Trade Me global deal skips GST

TOM PULLAR-STRECKER
Last updated 05:00 14/04/2012

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A new front has opened up in the war between online and traditional retailers: Trade Me has struck a deal with a United States online middleman that will help foreign brands sell goods to Kiwi consumers through Trade Me free of GST.

Trade Me yesterday announced a partnership with United States e-commerce company ChannelAdvisor, which last year helped 3000 brands, including Dell, Crocs, Speedo and Victoria's Secret, sell $3.6billion worth of goods online. ChannelAdvisor, whose investors include US online auction giant eBay, said it planned to help retailers from Australia and further afield sell goods to the 660,000 Kiwis who log on to Trade Me each day, in time for the Christmas holiday shopping season.

Trade Me chief executive Jon Macdonald said it had more deals in the pipeline with smaller New Zealand intermediaries and was keen to strike additional partnerships with other international players.

ChannelAdvisor would not speculate on whether prices would be cheaper than in the shops, but Asia Pacific managing director Mark Gray said he hoped it would mean more variety for consumers.

Retailers Association chief executive John Albertson was concerned the deal might mean more goods would be bought direct from overseas without incurring GST or duty, which he said was unfair to New Zealand retailers.

The association estimated a "loophole" under which people can import goods up to a threshold of between $240 and $400 without paying GST or duty was costing government coffers $100million in foregone taxes. It is lobbying for the threshold to be removed.

"We are having discussions with a number of government agencies and politicians. It is a question of fairness and equity," Albertson said. "Why should the government subsidise overseas retailers? This is not just a New Zealand issue. This is becoming a global issue in countries where there is a significant tax-free threshold."

Macdonald said he believed the issue was a bit of a red herring. "In my view there is a big opportunity for New Zealand retailers to look to sell overseas, especially into Australia, and take advantage of Australia's considerably higher $1000 [tax-free] threshold."

Neither Macdonald nor Gray would comment on whether ChannelAdvisor had managed to negotiate a discount to Trade Me's standard success fees.

"That is commercially sensitive and confidential between us and ChannelAdvisor," Macdonald said.

In February he said he believed Trade Me could encourage big-name retailers to sell new goods through its online platform while still remaining fair to its army of second-hand traders. He said then that Trade Me was open to discussing discounted fees with large mass-market retailers but believed it could offer them a strong proposition "without compromising on our roots".

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New goods already account for a little over 40 per cent of general items sold through Trade Me.

Trade Me shares closed up 1.17 per cent to $3.47.

- BusinessDay

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