Amazon hands goodwill to eBay with move to shut Australians out of overseas sites

SYDNEY: Australian home entertainment installer Paul Boon has relied for years on Amazon.com Inc´s U.S. website for cheap wall racks and other parts to keep his costs down.

But Amazon´s recent move to stop Australians from shopping on its foreign websites, due to a new law that requires it to collect taxes, is turning away once-loyal customers like Boon. He´s considering a switch to eBay Inc, adding that prices for wall mounts were 40 percent higher on Amazon´s Australia site if they appeared there at all.

"I´ll be going somewhere else to get that regular stuff," said Boon by telephone from the northern city of Brisbane, where he runs his business. Amazon´s launch of an Australian site in December, followed by last month´s introduction of its Prime service for faster delivery, has been heralded as a game changer for the country´s retail industry. But it has gotten off to a choppy start.

For customers like Boon, the retail giant has lost years of goodwill by forcing shoppers onto a local site with a product range roughly one ninth of the U.S. site and which sells some goods at higher prices. It has also given online marketplace eBay, Amazon´s bigger and more established rival in Australia, the opportunity to swoop in and capture that goodwill, building its first automatic tax collection and payment system and wooing local customers with discounts.

Australia is the first market where Amazon, the world´s second-most valuable company worth $890 billion, has responded to a sales tax on internet purchases by shutting out customers based on where they live. An Amazon spokesman said in an email the company would continue to build its range of goods and services through its Australian site, and that it was "thrilled with the reception it has received from Australian customers" since introducing Amazon Prime.

The Australian government extended its 10 percent goods and services tax (GST) to all goods bought online from overseas, effective July 1, requiring online retailers to collect the tax. It was previously applicable only to overseas purchases over A$1,000 ($745). Amazon also gave Australians just one month´s notice that they would be shut out of its global network - sales are cut off when an Australian delivery address is entered - even though the government´s plans were announced a year ago.