Crowd-scorning an accountant

Heard of crowd sourcing? …yeah..thought so..boring, much more fun is crowd scorning and a perfect example of that happened yesterday.

In this article, Steve Waite, partner at accounting firm BDO, has taken it upon himself to argue that GST should be applied to all online transactions, to level the playing field and to “give our retailers on Main Street a bit more time to adapt to the brave new world confronting them”.

Not surprisingly, the accountant has been treated to concentrated vitriol of a sort previously only applied to district court judges who believe that blogs are devil-spawn and not news media.

A couple of samples, of crowd-scorning in full scowl mode:

I must say that I am disappointed to hear comments like this from a supposed expert.

I am buying online not because it’s tax-free but because some retailers charge ridiculously high prices, and it is their own greed that is causing the problem.

For e.g. USD298 Marc by Marc Jacobs bag (NZD360) is being sold for in excess of NZD700. Why would I pay this much when I can buy online for NZD360 – it’s still going to be NZD414 with 15% tax, much cheaper than what the high-end boutique store on High Street charges me.

And;

Actually, there are many more reasons to buy online other than price.

I get far better selection, service and products delivered from overseas in only a matter of days and it is more than 15% cheaper than buying locally from a shop that ‘doesn’t have it in stock’, has a surly shop assistant or poor service. Our retailers really need to step up there game (I have been involved in retail at some level or another for 35 years) as I get sick of shoddy goods, poor service, poor selection and inflated prices of products that have sat on their shelves for months (or longer).

I have had nothing but fabulous service and great deals from overseas for many years….buy local…yeah right.

Mr Waite’s article has attracted more than 200 comments, approximately 99% negative and most pointing out that GST is only a tiny fraction of the difference between local retail pricing and international pricing.

One can only feel sorry for the poor accountant who appears ill-equipped for the modern “brave new world”.

As noted by a few commenters, some of us have been buying stuff online for twenty years (in my own case, a bit longer than that, in fact since Compuserve linked our shores to the world of interconnected networks in 1987 or 1988). How much more time do our poor luddite retailers require, if 25 years is not enough for them to figure out this interweb thingy?

 


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  • sheppy

    But but but the version over here is designed for New Zealand conditions…..
    Yeah Right!

  • Allyson

    Must thank those ever so helpful chaps at Adidas for pointing out that local retailers are not the way to go. How much for a black shirt again?

    • Mr_Blobby

      The reason I don’t by Adidas now.

      • motorizer

        fuck, i dont buy ANY labelled shit. reebok nike etc its all just a bunch of threads made out of recycled coke bottles. the only reason you would buy an all black jersey is to show off. not for any practical purpose anyway.

        • franco

          You can buy exactly – and I mean EXACTLY – the same apparel at the Chinese shop for next to nothing. Who cares about the label? Labels don’t prove anything. I recently saw a tramp wearing Adidas gear and New Balance trainers. As for printed tees, the only one I would buy is one put out by the Hitler Youth Old Boy’s Association. They are not even on e-bay.

  • conwaycaptain

    As a retailer of educational books the MAJOR problem is the publishers. They have moved all their distribution to Oz and order books from them has to go to Oz and through their system and then to us. If out of stock wait for the ship to bring it from the UK or US.
    They cannot see what is happening and sit there wringing their hands. They have in fact reduced their prices for UK sourced books but Pearson at the same time reduced the NZ retailers margin by 30% and wonder why they are not getting the support from the retailers.
    I import and distribute books from the UK and excluding GST for one series of books my price in MARGINALLY more than buying on line.

    • Educational books are a rort. You get told you need the “4th edition” for the course, and next year it’s the 5th, so you can’t even sell your 4th edition for a reasonable price, if at all.

      Educational book is another area that’s trying so hard to hold on to a model that protects their future – but it won’t.

      They’re going to get cut out of the loop over the next decade or two – definitely at degree level and below. How bloody exciting is the field of Calculus that forces revisions to the texts every two years?

      Does anyone know if education providers (universities, schools, etc) get a kickback from making certain texts “mandatory”?

      • ratmuncher

        Get rid of the printed book altogether – have a tablet app that issues updates for a fraction of the price.

        • blokeintakapuna

          My now 13 y/o Niece only has an iPad at Orewa College and very few books – it’s all done mostly on line now…

          • ratmuncher

            I get all my magazines via iPad and all news either by iPad or computer. Junkmail take the place previously held by newspapers as something to start the fire with.

          • Murray Irwin

            And that’s a very good thing; the printed book really is an interesting footnote in history. Sorry for those who depend on books for their incomes, but the on-line book really IS progress.

      • People will just download all course books to their tablet…BOOM..industry over

        • Murray Irwin

          And that’s why i told Bill Birch many years ago that we should sell the Post Office; it was going to die. Guess what….

        • Patrick

          Already well underway, unfortunately the price of this stuff is still far too high.
          Downsides are schools now off load their IT budgets onto parents, they mandate the type of device (always an Apple), they have not changed the curriculum at all to incorporate computers & to me they are really only babysitters for boys – keep them quiet in the back of the class playing computer games. Also parents now have the issue of trying to control the amount of time & what content the little Johnnies are viewing on the www. More headaches for little benefits.

      • Garbageman

        When i was doing my IT degree it was a requirement to have the latest edition (campus owned bookstore on site) filthy rort and damned expensive, now i head to Pirate Bay theres very little you cant find and my dropbox has thousands of books in it…just getting my hard earned dollars back and im sticking to that excuse

      • Mr_Blobby

        Yes the Author of the book gets a royalty.

    • franco

      If you are selling books on correct English pronunciation, I suggest you try sell some to the television news presenters. Good luck, you are doing good work and I hope you sell plenty.

  • Cyber Billy

    I so wanted to post a comment on that article yesterday but for some reason somewhere during the brown saga I must have been busted for unruly comments as any comments I make at the Herald no longer get published.
    In my view “the guy has no concept of technology and never will”.

    WOBH pretty much says it all “One can only feel sorry for the poor accountant who appears ill-equipped for the modern “brave new world”.

    • Dan

      Same. If I send a comment that is remotely close to the bone the pricks wont publish it either. If they know its a contentious issue they often wont include a comments function. Pricks.

      • Agent BallSack

        Comments are generally reserved for government bashing and any pro sentiment is weeded out. Don’t even bother over at Herald or TV3, I am not pushing the agenda they want heard.

      • ex-JAFA

        I’ve been banned from commenting at the Horrid for months, ever since I delighted in pointing out some of McCarten’s gross keyboard explosions.

    • 4077th

      Apparently I am not allowed to comment on Skidmark Brown’s FB page anymore either. I had always been reasonably polite and never any bad language. My last comment was a fairly innocuous joke about the very tall lady with the commonwealth games torch and that Pants Down Brown would have trouble presenting her with a nice necklace. Comment was live for about 2 days then BANNED..What will I ever do with myself now? Bunch of fucktards.

      • Patrick

        Seems overly harsh, I mean similar thoughts were no doubt rushing through Brown’s head at the time – you only said what he was thinking.

      • Garbageman

        Head over to the Standard 4077th its fun to poke that hornets nest

  • Dan

    And why buy a pair of $220 running shoes when you can buy them for $100 including postage? I am sure the local retailer will tell me to FO if I take them back a month after I bought them with a stitching fault so I might as well get almost two pairs for the price of one me thinks.

    • Alfred12

      Agree totally, as much as we prefer to support NZ business no way are we going to be price gouged like we are. My wife just bought a pair of sketcher shoes for US $69, postage $30, NZ retail between $240 & $300.

      • BG

        I understand but look at it through another set of eyes. The guys selling in a retail outlet in NZ only have a fraction of the potential market as does an international website, so two things happen. The international website can drive their price down lower due to bulk buying and also has the benefit of a massive marketing reach. I would guess the sales conversion rates are very different (the local retailer would convert possibly 20-30%, whilst online 2% is considered good) but if the retailer is only getting 400 people through the door each day, and the website has 4,000,000 visitors each day…well you do the maths.

        And thats not even getting into overheads per items.

        • ex-JAFA

          Valid points, but they only serve to show that it’s not economically viable to continue doing business that way. They should try their hand at something more appealing to Joe Public; in Queen St, I believe there are currently only four McDonalds.

          • BG

            Whilst I agree its a slippery slope, as soon the only retail choice we’ll have left will be the Warehouse, and then we’ll be really f%&ked!

          • ex-JAFA

            Yes, that’s why these retailers need to offer customers something that’s worthy of the markup. Excellent customer service, immediate resolution of issues, and immediate availability of the product (bloody near impossible with the likes of clothing, in so many colours and sizes!!).

    • Dan

      Just went into NZ Post to do a transaction and got treated like something on the bottom of a shoe. Time for a serious dose of privatisation in that establishment.

    • bobby

      100% agree. I buy all my sport shoes online from the US because I can get them couriered to my front door in 5 days for 1/2 the price as they are in NZ. Additionally, the shoes I want they only do in one colour variant in NZ or they don’t offer the model I want at all because the market is too small. Why on earth should I have to pay more and buy inferior products to somehow support a local shop who, as far as I can see, is taking the piss?

  • CJA

    Being a former employee of BDO all I can do is laugh. As an accountant I can understand his point but as a consumer all I can say is what a dick.

  • Murray Irwin

    There is both room and need for both ‘bricks and mortar’ and online. Where bricks and mortar have to collect a 15% GSDT tax for the govt (plus the cost of collections and admin – say another 2~3%?) they are at a disadvantage. To make the rules the same for all e/r-tailers would make for a fair fight.

    • A far better way to have a fair fight is get rid of the wholesalers and the brand protection mechanisms of “exclusive agents”. They are the ones margining the product so much….GST is nothing compared to the margins of wholesalers. Parallel importing needs to be extended…that will solve the problem

      • Murray Irwin

        hmmm – I wish it were that simple. We supply to about 10 different retailers in NZ and AU, we manage the exchange rate risk, we provide stock rotation for what is slow selling, we provide price protection in case of price drops – and we haven’t enjoyed 10% margins in years. Mostly our products are low value items so volume is key – no-one can ship similar product to ours freight free to NZ and be lower priced than us. There may be some industry sectors where margins are much higher for importers – but if I knew which sector, I’d be there like a shot. Except cars of course. Price a BMW in USA vs NZ – the price difference makes your eyes water. But if it fails, and there were no local importer, where would you get spares, technical advice etc> Having said that, the price difference makes your eyers water.

        • gander

          I’ve got a relatively unusual car. Each time it’s needed a major service, always at one of the manufacturer’s authorised NZ agencies, some parts have been out of stock in NZ. Tell me again why I should pay twice (or more than twice) the Overseas price for the parts?

          • Murray Irwin

            I’d also buy parts offshore. I too have an unusual car – and I guess I knew it was unlikely all parts would be carried here. You pays your money and takes your chances. Generally though, the more we consumers move from mainstream product, the less the chance we can get full service here. Ultimately it will reduce the choice of products available in NZ. For books – hey we can download anything – so we don’t need retailers to carry books for us, but the narrowing of choice makes retail in NZ ever less interesting.

      • ex-JAFA

        Unless you’re an actual subsidiary of the brand owner, I believe that Customs doesn’t recognise “exclusive agent” status any more, and anyone can import any quantity of the good concerned. No more seizures at the border because the importer isn’t “authorised”.

  • I once wanted a specific item I could get for $1000 landed. NZ price was $1800. I went to the shop, showed them, and offered to buy it for $1200 to ensure they got some action. At least they had stock churning. I was willing to pay $200 over and above to get a local warranty and eliminate the shipping risk.

    No go.

    I’ve now purchased things online for 25 years and it is my preferred method. In all that time I’ve not had a bad experience except perhaps for 3 Trademe auctions (out of 200 odd).

    • Euan Ross-Taylor

      Same with me Pete. A couple of years back we refit our kitchen. went to buy tap for sink, looked around and saw just what we wanted (shapewise) but it was a Grohe and cost $1300 +GST and stock had to be shipped from Singapore with a 3 week delay, I went online and sourced it from a plumbing shop in UK (exactly the same tap) had it landed at my door by courier in 5 days for a total of $400. No Bull!

      • blokeintakapuna

        That saved lot of money going down the gurgler!

        • Orange

          ba dum chish

      • Gordon Gibson

        My sister buys books, thick ones too, from UK – free shipping. wtf?

        • Euan Ross-Taylor

          Yes, Amazon UK is free. Amazon US not.

        • John Q Public

          TheBookDepository.co.uk. Rocks. Free delivery to anywhere on the planet.

          • Cowgirl

            Much cheaper than buying locally

    • blokeintakapuna

      We’re you trying to buy off Trev perhaps?

      • IWantToBeLikeMallardOneDay

        Trev doesn’t read. He only likes sport.

    • bobby

      I had an opportunity via a friend to buy an electronic item from the local dist for cost. Their cost was more than the US retail plus postage! When I pointed that out to them they said that they couldn’t even land the product for the price I could get it because…. *no surprises* the Aussie agent has NZ locked down and can charge whatever they want to them.

  • rouppe

    A guy at my work has just certified as a scuba diver. He went to several shops in the Auckland area for a full set: BCD, regs, gauges, computer, fins, mask, snorkel, wetsuit all in a bag. Not the cheapest of everything, but not the most expensive either. He had several quotes around the $7000 mark.

    He ended up buying from a supplier in Italy. Exactly the same stuff for around $2500. Delivered.

    Seriously, there must be a lot of fingers clipping the ticket somewhere on the way

    • MarcWills

      Yes, it’s the ticket clipping that is the killer for retail – from the importer, to the agency, to the supplier, then the retailer. All adding 40%. Parallel importing starting exposing the rorts, and now we have uncontrolled on-line competition. Stoneage retailing needs to be abandoned.

      • Murray Irwin

        We are importers supplying to retailers in NZ. Our margin in many cases is low single digits, from which we pay freight out ( so we loose pretty much every time we ship to the South Island) and manage the exchange rate liability. 40% margin no longer exists in most sectors.

        • 4077th

          Precisely the problem. Importers=Ticket Clippers. This is an outdated protectionist concept. In years gone by the manufacturer had no option but to use importers as it was the only means to market. The internet has changed all that and “importers” offer nothing other than a local supply any bullshit about warranty is no longer an issue. As a manufacturer we still use our dealer network mostly because our products are very specialised scientific based equipment so it is important the customer is dealt with directly and we don’t have the resources to do this. We have however done away with dealers in places other than the main 5 and we sell direct. We found that in all cases where dealers were outside the main 5 dealer margin was sometimes as high as 200% so not only were we loosing business to competitors but we were also supporting what could only be described as order takers (ticket clippers). A business model that works on single digit margin is one that cannot exist long term unless you are selling food or alcohol or both.

          • Murray Irwin

            We sort of agree with each other. We sell to AU and NZ and in big numbers. We are very efficient so we can prosper on small margins. and we sell to a small number of retails. Our supplier cannot provide the services retailers demand – thus we are required if people in NZ want choice. We are not that different from each other.

          • 4077th

            Are you selling perishable goods?

          • Murray Irwin

            No, consumer electronics – so prices are really volatile – but unlike fruit, don’t trend to zero.

      • Mr_Blobby

        The problem in NZ is that most of the commercial property is owned by a few big sharks and the Councils, Auckland in particular, have there ratings differential, like 5 times the residential rate for the same value. Power, Phone, Insurance etc are all commercial rates far in excess of residential.All costs are borne by the tenant.

        We have to much retail space and rents are to high. Landlords would rather have a vacant property than meet the market.

        The small business sector in New Zealand is treated like some sort of piggy bank by everybody from the Government down. The main reason I will be extremely reluctant to go back into business.Where I felt like a third rate citizen. No work from home and avoid anything that requires Council compliance.

    • Gordon Gibson

      Oh yes, there’s fingers.

    • motorizer

      its the same old “should i be cheep and sell heaps or be expensive and sell less?” and people panic and put the price up because THE BLOKE DOWN THE ROAD IS!!! it fails. im a carpenter and i charge $30 an hour and i am never without work. i know a dickhead who is $49.50 an hour and guess what….. HE NEVER HAS ANY WORK.

  • BG

    I actually do have some sympathy for the local retailer, in saying that I buy online from overseas as well.

    The simply fact that an online store can market to the entire world whilst the retailer has to wait for you to walk through the door, and lets face it, with a population as small as ours he/she needs a rather large percentage to do that to be profitable.

    I once spoke to a head of marketing who came from the UK and he said he could believe how anyone in NZ can make any money, with only 4 million people to sell to. This is why the margins are much higher in local stores. And before you say if they drop their prices then they’d sell more, well they probably wouldn’t, as the conversion rate will be most likely the same.

    I’ve always followed margin management adage “10% of shitloads is shitload, 80% of fuck all is fuck all.” With our small population we only have fuck all to sell to.

  • I can buy the cheapest Kindle, from Noel Leemings and DSE for NZ$149.
    I can buy the same device from Amazon (yes on special at the moment), get it shipped free to NZ Post’s Youshop and then shipped to me for under NZ$85. Add 15% GST to that total price: still under NZ$100.

  • Jas

    The interesting thing about this is the fact that the price between NZ and overseas would normally always be higher, economies of scale and such, but as some point out not to the levels that you see. The fact the NZ dollar is high makes the issue even worse.
    The other issue I think we have in NZ is the number of retail shops for the population we have which whacks up the overheads and thus the price.
    As for the GST i can see both sides, everyone likes to think they are getting one over the government and not paying GST is a small way of doing it. But then like with things like WFF, if you are paying GST but the person down the road isn’t then you might get annoyed

    • Murray Irwin

      problem is that those not paying GST are being subsidised by this that do. We should all pay, or none pay.

      • Rubbish…missing the point as usual

        • Murray Irwin

          haha – c’mon Cam – I’m only arguing for the level playing field. I buy plenty on-line – sometimes it makes sense. I buy stuff from NZ retailers – sometimes it makes sense. If I don’t get charged GST for imported goods – I’m happy. But I can’t complain if I do. There probably are some importers with a sense of entitlement – expecting big margins – for them get used to the new reality. But it doesn’t matter where you are based or what you do, if your value add is greater than your cost add, you have a place.

          • Pissedoffyouth

            as I’ve said before – I don’t mind paying 15% more here to get it faster. But normally the markup is 2 or 3 times on a lot of things.

            Maybe if the rent’s on stores weren’t so high we would buy more NZ stuff

        • Callum

          GST is a consumption tax applied to nearly everything in NZ, if you import something for consumption in NZ why should you not pay GST? The ONLY question is how to collect it cost effectively.

  • cows4me

    What will happen to GST if people start using currency like bitcoin, how will the cost of a certain product be estimated?

    • Pissedoffyouth

      The government doesn’t like anything it can’t get a chunk of

  • Pissedoffyouth

    I find computer parts like Graphics cards here can be reasonably priced and would rather pay an extra bit to have it delivered next day or pick it up in person. The range can be limiting but we do have no population in the middle of nowhere.

    Small crappy things like adaptors etc I can buy for $1.50 including shipping to NZ from China from Aliexpress. I buy a ton of stuff from Ali, most recent was a new laptop fan as the old one I broke some fins off, cost me $5 where a local repair shop would charge me a small fortune if they even had that model in stock

    Clothes and other shit though is priced way out of line though – somebody is making money in that industry

    • GazzW

      I buy all of my clothing offshore now mostly from My Habit in the US who offer a massive selection and have great ongoing promos.. Some of their product lines cannot be sent internationally so I just get them sent to Bongo in the US who forward them on for a small fee. You can use your Amazon account too at My Habit. A new pair of casual shoes arrived this morning – local price (on sale) NZ$149, My Habit price NZ$64 including freight. The shoes are made in China (Italian brand), so how come they can be delivered here via the US$85 cheaper (yes I know about NZ GST). How many times is the ticket being clipped in NZ?

      • Gordon Gibson

        I buy all my clothing offshore too. Well, Steven gets it in and I get it from him ;)

    • Orange

      Other countries miss out because they don’t have Asians selling computers like we do. One of the best things about NZ.

  • Cowgirl

    My husband quite rightly pointed out that we shouldn’t be paying GST on things bought from overseas because the local market is providing neither the good nor the service. If anything, we should be paying sales taxes to the overseas governments where the retailers are located – I couldn’t really argue with that logic.

  • 4077th

    I know of a situation where a person wanted to buy a high value piece of test kit. The local price was around $40k from memory. The same piece of kit could be purchased from the UK for around 25 to30% less. That is not an insignificant amount of cash. The problems started when the local agent said if the kit was purchased outside NZ it would not be able to be calibrated by the 1 guy who visits once a year from Australia to do calibrations. The kit would have to be returned to the UK…time, freight and so on. This is plain and simple daylight robbery, holding the customer to ransom and protectionism at its worst.

    • Agent BallSack

      A couple of years back I was sourcing robotics for my work, and got some prices from Roland DG here in NZ and enquired with Roland USA at the same time. 100% mark up on the prices from the sole Roland NZ supplier. Managed to convince Roland USA to supply the same, got an electrician in and changed the voltage to 240V, saved 17k. Even better while I was negotiating, the dollar hit US 82c.

  • coventry

    Just purchase some car parts for a Honda via Amazon, roughly 1/3rd the price of NZ even after shipping it to NZ.

    Amazon: Honda Air Intake Tube NZ$49 vs Honda NZ $144.38
    Amazon: Honda Expansion Valve NZ$49 vs Honda NZ $300.00 (2 weeks ex-Japan)
    Amazon: AC Compressor NZ $331 vs Strongs (2nd Hand / Wrecker) $385 (new was $1300)

    Have a look at Spark Plugs, here the good ones are $60 upwards per plug – Amazon same product is under $10.

    Retailers need to get smarter.

  • Daniel

    The guy is an idiot. I especially can’t believe this comment:

    “NZ should simply require them to attach a ‘bar code’ to the outside of the package that details what’s inside, it’s value and authorises the IRD to debit the sellers bank account for the tax (I’d suggest levied at 20%)”

    Whenever I need some piece of crap electronics or cable I order off ebay. The most recent purchase was a multicard (SD, microSD etc) USB reader. It cost $1.20 NZD including delivery from Hong Kong. As if some Chinese seller offloading cheap stuff for a single dollar is going to set up a barcoding system for each country in the world. Steve Waite obviously has no idea what he is talking about. It is completely unworkable.

  • GazzW

    Just check out the massive consumer response to Steve Waite’s proposal and go figure whether any sane political party would consider changing the status quo. Absolutely suicidal.

  • Patrick

    What he is really advocating is import tariffs on goods entering NZ – I thought we had already been down that road?

  • Callum

    He is 100% right.
    Forget whether it makes the price comparable or not, GST applies to all items sold for consumption in NZ. If you choose to import rather buying local then you should pay GST on the item you bought as it is still to be consumed in NZ. All the bitching about it still being cheaper to import is a side issue, pay the GST and you are still ahead so what is the problem?
    This is of course all dependent on a cost effective way of collecting tax on lower value purchases being found.

    • ex-JAFA

      Who’s liable for the GST? The seller. The overseas seller. The overseas seller who isn’t governed by New Zealand tax law.

      • Callum

        No, when you import something into the country YOU are liable. Every item over $400 value (or $60 of duty) is liable for GST, other than cost of collection why should you not pay GST on lower value items?

        • GazzW

          And what practical cost effective method is there to collect the GST Callum?

          • Callum

            That is what the government is currently working on. The masses though are claiming they should not have to pay GST at all if they import something, there is simply no reasonable justification for that stance.
            So the simple approach is lets find out how we do it, collect the tax, everyone is on a level playing field and the retailers who still have too high a price (for whatever reason) can then either adapt or go out of business.

      • jonno1

        Callum is quite right, in principle GST should be paid on all imports, but the problem is collection costs outweighing the value. Hence the $400 threshold. Maybe a voluntary/honesty system would work, who knows? The real problem is the distribution chain, as others have said.

        TradeMe sales highlight this too – I recently bought some parts for my car from a NZ-based importer which, including GST and freight, were less than half the cost from the local agent. Not after-market either, genuine manufacturer parts, and he still would have made a profit.

  • John Q Public

    I blame greedy distributors, more so than greedy retailers. Like the guy who had the 5 plus year laugh on the price of Diesel shoes here in the earlier 2000’s. $300 here, $100 in the US, same shoe.

    Just one of 100’s of examples.

    Just what are typical margin expectations on retail goods?

40%