Published on the 27/11/2018 | Written by Pat Pilcher

Backdown on Geo-block conveniently timed for Xmas?..

Australian online shoppers can finally purchase from Amazon’s international sites after the company reversed its decision to block Australian shoppers from buying goods from its offshore sites. The unpopular geo-blockade started when the Australian government introduced 10 percent tax on imported goods valued A$1,000 or less. The charge soon became known in Australia as the Netflix Tax.

The July announcement by the Australian government saw Amazon blocking the purchase of goods bought from their US/UK site to Australian addresses, restricting Australian shoppers to Amazon’s Australian online store.

The move attracted the ire of shoppers who alleged price gouging and criticised the smaller range on offer within the Australian Amazon store.

“Amazon has applied GST conveniently to Australian shoppers just before Xmas sales.”

While shoppers and the media were swift to condemn the move, Australian retailers who had long been bracing themselves ahead of Amazon’s Australian launch heaved a collective sigh of relief, albeit a small one given the potential threat of the Australian site itself.

Amazon had initially said that it was too difficult to collect any tax on sales to Australians from its global network of sites, but that changed last week when the behemoth confirmed that customer feedback had prompted them to reopen shipping from international stores to Australian addresses.

While shoppers may be rejoicing (and retailers sighing), there is a catch. Amazon also confirmed that their decision only applies to items that Amazon stocks. Merchandise from third-party sellers on Amazon’s marketplace (which accounts for anything up to half of the estimated 500 million products Amazon sells on its US site) will remain geo-blocked until Amazon can find a way of applying GST to marketplace goods.

The sudden reversal comes less than five months after the geo-blocking policy was introduced and underlines just how much the media-hyped launch of Amazon in the Australian market has faltered. At the time, the hugely popular website lifehacker.com.au was scathing, saying “The launch of Amazon Australia was supposed to be a game-changing event that redefined retail pricing for the whole nation. Instead, its arrival went down like a huge wet fart.”

The change in policy was announced by an Amazon spokesperson who said; “As a result of customer feedback, from 22 November Amazon customers will be able to ship eligible items from amazon.com to Australian delivery addresses.”

It also appears that Amazon took the sometimes-harsh feedback from disgruntled consumers to heart, stating that “Since that time, our teams have continued to focus their efforts on building the complex infrastructure needed to enable exports of low-value goods to Australia and remain compliant with GST laws.”

A more cynical view could be that the timing of Amazon’s focused efforts to develop a means of applying GST just before the Christmas holiday period is very convenient. It is also arguable that Amazon’s online retail competitor, eBay played a sizeable role in helping focus Amazon’s. eBay also argued that they’d block Australians from their platform if the Australian government went ahead with what they called ‘unworkable’ online GST changes. Not long afterwards, however, eBay did a u-turn, announcing that on July 1 they would be GST compliant.

Cynicism aside, Amazon will need to be extremely careful of how they implement GST. The methods used by eBay to apply GST on goods shipped to Australia technically breached Australian consumer laws attracting complaints from confused customers who found prices got shown as pre-GST in search results but that the shopping cart displayed a GST inclusive price.