Local retailers can be better value due to falling Aussie dollar

IT'S cheaper to buy everything overseas right? With the Aussie dollar headed for a three-year low, you'd be surprised at where the best bargains are.

The price difference for an Apple iPad purchased in Australia versus on eBay US is almost non-existent. Picture: Supplied

IT IS cheaper to buy things online from overseas right? Right? Maybe not. With the Australian dollar headed for a three-year low, you'd be surprised at where the best bargains are.

If you're addicted to online shopping, especially from overseas websites, the good times are at an end. For years Australian shoppers have been enjoying the upsides of shopping from international websites - low prices, brilliant variety - and those retailers have been all too happy to roll out the red carpet for cashed-up customers from a strong economy while the rest of the world was in recession.

But now with the Aussie dollar hitting a three-year low, the once-mighty savings on those shiny products aren't so ubiquitous.

Fluctuations in the Australian dollar hit online shoppers immediately. So if you're buying something from Amazon US the day the dollar is at its lowest, you'll end being slugged with that exchange rate instantaneously.

The price difference for an Apple iPad purchased in Australia versus on eBay US is almost non-existent. Picture: Supplied

Whereas the currency flow-on effect with imported products in bricks-and-mortars retailers can take up to a year to make a difference Westpac senior currency strategist Sean Callow said.

"A lot of those rates will flow through immediately for those of us who like to shop online," he said. "It's noticeable in online shopping with its instant impact. Whereas if you went to a store, it can be a very long chain from the exchange rate to the customers".

And weaknesses in the Australian dollar aren't always passed onto consumers by traditional stores, especially in a tough retail environment. Rather, businesses will squeeze their profit margins so as to not alienate customers, he added.

And taking into account additional charges such as bank foreign transaction fees and higher shipping costs, the less stellar exchange rates (the dollar has dipped almost 24c from about a year and a half ago), sometimes, it's not actually cheaper to buy overseas anyway.

For example, Converse Chuck Taylor sneakers in white can be purchased locally for $67.50 on StyleTread while the same item will set you back $75.09 from eBay US, according to analysis by price comparison website Finder.com.au. Or in another instance, the price differential is so insignificant ($0.57 for a 16GB iPad), it might not be worth the effort.

Converse Chuck Taylor sneakers can be purchased for cheaper locally than from international online retailers. Picture: News Limited.

However, Callow added there are currencies where the Australian dollar has remained largely steady in the past year, including the Japanese yen. So local consumers can still snap up a deal from Japanese-based retailers.

Australians' appetite for online shopping is not abating, having spent $14.6 billion in the 12 months to November 2013. That's the equivalent of 6.4% of traditional bricks-and-mortar retail spending in the year to October.

But what may surprise many, given the vociferous outcry from some local retailers about the GST threshold, is almost three quarters of that money is being spent with domestic websites, according to the most recent quarterly NAB Online Retails Sales Index. In fact, domestic online retail sales grew 0.3 per cent in the three months to October whereas international online retail sales fell 0.5 per cent.

Finder.com.au money expert Michelle Hutchison said: "Overseas retailers are popular because they have long been ahead of the game with technology and price. But Australian retailers are catching up.

"There are a range of factors that can impact the cost of purchasing goods from overseas. For instance, you will need to convert the currency to Australian dollars which can incur foreign currency conversion fees averaging three per cent on your credit card, also tax and shipping costs.

"So it's important to compare these factors and see where you can save money as they can make significant difference to your purchase."

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