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Global online retail giant, Amazon has announced plans to establish its first distribution centre in Australia. The new warehouse, based in Melbourne, will allow NZ consumers a much closer, convenient point of delivery when ordering products from Amazon.
Amazon, along with other large scale companies which produce their product in bulk are able to export their goods to New Zealand tax free, with no GST required for product priced below $400.
This puts a lot of pressure on local retailer and manufacturers who feel they need to offer a competitive price.
According to a study by the Nielson group, 52% of participants said that they try and buy NZ made as much as possible with 59% indicating that they choose local brands because they want to support local industry.
So as a nation, we want to support NZ Business, but why is it being made so difficult on a regulatory level for these business to compete?
Seasoned vendor Eric Faesenkloet of Golf Warehouse affirms that the current arrangement must be made fairer so that NZ owned and operated business can be allowed to compete.
"It's not by chance that a number of clothing retailers in NZ are folding - it's [not] that they're doing anything wrong in a retail sense, it's loop holes the Government has allowed ... in the tax system," he said.
Even if NZ retailers are able to find a way to compete with the pricing offered by these bulk retailers, they will still have to charge 15% more due to the GST loophole.
"The tax department at some point has to make a call on it because New Zealand retail, particularly businesses that sell products below $400, are going to be seriously affected."
Kelvin Davis, co-founder of NZ outdoor heating manufacturer and retailer feels that a lot of the product ingenuity found in NZ could be at risk of being undermined under the current arrangement.
“There are a lot of clever people in NZ, engineering and producing a range of amazing products. Although many of these stand out in terms of quality and workmanship, it can be difficult to compete with overseas retailers who have big marketing budgets and can offer lower price points”.
Davis highlights some of the added benefits of buying locally, outlining how they have been able to establish their point of difference from heaters manufactured overseas.
“As a NZ manufacturer, we have a better idea of want consumers need from our product. For example we know that the materials and workmanship of many overseas manufactured do not stand up to NZ’s coastal conditions and heavily salt-laden air. Because of this we use marine grade 316 stainless steel – the only manufacturer to do so”.