Melbourne to Sydney as it does from the UK to a destination in Australia," Westfield said.