Thread: Overseas purchase

Pretty sure it works out at around 20% on top of the total cost which includes post.

Kapex isn't a good example. You would be stung with GST and duty (15.5% on top of everything including shipping) plus a fee from the delivery company for customs clearance (about $100) so you would probably end up paying more than Au price or so close to it that it wouldn't be worth the hassle.

Yeah most of the power tools don't work out any cheaper really once you factor in huge shipping costs. Most of my savings have been on hand tools, especially Veritas stuff.

Originally Posted by DomAU

Kapex isn't a good example. You would be stung with GST and duty (15.5% on top of everything including shipping) plus a fee from the delivery company for customs clearance (about $100) so you would probably end up paying more than Au price or so close to it that it wouldn't be worth the hassle.

Very unlikely that there would be Customs Clearance on an Air freighted item. Sea freight is a different kettle of fish altogether, but there is one mob from the USA that does an all inclusive price (which is useless for power tools unless you want to go the inverter route - no thanks).

The GST ruling is as follows:
If the goods are greater than or equal to AUD1000.00 on the day of shipping then GST of 10% is applied as well as Import Duty of (probably) 5% so 15.5% would be right. However, GST is also applied to the freight costs in this instance, even though the freight costs are not used for assessing the $1000 threshold.

With reference to "on the day of shipping":
Let's say you pay AUD980.00 and the exchange rate drops against your favour by 2% between when you pay for it and when they are shipped. That means they are assessed at $1000 not $980.

Customs uses the Mid-Market exchange rate which will also be less than the retail rate that you will get with a credit card or Paypal (probably by 3-5%), so that too works against you.

This does not apply if the invoice is in AUD and is less than $1000, but it rarely is - even if you ask for it.

Originally Posted by DomAU

Just want to add my thoughts regarding local vs international retailers because this was on my mind recently.

IMO the main value added by local retailers of goods available overseas are; security (certainty of getting your stuff), convenience (get it now), warranty support, advice and the ability to see/touch the tools before you buy.

snip

I think if you go into a local store, check out an item and then go online and buy it somewhere else it's similar to theft. You've stolen the retailers value-add.

However, I don't agree with the arguments that supporting a reseller of goods in Australia, that are manufactured overseas, is in any way supporting the Australian economy. You are simply handing over your money to the owner of that business.

Now if something were actually manufactured in Australia I would be far far more willing to pay a large premium, and this would actually help our economy

unfortunately there is a flaw in this argument. For a very long time the Australian economy has been based on building construction and services. "Services" include people who work in warehouses and retailing, as well as doctors and nurses and teachers, etc.
So buying from overseas rather than locally is depriving some Australian of a local job.

Our problem is that we live in a very high cost economy. Compare our housing prices and minimum wages to just about any other western democracy and you'll see what I mean.
Th only way out of this dilemma is a drastic reduction in house values and a huge pool of working poor (like 30 to 40% of the workforce) -- outcomes which would have a negative impact on almost everyone who posts on this forum.

Originally Posted by ian

unfortunately there is a flaw in this argument. For a very long time the Australian economy has been based on building construction and services. "Services" include people who work in warehouses and retailing, as well as doctors and nurses and teachers, etc.
So buying from overseas rather than locally is depriving some Australian of a local job.

Our problem is that we live in a very high cost economy. Compare our housing prices and minimum wages to just about any other western democracy and you'll see what I mean.

Hi Ian, I didn't say buying directly from overseas wouldn't cost local jobs. What I was trying to say, was that if people don't derive value from the benefits of buying locally (advice, security, timeliness, see-before-you-buy etc) then the service that is being provided locally is just a waste of resources, and furthermore does not really contribute effectively to our economy or the balance of trade. In this case, it would be better for the country if the people doing those jobs applied their effort to productive endeavours that generate goods or services that have value. Now, I personally do derive value from local retailers and will be sad when we are only able to buy things online; however I also won't pay 40% more for an item here if I can get it directly.
A simple example; Scenario 1; I have $1000-. I buy a tool locally for $1000-. I get my tool. The store pays $600- for the tool to an overseas manufacturer / supplier. The other $400- goes to wages, facility costs and profit for the owner of the business. This $400- stays in the local economy for a while. Scenario 2; I have $1000-. I buy the same tool directly from overseas for $600-. I have $400-. I spend the remaining $400- on services locally and so the $400- turns over in Australia for a while. The same amount of money has gone directly overseas. What is the difference to our economy? The difference to me is I have gotten my product and had $400- left over to enjoy other local services so I have maximised my own value and still contributed the same to our local economy. The local tool store staff and owner have $400- less; potentially putting them out of business and jobs. But now, the people and assets that were being used to provide the local service of supplying tools are available to apply themselves to other activities that can generate value for our economy.

Originally Posted by DomAU

However, I don't agree with the arguments that supporting a reseller of goods in Australia, that are manufactured overseas, is in any way supporting the Australian economy. You are simply handing over your money to the owner of that business.

Now if something were actually manufactured in Australia I would be far far more willing to pay a large premium, and this would actually help our economy

Agree 100%

It's not like that money you have saved disappeared from the economy either. You might use it to buy Australian made food or go out for a meal. Or invest in Australian shares or reduce your reliance on the pension.

The argument that buying non Australian made stuff from overseas for a significant discount is somehow robbing Australian businesses and reducing our economy has no logical basis.

Originally Posted by DomAU

Scenario 1; I have $1000-. I buy a tool locally for $1000-. I get my tool. The store pays $600- for the tool to an overseas manufacturer / supplier. The other $400- goes to wages, facility costs and profit for the owner of the business. This $400- stays in the local economy for a while.

Scenario 2; I have $1000-. I buy the same tool directly from overseas for $600-. I have $400-. I spend the remaining $400- on services locally and so the $400- turns over in Australia for a while. The same amount of money has gone directly overseas. NO - not right!

Dom, whilst I largely agree with your sentiments, there are a couple of flaws in your argument, mainly about your overseas price being the same as what the Aussie retailer pays.

It is not - even if you are going direct to the manufacturer - quantity discounts. Consider the following:

1. Item retails here for $1000, of which the Oz govt gets $91 in GST and about $43 in Import Duty (@ 5%). The price of the goods includes the original freight from whence it came.
2. You can purchase the item overseas for say $650 plus the freight of say $90. The Oz Govt gets nothing from this transaction.
3. This must mean that the price of the goods from the manufacturer to the overseas retailer will be less than $650 in order for the retailer to make a profit. So let's say the cost price is $500, and is the same cost price to the Oz retailer.

So when you buy it for the $650 + $90 = $740 leaving the country. That means you have $260 to spend on something else here, and the Govt has missed $134 in revenue. They also miss the income tax on the wages that would come out of that profit, and company tax.

When you buy it locally only $500 + (say) $20 (bulk freight cost) = $520 leaves the country.

Having said that, the most important economy to me is my own.........I just have this problem about handing over more money than I need to, to someone else, and being poorer myself as a result.

That to me is dumb economics. Really dumb. Perhaps it might be different if I was wealthy, but I am not.

Ok less is leaving the country but the money that is saved is going to be spent somewhere too.

I guess a lot comes down to what the actual price difference is and where a local company is spending that money.

I am guessing lots of importers make a decent margin and then go and buy a new car/boat/jet ski/computer etc. Ie stuff not made in Australia.

For many products direct purchase from overseas is much more efficient. Why support inefficient local importers who are essentially middle men?

It could just be a Perth thing but one of the big reasons I buy from overseas is stock availability. Often I'll need something so I'll go out on my one day off looking and come back empty handed because everyone was out of stock. This almost always results in a purchase from overseas as most international packages arrive at the same time or quicker than Australia post. The added savings are just a bonus.

The Australian manufacturing industry has been decimated by the people demanding more. More money/hour, more public holidays, more holidays, more leave loading, more sick days, more unpaid leave days, more superannuation, more more more. And then in all their wisdom, they demanded higher levels of safety which adds significant initial cost and ongoing costs to plant and equipment. More meetings to discuss how things get done rather than actually doing things. And these same people, in all their wisdom, loved to buy stuff from the people in china which don't receive the same benefits and safety levels that they have demanded for themselves. Then...in all their wisdom, they paid a little extra for their homes and investment properties pushing the cost of housing through the roof in Australia because they now had too much money and could afford to pay that little bit extra.

So now, the manufacturing staff have to find employment elsewhere, and given that imports and reselling are big business in Australia it seems fitting that their manufacturing roles evolve into a pick and pack or sales roles. But now, in peoples great wisdom, they look to bypass Australian sellers to once again attempt to decimate another industry.

But don't worry, the Australian mines will prop up Australia indefinitely using a finite supply of raw materials.

Originally Posted by FenceFurniture

Dom, whilst I largely agree with your sentiments, there are a couple of flaws in your argument, mainly about your overseas price being the same as what the Aussie retailer pays.



So when you buy it for the $650 + $90 = $740 leaving the country. That means you have $260 to spend on something else here, and the Govt has missed $134 in revenue. They also miss the income tax on the wages that would come out of that profit, and company tax.

When you buy it locally only $500 + (say) $20 (bulk freight cost) = $520 leaves the country.

Yep, understood and agree, I just didn't want to complicate things even more in my simplified example (much easier to have a dialogue than writing long posts!) by adding tax and the fact that a retailer MUST SURELY be paying less than you or I directly.

However, in your example, the question still remains; even with $220- less leaving the country directly, is the effort expended and resources consumed in providing that product via a retailer in Australia vs buying directly (warehousing, lighting, fuel, sales staff, web page development, admin/management etc etc) equal to or greater than the value that that same level of effort and resource could have generated in the next best endeavour? With most retailers claiming minimal profit I would argue that this is probably not the case (remembering that they also got an extra $260- of your money transferred to them as basically a gift / subsidy). What I mean is, through all of the efforts (human and assets) of the retailer/distributor, they have retained $220- in Australia from this transaction; could another endeavour using the same level of human resources and assets yield more than $220- of value to the economy? Not a yes / no question, but rather something to think about.

Originally Posted by Kuffy

The Australian manufacturing industry has been decimated by the people demanding more. More money/hour, more public holidays, more holidays, more leave loading, more sick days, more unpaid leave days, more superannuation, more more more. And then in all their wisdom, they demanded higher levels of safety which adds significant initial cost and ongoing costs to plant and equipment. More meetings to discuss how things get done rather than actually doing things. And these same people, in all their wisdom, loved to buy stuff from the people in china which don't receive the same benefits and safety levels that they have demanded for themselves. Then...in all their wisdom, they paid a little extra for their homes and investment properties pushing the cost of housing through the roof in Australia because they now had too much money and could afford to pay that little bit extra.

So now, the manufacturing staff have to find employment elsewhere, and given that imports and reselling are big business in Australia it seems fitting that their manufacturing roles evolve into a pick and pack or sales roles. But now, in peoples great wisdom, they look to bypass Australian sellers to once again attempt to decimate another industry.

But don't worry, the Australian mines will prop up Australia indefinitely using a finite supply of raw materials.

I agree with you on a lot of what you say. The Australian government and voter really dropped the ball over the last two decades by not investing in our future, particularly by not making the most of our natural resources during the boom (we basically gave them away) and investing in infrastructure to set ourselves up to produce goods and services that we could export / reduce our reliance on imports. As well as by allowing our car manufacturing industry to shut down, and selling off a lot of our agriculture businesses etc etc. It's a joke and will undoubtedly see the overall quality of life fall for all of us in the medium to long term.

However, I can't agree that propping up certain areas of retail, that aren't able to provide goods either cheaper or with enough value-add through additional services that make people want to buy locally vs on the internet from overseas, on the basis that "it's good for the economy" is correct, as I don't think it is. That's not to say I want these retailers to go under, or for people to lose their jobs, I don't. I'm just speaking from an overall Australian economy / collective good point of view.

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