The GST is here, for better or worse

Michel Van Aalten

3rd Jul 2018

Australia on Sunday debuted its much discussed GST on low value imported goods under $1,000. But with the official launch now in the rear-view mirror, dwelling on international sentiments
and the overall fairness of the GST seems trivial. The GST is here for better or worse, and many Australian consumers are still in the dark about it.

Adyen recently partnered with deciBel to undertake consumer research in a bid to better understand some of the attitudes around this new piece of legislation. The survey interviewed over 1,000 Australians from various age-ranges and demographics, and collectively the insights they shared pointed to a lack of awareness.

Unsurprisingly, the overwhelming majority of respondents (94 per cent) surveyed shopped online. As for international websites, three out of four Aussie shoppers currently order their goods from them. When looking at the numbers it is clear the GST will have a direct impact on almost all Australians.

What is also abundantly clear is the GST is still quite divisive. Thirty-nine per cent of respondents showed a complete indifference to the tax, noting it will not change how they shop in any capacity.

However, 54 per cent of respondents went in the opposite direction suggesting it will actually make them shop less often. Whether you like it, hate it or are totally indifferent, it is still important to be well informed of the approaching GST.

Because Australian shoppers enjoy the convenience of shopping from the comfort of our own home like the rest of the world.

Why the GST?

With the modern explosion of online shopping and the continued advancement of collection methods at our border, the resulting GST was an inevitability.

More often, products being bought overseas are arriving at Australian doorsteps. As a result, a tax was established to ensure that goods imported by consumers in Australia receive the same tax treatment as goods purchased domestically.

The GST will make Australia the first country in the world to enforce a GST to offshore suppliers. But we are not alone in this endeavour, as many nations watch this new model unfold, poised to follow suit.

What the low-value GST means for local retailers

This puts Australian retailers in the position of showcasing how creating extraordinary customer experiences allows them to compete and win.

The Australian consumer is fairly easy going. Of those surveyed, 41 per cent expressed no preference over local or domestic retailers. Working with retailers globally and here in Australia, there are three things that retailers can do now to entice the online shopper:

1. Consider convenience as essential to the customer experience: Simple measures like offering click-and-collect or free delivery can sway the customer – our research shows that 89 per cent of shoppers have been put off by high delivery costs

2. Create promotions with local card schemes – 88 per cent of shoppers in our survey used credit cards

3. Mimic the online experience by offering instant gratification – consider mobile POS systems that allow people to purchase immediately instead of making shoppers schlep their purchases to a counter – over 72 per cent of Aussies will abandon a purchase rather than wait in line.

Getting smart

More than half of those surveyed weren’t aware that this additional tax is being introduced next month. Within the 34 and younger age-range, the lack of knowledge is even worse sitting at 65 per cent.

The lack of awareness amongst Australians is troubling, as the GST will significantly impact the entire retail landscape. The majority of online stores are not Australian, and the bulk of what’s purchased online often sits comfortably under the $1,000 threshold. For the most part, we will be paying 10 per cent more for online goods from overseas retailers in the key categories of clothing, electronics and jewellery.

From July 1 onwards, all wallets will show the signs of an extra 10 per cent being taken out of every purchase. As a result, our research predicts a gradual shift in consumer spending habits, one that looks for more value and choice within our borders.

Only time will tell if this GST move will be the win for Aussie retailers the ATO is banking on. Certainly, price is not the be-all and end-all determining factor when it comes to shopping.

For local retailers to take full advantage, they need to level-up their customer experience by looking to data to understand customer behaviour. Only through data-rich customer insights can retailers expect to be competitive in this new marketplace.