Inside Gerry Harvey's echo chamber

Inside Gerry Harvey's echo chamber

Summary: After over a year of complaining about it, Gerry Harvey's issue with the GST on goods bought overseas online seems to be hitting home — or so he thinks.

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TOPICS: E-Commerce
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After over a year of complaining about it, Gerry Harvey's issue with the GST on goods bought overseas online seems to be hitting home — or so he thinks.

In one of his frequent, and, let's be frank, predictable rants on Lateline last night, Harvey made some pretty decent, if oft said, points about how it's unfair that bricks-and-mortar retailers have to pay GST while overseas companies get to import goods that are under $1000 without paying the tax. That, alongside other operating costs, are crippling home-grown retail, according to Harvey.

How do you compete — I ask you. I opened a shop selling tennis racquets and golf clubs, and I put them in the window and I put them there and I've had to pay a lot of rent, and I've had to bring these goods in and then another guy can go and buy them off an overseas site, pay no duty, pay no GST and you tell me that's fair? Right? All I said: "That's unfair." Because the retailer here will then have to go out of business.

Of course he's right. The GST is unfair for physical retailers. But fixing that would be costly for the government, unless it's ready to put extreme strain on customs. The cost would outweigh the benefit. So unless there's some sort of GST subsidy for people to go buy those goods in a store instead of online, then there's no real way around it.

And the GST doesn't explain the bigger cost difference, with the price disparity between online and in stores being much larger than just the tax. Harvey explained this by saying that an Australian retailer cops set-up costs, wages and other taxes that the overseas retailer doesn't, meaning that it wouldn't be possible to offer products at a competitive price, even if these goods were from an Australian online retailer. Harvey said that if he were to cut out the bricks and mortar and substitute it for just online retail, even if a number of jobs would be created in the distribution of goods bought online, hundreds of thousands of retail jobs would be gone.

This also sounds reasonable; however, I think Gerry Harvey is just using these arguments as an excuse for the much higher prices faced in Australia. He needs to realise that you can't turn back the clock, or at least not without going back to the bad old days of massive government intervention in the retail sector to push up the costs of importing. Let's face it: that's not going to happen. Online is here, and it's here to stay.

Retailers have to learn to compete effectively with online retailers by changing their business model, or shrivel up and die.

And I think that's the part that Harvey still doesn't get. Rather than listening to what his customers want, and seeing the reality before him, he seems to come back to how it's the government's fault that retail is struggling.

This was underlined by his other comments at the interview.

I think I've got as good a hold on it as anyone, but I am seeing, by people out there, and they write about me and they talk about me as being somebody that missed the boat. You know, you're yesterday's man. Your time is over. You had your moment in the sun, and it's all over.

And so, I look at that and think, "Are they right? Is there any truth in what they're saying?" So I then go to the people that work with me and for me, and I say, "You're 30 or 40, have I missed it? Tell me if I'm losing it." Right? "No, no, no, no, no." They say, "You're not. You're up there."

And I can argue on the internet and all the things that are going to happen, all the things that have happened, I think as well as anyone. I definitely am right up there with it.

Seriously, Gerry; is your staff going to tell you if you're behind? I don't think so. Yes, you've opened some new websites to sell online, but the online battle will need more than that.

Topic: E-Commerce

About

Armed with a degree in Computer Science and a Masters in Journalism, Josh keeps a close eye on the telecommunications industry, the National Broadband Network, and all the goings on in government IT.

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11 comments
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  • Well tax those purchases, it's still would be cheaper to buy online.
    Knowledge Expert
  • B&H Photo is huge store in New York, one of the most expensive real estate cities in the world, with floor staff and all the overheads Mr Harvey is complaining about and even if I paid GST, postage, insurance and credit card fees and foreign exchange fees of 3 percent to the greedy banks it is still cheaper to buy from B&H than Mr Norman. How do you explain a camera battery costing $50 in a retail store as opposed to $8 posted online. WE ARE BEING RIPPED OFF. Its as clear as daylight Mr Harvey whine as much as you want you wont win this one; so get on with it.
    What a Load of BS
  • I'm sorry, but I cant listen to anything Gerry Harvey says ands take him seriously. I've bought items from a retail chain in the US that has all of the same "running costs" that Harvey claims he has to pay and guess what? I can still buy items (including shipping) substantially cheaper than any of the Harvey Norman stores offer. Maybe Harvey Norman should look at it's margins and not be so greedy. To illustrate my point on margins, an on-line forum user asked if he had been ripped off at a Harvey Norman store by paying $249.00 for an Astone PVR (that price was a "Labour Day special") - the same unit is for sale in a significant number of "bricks & mortar" stores throughout Australia for $119-$129! So who's being ripped off Mr Harvey?
    FiremanMick
  • Harvey, you're a rent-seeker. The difference in prices is far more than the 10% of the GST. If an Australian retailer is competitive without taking the GST into account, I'll use them. But you, your price is so high even after removing GST it isn't funny. The range of goods you keep is abysmal. Your time to get goods in compares badly with the time to order them myself, direct.
    meski.oz@...
  • I recently needed a quick replacement for a dead R/W DVD drive.
    Checked out my local HN store:
    Only one unit in stock to choose from, price $76.99.
    Returned home & purchased the same brand item from an online Australian retailer for $33.00 including GST & postage with overnight delivery...so much for Gerry's BS!
    Even his online store is just a token gesture, selling just a few categories of selected daily items.
    I can buy a basic PC mouse (including delivery) from Asia for under $7.
    HN stores charge over $20, no thanks!
    grump-a1eeb
  • Gerry Harvey may be concealing more than he reveals in loudly and frequently calling for 'a 10% GST ' to be applied to imports.

    I suspect he know very well that, while the GST on a personally imported $150 item would be just $15, the customs handling and forwarding charges that would then apply to that parcel would be several times $15.

    So it sounds like it's really just the old protectionist rampup under another name.
    anonymousI
  • The biggest complaint I hear from people indicatiing that they dont like shopping at bricks and mortar shops nearly all come back to crap customer service. People dont mind paying a little more if they get value for it. Harvey Norman stores are particualrly bad for their customer service and lack of knowledge. I once had a Harvey Norman saleswoman tell me they didnt have a product, and didnt stock that brand, when I could see the exact product on the shelf over her shoulder, and 3 other shelves packed with products from that supplier. There are numerous stories that could also be told about wrong goods being supplied, wrong information provided , etc,etc,etc. Personally I avoid shopping in these stores because its easier and less painful to do it online than to deal with the sales staff. If Gerry wants to change things, he really needs to get his staff providing decent service instead of whinging about the GST. This of course applies to many many stores sadly, not just Harvey Norman.
    CommonSense-e9dea
    • Pretty offensive comment with little actual basis in fact. Most Harvey Norman computer staff are studying at Uni and often IT or Computer science. There is a cadre of professional sales staff who have been around for a very long time with considerable experience and expertise. My lengthy experience in the HN group proves daily that most people have little or no knowledge of computers or, more importantly, how to buy the right solution. This is common to most stores. You might get a few who are not so great but this could apply to any store in any franchise in any industry. The fact that quality staff are leaving is due to the fact that commissions have eroded to nothing and the base rate of wages hasn't changed in years. If you don't know what you are talking about, and you don't, please refrain from commenting.
      rjimlad
  • Compared to some store, HN does seem to have lots of staff. Tried finding service in a Myers store lately?

    However, one of the problems is that local stores do not have the range and grossly overcharge for accessories.

    I think it will get to the stage where some stores, like shoes, charge for you to try on shoes. That will cover the cost of providing the range and staff. You then go and get it from OS via the internet. The store could even have tie-ins with OS stores.

    Some stores, like Body Shop, seem to thrive while having enough staff, who seem to like working there.

    If wanting shoes, I may buy the first pair from Athlete's Foot, just because they put in the time to get the right fit, but subsequent pairs from OS.

    However, electrical and electronics goods are a bit risky getting from OS, as the warranty and shipping can be problems. I did get a Galaxy Note via a grey importer with a two-year, Australian, non-Samsung, pickup and loaner warranty.

    I think a large part of the problem is that the local distributors are not lean and nimble enough and are the ones that add too much margin, excessive delivery turnaround and reduced range offerings. They need to operate more like the large OS e-tailers and be much more nimble with small quantity, quick delivery to retailers.
    Patanjali
  • If you want to play in a global economy then you have to face global competition, and someone will always be cheaper. That's the harsh reality, it'll never be a level playing field.

    Furthermore, Australia isn't well placed to compete against most of the world. Our economy and legislation ensure that. So short of turning Australia into a banana republic that is cost competitive it's not going to change for the better any time soon.

    So the options are:

    1. Be part of the global economy and accept that Australia is never going to be one of the big players. (aka let ourselves be exploited for our vast resources).
    2. Stop trying to compete in the global economy. Focus on developing our own nation first.
    3. Revise our economic systems so that businesses can compete more effectively. Which will always lead to more bureacracy and taxes, because the government couldn't concieve of any other alternative.

    For Mr Harvey, get with the program in a serious way or shutup. Don't think for a moment the government is going to give you concesions to compete against the global economy. They'll just use your bleating as an excuse to apply more taxes to 'level the playing field' which neither you or I will ever see spent on improving this country.
    Scott W-ef9ad
  • Everyone seems to think that the retail problems only exist in physical shops in Australia. I have had a small home based online business for 15 years in Australia, & the trend is slowly downward due to the ever increasing competition from backyard unregistered businesses, & other Australian online businesses that do not include the GST in the pricing. How do you compete against these rogues when they hide the GST until you get to their online checkout?
    I think that the online shopping fad is slowly declining with many that have played the game, only to find that many things that they bought may not have been what they expected.
    If they reduced the $1000 threshold then it will mainly affect small businesses like mine that import lots of electronic components into Australia. We are registered for GST, so after we mark up the price we then add GST so the overall outcome is that the Government still gets its Tax. Goods over $1k attract not only GST, but then have to be processed by a customs broker that can cost up to $88, & then also any duty & GST . This could add an extra $200 on a $1001 purchase that is an extra cost that has to be paid up front. With the current retail problems we have been trying to bring most into Australia under $1k to save on these costs which gives us some competitive advantage against so called Australian businesses run off shore in Malaysia.
    My largest problem however is the ever increasing Australia Post pricing, & it being geared towards large business with discounts. Get ready for the 2nd of April when Australia Post prices are hiked up apparently due to external costs. Indirectly I have been total that Australia Post cost increases in the past couple years are mainly due to the costs of delivering very high quantities of packages purchased overseas to the front door. So it appears that Australian business have another disadvantage to overseas online stores as they are indirectly paying the delivery of overseas goods.
    Our business spends over $14k a year with Australia Post, & got around $150 discount last year from Australia Post. Even my electricity supplier gives me a better discount than this.
    Mark K-bd8db