GST on all mail order items

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Re: GST on all mail order items

Postby photohiker » Tue 25 Aug, 2015 6:54 pm

Not if the business operates their foreign exchange risk correctly. Making major errors is not something you would want to be involved with if you are an importer. I guess it's true that plenty go under due to not managing their forex risk correctly.

The business effectively has the cash in their hand (even if it's on credit). Playing a currency 'game' is not something an importer should involve themselves with. They know the foreign buy price, they know the exchange rate, they know the freight, insurance, handling, customs clearance and tariff costs. At that point, they can calculate landed costs and margins to wholesale/retail, and then they can make their decision. Maybe they have to increase the prices, or maybe they have to take a bit of reduced GP, or maybe they can wait for improved exchange rates. Watching rates well before your reorder point is important.

I've been in that merry go round in a former life. Sometimes, when the exchange rate went crazy, we only placed absolute minimum orders if we really needed stock and waited for the rates to settle. We always made sure we were covered for forex at the point of placing the order regardless. We did a lot of importing (container loads) and we never copped a forex loss on our purchases. Sometimes the rate improved against the rate we locked in at, but not worth crying over spilt milk. Our response depending on the product might have been to double up the order at the better rate and average out the landed price between the two orders.
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Re: GST on all mail order items

Postby GPSGuided » Tue 25 Aug, 2015 9:24 pm

There's already quite a bit of assumptions and bets there above. How does one known when the Fx is going to plateau than another dive or up move? In all these, someone will need to take the risk somewhere, or one pays for the safety. It's all easy when the chop is limited but progressively harder with increasing volatility into the 40% range as what we have seen in recent years. Out on the Fx market, there's no risk free trades.
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Re: GST on all mail order items

Postby photohiker » Tue 25 Aug, 2015 10:34 pm

So you are an importer dealing on the forex market on a regular basis GPSGuided?

I am talking from long term experience. You can lock in the rate for your imports at the time of placing your overseas orders. This is not an assumption or a bet, it is a fact.

You have your order quotation details in hand and you are ready to confirm your order. You lock in your exchange rate by one of several means and you confirm your order.
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Re: GST on all mail order items

Postby icefest » Tue 25 Aug, 2015 11:16 pm

The issue you're missing photohiker is that store owners keep hold of their stock for more than a month or two.

Usually, if you're selling on quickly you can hedge and it works as you described. Bushwalking stores cannot do so easily.

This means they have to decide when to import and may end up importing at a time that makes them uncompetitive.
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Re: GST on all mail order items

Postby photohiker » Tue 25 Aug, 2015 11:39 pm

Lol.

The issue you're missing icefest is that store owners buy from head office or suppliers/distributors. Bushwalking stores do not stock their shops by individual orders on multiple overseas suppliers.

Importers do face the same issues, but their stock is larger and they have the opportunity to absorb some currency movements to maintain relatively stable pricing. Sure, sometimes they have to burn margin to remain competitive due to order timing. Sometimes the equivalent Thermarest for example might be cheaper than the competition because of order timing, and sometimes the scales fall the other way.
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Re: GST on all mail order items

Postby simonm » Wed 26 Aug, 2015 5:56 am

photohiker wrote:Lol.
Bushwalking stores do not stock their shops by individual orders on multiple overseas suppliers.


I do but I am a little different :P. For the most part I deal direct with the manufacturer.
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Re: GST on all mail order items

Postby photohiker » Wed 26 Aug, 2015 8:06 am

Sure, you're a cottage cottage style store. That's a different setup to the average bushwalking store. You're not dealing with local wholesaler/distributor/importers for most of your product.

When you re-order, and the AUD has fallen significantly, that has a direct impact and you have to adjust your retail pricing to maintain your gross margin.
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Re: GST on all mail order items

Postby simonm » Wed 26 Aug, 2015 8:25 am

Yep it's a fairly simple equation for me, mostly.
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Re: GST on all mail order items

Postby icefest » Wed 26 Aug, 2015 9:26 am

If the wholesaler has enough of a margin to absorb 30% currency fluctuations, then they have a markup of at least 30%. When you add retail markup it's no wonder that many things are cheaper overseas.

No amount of hedging will limit customers going overseas for cheaper products, due to that time difference. Not even 10% gst will change that.

The only time that Australian retailers win is when the aud is dropping quickly.
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Re: GST on all mail order items

Postby GPSGuided » Wed 26 Aug, 2015 9:31 am

Whilst I don't do those traditional import-export business, I have been involved in the export field (IP specifically) and is familiar with the FX financial sector. Apart from your work sector, I have seen numerous import-export businesses go down here in Australia in the last few years due significantly to our fluctuating Fx rates. Some get hit on the way up while others get hit on the way down. As Icefest pointed out, not all import-export business have the same model as what you have outlined. With Fx changes, the whole market change, from Fx risk to market demand (domestic as well as foreign). As such, these dramatically fluctuating Fx rates do kill otherwise perfectly sound business models. That's just a reality and you just can't mitigate all the risks of big up and downs in simple dollars and cents. Hedge can handle the Fx risks of individual contracts but not the market and business.
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Re: GST on all mail order items

Postby photohiker » Wed 26 Aug, 2015 2:02 pm

icefest wrote:If the wholesaler has enough of a margin to absorb 30% currency fluctuations, then they have a markup of at least 30%. When you add retail markup it's no wonder that many things are cheaper overseas.

No amount of hedging will limit customers going overseas for cheaper products, due to that time difference. Not even 10% gst will change that.

The only time that Australian retailers win is when the aud is dropping quickly.


I think a wholesaler with good margins (not common btw) might absorb a 5-10% fluctuation. Unless the product is in a very price concious field with many competitors, a 30% exchange hike is going to hit the retail price.

I agree that there are costs for being an importer as well as distributor and retailer. They also need to make a profit. Buying overseas will almost always deliver a cheaper price (plus freight) than a traditional local business. I support local businesses whenever I can, but I won't pay double for the same item.

I have no doubt that import businesses go down on a regular basis partly due to forex risks taken. I've never understood why people take those risks in a product importing environment. Recently, I ordered some building materials (windows) from an importer. The importer gave me the option of locking in the exchange rate and I took up that opportunity for very little cost (6 weeks interest, basically) but after the goods were delivered, the importer admitted to me that they had not transferred the funds overseas at the time and they basically had made a loss on my order because of currency movement.

We're talking import of bushwalking gear here, not export of IP or import/export businesses. For a business importing product for retail sale, they need to be aware of the currency conditions at the time of purchase and make sure they cover themselves. Doing anything else is just nuts.

Perhaps we should get back to GST?
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Re: GST on all mail order items

Postby icefest » Thu 27 Aug, 2015 12:46 am

My point was that GST has a smaller effect on overseas prices than forex rates, as bushwalking stores always lag behind it.

I did see that you agreed with the final result though. " Buying overseas will almost always deliver a cheaper price (plus freight) than a traditional local business."
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Re: GST on all mail order items

Postby photohiker » Thu 27 Aug, 2015 12:54 am

Excellent, we have agreement! :)
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Re: GST on all mail order items

Postby vicrev » Thu 27 Aug, 2015 7:55 pm

What happened to the idea "Buy your kids a job,buy Australian" ?....In reality,if we see something cheaper from overseas,even though it might be 5c we go for the cheaper product...that is why we are producing less & less..we are all shooting ourselves in the foot ....we dont even produce enough food to support ourselves,have a look at the supermarket shelves & see where its place of origin is....
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GST on all mail order items

Postby GPSGuided » Thu 27 Aug, 2015 8:32 pm

It's called international trade. We make our money and jobs where our strengths are while buy those that are of value elsewhere. It all washes out than to continue to support the rot.
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Re: GST on all mail order items

Postby LachlanB » Thu 27 Aug, 2015 8:42 pm

vicrev wrote:We dont even produce enough food to support ourselves...

I think Australia still exports more food than it imports, although we are on a trend towards greater imports that exports. Although, you'd probably get sick of a diet of beef, mutton and wheat alone... But I think Dick Smith's attempt to have a brand that only sources it's products in Australia was really good, plus they made such nice Peanut Butter. Shame Woolies stopped stocking it. /:
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Re: GST on all mail order items

Postby vicrev » Thu 27 Aug, 2015 9:10 pm

LachlanB wrote:
vicrev wrote:We dont even produce enough food to support ourselves...

I think Australia still exports more food than it imports, although we are on a trend towards greater imports that exports. Although, you'd probably get sick of a diet of beef, mutton and wheat alone... But I think Dick Smith's attempt to have a brand that only sources it's products in Australia was really good, plus they made such nice Peanut Butter. Shame Woolies stopped stocking it. /:
Sorry,Dick Smith is a two faced hypocrite as far as I am concerned,he made his money importing cheap asian trash,now he is spouting Buy Australian.. :roll: .....A diet of beef,mutton ?..we now live export it & killed Oz jobs in the food processing industry, thanks to our gutless politicians who have not got the balls to stand up to the multi-nationals......
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Re: GST on all mail order items

Postby vicrev » Thu 27 Aug, 2015 9:19 pm

GPSGuided wrote:It's called international trade. We make our money and jobs where our strengths are while buy those that are of value elsewhere. It all washes out than to continue to support the rot.
Mmm this so called international trade is loaded one way,certainly not the Oz way......wonder what would happen if GST was only on imported goods , not on Oz grown/produced items...nope that would be too hard,got to think of the multis & their profits......
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Re: GST on all mail order items

Postby highercountry » Thu 27 Aug, 2015 9:36 pm

vicrev wrote:we dont even produce enough food to support ourselves


Not quite right.
About 60% of our total food production goes to export.
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Re: GST on all mail order items

Postby icefest » Thu 27 Aug, 2015 9:37 pm

vicrev wrote: Mmm this so called international trade is loaded one way,certainly not the Oz way......wonder what would happen if GST was only on imported goods , not on Oz grown/produced items...nope that would be too hard,got to think of the multis & their profits......

You cannot be serious. Do you honestly think the GST is a conspiracy of the mutinational companies to decrease Australian grown products?


vicrev wrote: Sorry,Dick Smith is a two faced hypocrite as far as I am concerned,he made his money importing cheap asian trash,now he is spouting Buy Australian.. :roll: .....A diet of beef,mutton ?..we now live export it & killed Oz jobs in the food processing industry, thanks to our gutless politicians who have not got the balls to stand up to the multi-nationals......


Do you actually know why Australian manufacturing and food processing died out? It's a large part the high cost of labor and remote locations. If by cheap asian trash you mean high tech mincroelectronics and installation of car stereos then yes. But you have to remember that Dick Smith sold Dick Smith Electronics in 1980-82 (well before the "cheap trash".
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Re: GST on all mail order items

Postby photohiker » Thu 27 Aug, 2015 9:40 pm

vicrev wrote:
GPSGuided wrote:It's called international trade. We make our money and jobs where our strengths are while buy those that are of value elsewhere. It all washes out than to continue to support the rot.
Mmm this so called international trade is loaded one way,certainly not the Oz way......wonder what would happen if GST was only on imported goods , not on Oz grown/produced items...nope that would be too hard,got to think of the multis & their profits......


We did that, it is called duty and tariffs. Most of them have gone now.

Car tariffs dropped from around 60% in the '80's down to about 5% now. Protecting the local industry by pricing up it's overseas competitors just made the local industry lazy. Ultimately that industry could not survive without government support, and eventually the government backed off and the industry is in it's final death throws now.
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Re: GST on all mail order items

Postby vicrev » Thu 27 Aug, 2015 10:07 pm

Sounds like the Multi-Nationals are the good guys :roll: ...no imported trash before 1982? are you serious ?.......We export more food than we import ?...If all the imported food was taken off the shelves,all that would be left would be packets of peas & tins of pineapple..next time you are in a supermarket have a LOOK at the labels where it is from,also,chances are the property you are standing in while looking at the produce is owned by the good guy Multi-national......
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Re: GST on all mail order items

Postby GPSGuided » Thu 27 Aug, 2015 10:08 pm

'Buy Australian' makes sense if that's a national objective and is one that's worth supporting. At this point in time, the govt is certainly not interested in artificially supporting sections of the industry. Fact is, our industries need reform to compete on the world stage and successive govts have largely permitted transition in that direction. Natural selection of the business world will do its work.
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Re: GST on all mail order items

Postby GPSGuided » Thu 27 Aug, 2015 10:10 pm

vicrev wrote:Sounds like the Multi-Nationals are the good guys :roll:

Multi-nationals are there and won't go away any time soon, just like you and me. The key for the nation is to manage them for win-win than being managed one way by those business interests.
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Re: GST on all mail order items

Postby vicrev » Thu 27 Aug, 2015 10:33 pm

GPSGuided wrote:
vicrev wrote:Sounds like the Multi-Nationals are the good guys :roll:

Multi-nationals are there and won't go away any time soon, just like you and me. The key for the nation is to manage them for win-win than being managed one way by those business interests.
I do not think our present Gov is capable of managing a %$@# up in a brewery ........Nor the ones before them......
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Re: GST on all mail order items

Postby LachlanB » Thu 27 Aug, 2015 11:06 pm

GPSGuided wrote:At this point in time, the govt is certainly not interested in artificially supporting sections of the industry

Yeah, but I'll be interesting to see if it applies these policies to Bluescope Steel, now that Bluescope is thinking of shutting down the Port Kembla Steelworks.

vicrev wrote: We export more food than we import ?...If all the imported food was taken off the shelves,all that would be left would be packets of peas & tins of pineapple..next time you are in a supermarket have a LOOK at the labels where it is from

I'm serious, Australia (currently) exports way more food than we import. Admittedly, some comes back packaged and processed, but we export vast quantities of produce. That's why lobsters are (and most other seafood is) so expensive in Australia; we export most of it (and usually the better quality too) overseas, with the consequently small local supply driving prices up. Just to pick an example...
The table (5.1) here: http://www.agriculture.gov.au/SiteColle ... 010-11.pdf, on page 91 gives you a good idea of the sheer range of Australia's food exports, with even more details of range of each category spread across the following pages.
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Re: GST on all mail order items

Postby icefest » Thu 27 Aug, 2015 11:49 pm

vicrev wrote:Sounds like the Multi-Nationals are the good guys :roll: ...no imported trash before 1982? are you serious ?.......We export more food than we import ?...If all the imported food was taken off the shelves,all that would be left would be packets of peas & tins of pineapple..next time you are in a supermarket have a LOOK at the labels where it is from,also,chances are the property you are standing in while looking at the produce is owned by the good guy Multi-national......


I don't think there is a conspiracy. Lobbying yes. Conspiracy no. I'll leave that to these guys: http://www.frontiersin.org/Journal/Down ... onal%20PDF.

Yep, we export more than we import.
Image

Interesting that you say that only packets of peas & tins of pineapple would be left, after earlier saying that the Australian food processing industry has been killed.

Then have a look at your meat and grains and tell me how much is Australian grown.
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Re: GST on all mail order items

Postby vicrev » Fri 28 Aug, 2015 9:51 am

So,a few tins of pineapple & packets of peas make for a thriving food manufacturing industry ?..I think you are missing the point.....If we did not send our sheep,cattle into the holds of ships,we would have much more viable food industry,ask any meat worker who was made redundant,especially in the country.........Also, if,the big if,we didnt sénd our minerals down a conveyor into a ships hold ,we would have a viable metal manufacturing industry ...we are all not lazy& unemployable as sometimes stated by our so called Industry leaders & their lackeys, the Liberal gov.......As for the statement do I really think it is a conspiracy by multi nats as far as GST,it would not surprise me in the least,Governments do not make policy,they lack the brains to,Canberra is no different to any capitalist country,the sub ruling class called lobbyists & public servants make policy,politicians put it through parliament..simple as that
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Re: GST on all mail order items

Postby South_Aussie_Hiker » Fri 28 Aug, 2015 10:42 am

Sorry,Dick Smith is a two faced hypocrite as far as I am concerned,he made his money importing cheap asian trash,now he is spouting Buy Australian.. :roll:


I hope Vicrev, that you can recognise that statement deserves an apology.

As someone else said, Dick Smith hasn't owned DSE for some 33 years - Woolworths owns it.

Dick Smith is a HUGE supporter of Asutralian industry and small business.

He is a companion of the Order of Australia.

He is committed to conservation. He stumped up $1m of his personal cash to the track refurbishment at Frenchman's Cap, not for any other reason than he was devestated to see the state of the damaged Loddon Plains after comparing the track to when he first walked it some 40-50 years ago. At the same time, he also convinced the TAS government to chip in another $500k.

Credit where credit is due, and apologies where apologies are due.
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Re: GST on all mail order items

Postby vicrev » Fri 28 Aug, 2015 11:05 am

Like Caesars wife,beyond reproach..it seems....
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