GST Won’t Curb The Rise Of Online Shopping, Says Nielsen

The introduction of GST on digital purchases from overseas retailers is set to hit the majority of Australians who are increasingly shopping online as a result of surging optimism for their financial future.

According to Nielsen, 60 per cent of online Australians shop online at least monthly, and over a quarter (26 per cent) shop online at least weekly. This number is a huge 20 per cent increase on monthly online shopping from 2014, and demonstrates a growing love of online retail and savviness in seeking out competitive prices online.

Leading categories for online shopping include fashion, DVDs/movies, books and beauty items; many of which are offered by overseas retailers. In fact, while the majority (93 per cent) of Australians purchased from local online retailers in the latter half of 2014, 40 per cent of online shoppers also purchased from U.S. online retailers.

Treasurer Joe Hockey has signalled that the “handful” of businesses engaged in the majority of digital technology transfers would be asked to impose the GST at the point of sale. While initial coverage will only include digital products such as music and movies, other goods will be included in the coming months.

The widespread online shopping trend echoes an increasingly confident Australian consumer. Nielsen’s Australian Consumer Confident Index is continuing to surge, reaching 95 in the first quarter of the year; up six points from 2014 and up two points from the previous quarter.

Some 45 per cent of online Australians believe it is a good or excellent time to buy the things they want or need, up four per cent on 2014. Likewise, close to six in ten (57 per cent) have a positive outlook on the state of their personal finances, up two pe rcent from quarter one, 2014.

Job prospects are also on the rise, with 38 per cent of Australians feeling positive about the next twelve months, up four per cent points on 2014 and two per cent from the previous quarter.

Head of Nielsen’s Retail Industry Group Kosta Conomos noted that the GST is unlikely to spook consumers: “The changes to the GST will affect most Australian consumers, however we don’t predict this will greatly affect their decision to buy from these retailers. The Australian consumer is exhibiting a large appetite for online shopping for the convenience, extended choice and cost saving factors. This is predicted to continue to grow, particularly for a time-poor, hardworking community.

“Having said that, that 10 per cent difference could be the deciding factor between going with one retailer over another, and the psychological effect of knowing the tax exists for these retailers could see consumers buying locally more often. We are also seeing in this report that 62 per cent of Australia have changed their spending to save on household expenses, so despite optimism, there is still a movement towards being more frugal,” said Conomos.

“The Australian retail landscape is changing just as all markets are; we’re predicting that online retail for grocery and food will reach four per cent by 2020 for example. Retailers are looking at different ways to assist consumer’s penchant for online shopping of groceries with offerings like Click & Collect as well as wider networks for delivery services. We will continue to experience change as long as consumers have an appetite to adopt new ways to purchase products,” said Conomos.

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