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Amazon to (mostly) stop international shipping to Australia: Retailers to benefit

Aussie retailers could be about to get a boost after Amazon announced that Australian consumers will miss out on international products, Amazon.com will no longer ship to Australian addresses after 1 July 2018.

The main reason for this is the new GST laws that are going to implemented where GST will be implemented on items bought overseas from places like Amazon’s sites. At the moment GST is only applicable on items over $1,000.

Citigroup has previously calculated that Aussies spend between $500 million to $700 million a year on the various Amazon sites.

I personally agree with local retailers on this issue. It would be unfair for local websites to need to charge GST and overseas websites didn’t – that would be a distinct disadvantage were it to continue.

Amazon will offer a certain selection of products through its ‘global store’, which will collect GST on products, but the range is a lot smaller and more expensive.

Some Aussie retailers have responded positively to this news. Kogan.com Ltd (ASX: KGN) is up 1.2%, Harvey Norman Holdings Limited (ASX: HVN) is up 1%, JB Hi-Fi Limited (ASX: JBH) is up 2.3% and Nick Scali Limited (ASX: NCK) is up 0.44%.

Foolish takeaway

Australians don’t yet do a lot of their shopping online, certainly compared to some countries like the UK. This Amazon announcement doesn’t make the retailers a buy, but it does level the playing field. Over the long-term, I’d still be very cautious considering the Amazon.com.au website is only going to become a more powerful competitor.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Kogan.com ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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