Books, movies, gadgets, cosmetics and clothes – Australian shoppers seem to pay more than those in New Zealand, the US, the UK and further afield. Along with the GST exemption, labour costs and other factors, expensive local postage is often blamed for price discrepancies.
How free is free shipping?
International online shops such as UK clothing retailer ASOS and US online department store Zappos offer consumers free shipping and even free returns for unwanted or unsuitable items, likely due to large postal discounts available to businesses in their markets. Recognising the appeal of such a model, local department store Myer has recently launched a deal offering free shipping within Australia for most items bought online.
“Currently our online business is trading around $5 million in sales, and our plan is to grow it to $50 million. This is one step towards offering consumer more convenience,” says Myer spokesperson Steven Carey. “We’ve just seen that when free shipping is offered in the online model, businesses grow by five to 10 times, so we want to see that in our business.”
But a spokesperson for Australia Post says free shipping is a myth. “We know that free shipping is really hidden shipping. Overseas retailers offer a bundled all-in-one price. Accordingly, these overseas retailers are neither shipping for free nor at lower parcel rates to their domestic consumers or to consumers in Australia.”
While the cost of shipping may well be worked into the business model, CHOICE has found that many overseas retailers offer goods at far lower prices than their Australian counterparts, regardless of delivery costs. This may be in part due to the fact that shipping from the US, Hong Kong and NZ to Australia can be relatively inexpensive.
Compare the pair
Sending a 1kg parcel from Australia to the US costs $63.50 using express post international, and $30.75 via air mail. It will also incur a A$9 US government surcharge, which is levied on all parcels weighing more than 500g. The same parcel sent from the US to Australia costs A$42.40 using express mail international, and A$35.15 using priority mail international.
An identical parcel sent from Australia to Hong Kong will cost $60.75 to send via express courier, and $25.75 using air mail. The return journey? That’ll cost A$20.67 using Speedpost and A$15.26 sent via air mail.
Sending the same parcel from Australia to NZ costs A$55 when using an Australia Post express courier and A$20.55 via air mail. But the return journey to Australia using New Zealand Post’s Express Courier will only set you back A$31.29, or A$11.50 via International Air.
Why does the same route cost more for Australians?
According to Australia Post, international letter and parcel post flows are governed by a number of treaties. Australia Post gets paid the same amount for the processing of inbound international mail irrespective of its actual costs of delivery. As a result, the pricing of international parcels destined for Australia may be lower than cost price.
“Australia Post is effectively subsidising the postal cost of inbound international mail that overseas postal services charge," their spokesperson told CHOICE. "Being a net importer, Australia Post incurs a substantial loss on the processing of such mail.
“Australia Post is not privy to the basis on which parcel rates are determined by overseas retailers, postal administrations or other carriers. It is therefore unknown whether subsidies are involved or whether there is a longer term strategy by these players to provide parcel services at a loss in order to grow market share.”
According to the spokesperson, UK’s Royal Mail and the US Postal Service are both incurring significant losses, and as a result are facing cuts to their services and/or privatisation.