Bricks-and-mortar vs online
According to Myer CEO, Bernie Brookes, over the next three to five years the top 10 internet sellers in the Australian market will be dominated by the existing bricks-and-mortar retailers such as Myer, David Jones and K-Mart. Yet consumers don’t seem to share Brookes’ confidence, as they continue to bypass the websites of the major Australian retailers and buy from specialised e-tailers, Australian parallel importers or directly from overseas sites. In 2010-11, online sales for David Jones and Myer accounted for just 0.2% and Harvey Norman less than 0.1% of all retail sales, while international sites have held onto a 27% share of online sales since a major boost in growth in late 2010.
The relatively low costs of establishing an online retail presence ensure strong competition and low profitability that Australian retailers have been reluctant to embrace. As part of their push into the online marketplace, companies including Harvey Norman, Myer and David Jones banded together to form the Fair Imports Alliance, essentially a lobby group with the aim of reducing the GST threshold on imported goods below its current level of $1000.
However, an IbisWorld report on online shopping contends the debate instigated by the Fair Imports Alliance has succeeded only in making consumers aware of the cost savings available online. Online sales grew 26% in the year to October 2012 compared with only two per cent for the traditional retail sector, however the retailers leading the Fair Imports Alliance missed out on much of the online growth as their websites don’t even rate in the top 10 in the online retail market.
With Australians paying up to 50% more than shoppers in the US for IT hardware and software, a 10% GST surcharge on overseas products is going to make little difference. Additionally, a Treasury taskforce report found the expense of collecting GST on imported goods below $1000 would be higher than the revenue earned. Lowering the low-value threshold (LVT) for imported goods could also result in longer delivery times, additional costs such as customs duties and Australia Post processing fees, and possibly administrative work for consumers such as Customs declaration forms.
Your rights online are covered by the Australian Consumer Law (ACL) in the same way that you’re covered when you walk into a store off the street. However, these provisions are difficult to enforce in other jurisdictions, and the ACCC advises it may be difficult to enforce the consumer protection laws of other countries on your behalf.
Manufacturers and distributors such as Maxwell, Sennheiser, Nikon and Nintendo exploit this cross-border confusion. To protect their supply lines and facilitate the price discrimination between Australia and overseas, they all note that there may be no recourse to their manufacturer warranties if the product is not purchased in Australia.
As an example, the warranty for photographic equipment distributor Maxwell states it “does NOT provide guarantees or rights to consumers who have purchased goods from online vendors based overseas”. It goes on to claim the ACL “provides no protection for such overseas-sourced transactions to Australian consumers”.
However, as CHOICE noted in our submission to the IT Price Inquiry, this is not strictly correct. “Australia’s consumer protection laws provide recourse for online shoppers irrespective of whether the seller is based in Australia or overseas,” we argued. “The enforcement of these laws may be more difficult to pursue when the seller is located overseas.” Furthermore, the ACL can be pursued against parallel importers in Australia such as kogan.com.au and dstore.com, regardless of where the products are sourced from.
Australian Consumer Law does not apply:
- when you buy from a private seller and the goods are not sold in the normal course of commerce, or
- to goods purchased via auction at an online site such as ebay.com (as opposed to buying at a fixed price on eBay)
Our analysis of some major domestic and overseas websites has found the return policies offered aren’t necessarily different to their Australian-based competition. The websites we scanned offer returns for faulty goods, and many extend this to “change of mind” purchases, which is not an ACL requirement, although return postage is generally payable by the consumer for such returns.
Hong Kong-based site dx.com provides an Australian address to which customers can return faulty goods, and offers reimbursement for shipping costs when the good is faulty or the site made an error (such as sending out the wrong product). But for products subject to a manufacturer’s warranty period, such as some cell phones or laptops, the customer is obliged to pay the shipping costs themselves for return to Hong Kong. Under the ACL, if the item needed to be delivered, the seller should arrange for this to be returned.
However, return policies in contradiction to ACL can also be found on Australian sites. On dstore.com, for example, they state the following with regards to manufacturer’s warranties: “Warranty claims are handled by the manufacturer directly, so please contact them immediately an issue arises [sic.] and follow their returns policy and instructions”. Under the ACL, the seller may send the goods to the manufacturer for diagnosis or repair, but they can’t force you to deal with the manufacturer directly.
In general, the larger reputable websites we looked at have fair return policies and secure online credentials regardless of whether they’re based here or overseas. However, a recent survey commissioned by NSW Fair Trading found only 52% of a representative sample of small to medium businesses in NSW published returns policies online, and 48% did not use a secure webpage for payments or collecting customer information. So, regardless of whether you’re dealing with an Australian or overseas business, always check the site’s contact details and refund policy, and read any buyer reviews.
- An online trader should disclose their physical address, phone and fax numbers
- Check with the seller whether the goods meet Australian safety standards
- Read the terms that apply to your purchase and check the seller’s policy on refunds and returns
- If things go wrong, contact the ACCC or the consumer protection agency of the country you purchased your goods from
- You can also file your complaint with econsumer.gov, the global site that allows consumers to file cross-border complaints with the aim of resolving the complaints without formal legal action