Carolina Tillett may not fancy herself a revolutionary, but she’s spent the past six years leading a different sort of uprising by enabling Australians to buy all kinds of products from US merchants, at prices that are often half the price of those charged here.
Tillett’s company, Price USA (www.priceusa.com.au), is one of a new kind of shopping intermediary known as a ‘parcel forwarder’ or ‘overseas shopping assistant’. Basically, you decide what you want to buy, and Price USA buys it for you and ships it to your Australian address. Tillet’s company has grown massively since she started it in 2007 — as “something I could do part time, in between kids and other stuff”, she recalls. She now has eight agents in the US working full-time to keep up with the demand from her Australian customers.
Those agents take instructions from the Australian customers, order products online from US merchants, then have the products delivered to their homes for repacking and ultimate delivery to Australia. Products from multiple merchants can be bundled into one box to save on delivery.
The most popular products over the Christmas season, Tillett says, included Amazon’s Kindle Paperwhite (US$119 in the US versus $215 plus here), and “all kinds of shoes” — especially sizes and styles for women with larger feet. Runners, fashion items, makeup and even ski boots have all flowed through the company’s agents, as have Apple iTunes cards, gadgets, Google Nexus 10 tablets and even chocolate and messenger bags.
Add on a small handling fee and delivery costs, and Australian shoppers can finish the transaction hundreds or thousands of dollars ahead — even on the rare occasions where the Australian Customs Service mandates the payment of a 10% GST on shipments worth more than $1,000. Still ahead.
Historically, low levels of online shopping allowed Customs to be relatively lenient on this limit, but increasing use of services like Price USA — and a growing number of overseas merchants happy to ship directly to Australia — have started enticing Aussies away from local malls.
“When stores like Zara opened in Melbourne, it was a big deal,” says Tillett. “But when you buy items from Zara in Australia, it’s almost twice the price as in the US. A lot of customers do their window shopping here and buy in the US.”
Carolina Tillet is flat out meeting local orders.
Price isn’t the only reason customers are looking overseas — the ability to redirect to a US-based address lets Aussies access US-only products such as made-to-order Converse sneakers (www.converse.com/create), personalised M&Ms (www.mymms.com), or the online and the US-only Prescriptives makeup (www.prescriptives.com).
Throw in the benefits of access to brands that aren’t available here at all, and styles that will never be landed in Australia through other channels, and you’ve got an irresistible combination for any Australian shopaholic.
“We’ve had a 500% increase in volumes in the past six months,” says Sarah Madigan, previously a Brisbane-based banker, who now lives in Colorado and runs US to Oz (www.ustooz.com) from her home. “The word is definitely getting out.”
Sarah Madigan runs ustooz.com from her home
Why shopping overseas direct is not easy
Fashion label Tommy Hilfiger will let you view its current catalogue but if you’re not in the US — or 15 other European countries — you can’t shop from its site.
Benetton does the same. US department store giant Neiman Marcus, seminal online shopping destination Amazon, and many other US retailers have — at the instruction of particular brands they carry, such as Chloé and Christian Louboutin — earmarked many product lines as being unavailable for shipment overseas.
Many brands are gradually extending an olive branch to Australian customers, with Gap and homewares retailer Pottery Barn recently introducing shipping to Australia, New Zealand and other countries through fulfilment provider FiftyOne — which uses geo-blocking to vary retail prices charged to customers.
However, be sure you read the fine print: Gap’s site for one warns that “not all products sold by Gap Inc. can be shipped internationally” and that “retail and online prices may vary”.
Indeed, fluid retail prices and shipping costs pose an ongoing threat to Australian online shoppers. “The sites that don’t vary prices really charge excessive shipping fees,” Madigan warns, noting that many freight forwarders are happy to repackage large shipments to reduce the lineal size and cost of boxes coming to Australia.
How they block you
There are several ways that overseas merchants block Australian shoppers. One is geo-blocking, in which the merchant’s web server detects which country you’re in based on your IP address. If you’re not in the US, the server may automatically adjust the prices you see, or — as in the case of True Religion Jeans, direct you to an Australia-specific shipping page.
Geo-blocking is usually done to protect territorial rights, although it has raised eyebrows from Australian consumer groups thanks to geo-blocking by the likes of Apple’s iTunes store (see our guide on how to set up a US iTunes account) and online game retailer Steam, where many games cost four times as much for Australian customers as they do for US-based customers.
Many sites simply won’t let you proceed if you’re coming from Australia. Others will simply adjust their prices on the fly so you don’t even know you’re being geo-blocked; these can be hard to pick, since the prices will be displayed in Australian dollars and you won’t know the original price.
However, you can visit the site using a Virtual Private Network (VPN) client like TunnelBear which can be used to mask the geographical location of your computer. In this case, you can trick the server into thinking you’re shopping from the US or UK, and things may look a lot different.
UK-based online bookseller Book Depository (www.bookdepository.co.uk), whose free-shipping offer has made it the go-to destination for many Aussie book buyers, has recently been targeted by bargain hunters who point out that it’s possible to use a VPN service to get even bigger discounts than those already on offer. This is because Book Depository geo-blocks customers and adds in a nominal shipping fee to the presented price for its products; if it thinks you’re from the UK, the presented price is lower.
Note that using a VPN won’t always work, because there are other ways that overseas retailers can restrict the sale of goods to Australians. One way, which has become increasingly popular with vendors selling non-physical merchandise like gift voucher codes and recharge cards, is to look at the credit card number being used for the purchase.
Each card issuer has its own numbering system — for example, American Express uses the third and fourth digits to represent the card’s currency — and merchant banks can parse the card number to establish which bank is being used to complete the transaction. If they determine that you’re trying to buy products using an Australian card, they simply won’t play.
This type of block is harder to get around — virtual credit cards are one emerging albeit alternative — but the most effective, trouble-free way to buy from overseas is to use an overseas-based shopping or parcel forwarding service. Those merchants are buying with US-based cards and will experience none of the frustrations that card-blocking can cause.
The final road block to buying from an overseas merchant is, of course, the shipping address. No matter what prices you see or which card you use, ultimately you need a way to get your products — and if you specify a shipping address in Australia, the merchant isn’t going to have to do much to block the shipment. They may do this explicitly (by refusing to ship to your Australian address) or implicitly (by charging a shipping fee so high that it’s not worth the time and bother to buy overseas).
Beat them with virtual credit cards
Geographically-based blocking of your Australian credit card can be a real pain. Recognising the growing demand to be able to buy online around the world, a host of ‘virtual credit card’ (VCC) operators are offering prepaid cards that are not attached to actual bank accounts.
Instead, you simply recharge the cards with any amount you like, and can use the number on the card to shop to your heart’s content. In addition, many VCCs don’t require an actual piece of plastic, but can email or SMS you the details for your card; the US-based globalVCard (www.globalvcard.com) is a good example of this — it’s a smartphone app that instantly generates one-off MasterCard numbers for online shopping use.
The possibilities of this model are obvious and significant: get a US-based VCC, and your geo-blocking troubles are — theoretically — over. However, it’s an inexact science as most VCC providers are banks and only provide the cards to existing customers. Australian providers like VirtualVCard (www.virtualvcard.com.au) sell through 7-Eleven and BP stores, but have the same geographical issues as conventional cards.
Third-party firms like US-based EntroPay (www.entropay.com) work outside the bank system and allow a US-based address to be attached to the card, which can trick some US-based shopping sites. Others may require a US-based credit card number as verification, or require a US PayPal account (PayPal is a stickler about geographical location).
Choosing the right VCC provider requires looking around. In the end, it may be helpful to have an overseas friend or relative, or a shop-and-forward company that you trust, source a US VCC for you and send it your way.
The prepaid-only nature of the card means you can keep only as much on the card as you want to spend.
The globalVCard lets you generate VCC numbers, control where it can be used and for how many transactions, but you need a US MasterCard.
Rise of overseas shopping assistants
Such is the demand for overseas-based shopping that some businesses offer Australian customers a curated selection of products chosen from inventories of US retailers. One is Australian venture Online Shopping USA (www.onlineshoppingusa.com.au), which has made its own version of AmazonGlobal by offering Australian customers a selection of products chosen by the company’s staff from US retailers.
“We are constantly scanning those sites for the best deals that we can showcase to Australian shoppers,” director James Harris explains. “While a lot of people have been shopping online in the US, we thought there was an opportunity to bring together the best of US online shopping, and aggregate that all in one site.
“Customers have the guarantee that those retailers are genuine retailers, that they have been vetted, and that they offer the full range of services [to Australian customers].”
Online Shopping USA’s agents can also buy products from US merchants, aggregate shipments, and ship products to customers in Australia. Business for the almost 2 year-old venture took off in line with the American Black Friday and Cyber Monday online sales, yet even Australia’s high-profile Click Frenzy event “provoked a lot of interest”, says Harris, who notes that the most popular products includes runners, designer labels and electronic goods such as digital cameras.
While authorities and retailers consider who will flinch first, consumers are continuing to scour the net for the bargains and styles they want — and are proving to be more than willing to let someone else do the actual purchasing for them.
As a result, many Australians now have the same kind of relationship with their overseas shopping assistant as they might have with a local vintner or hairstylist: trust is crucial, and a good agent can become a partner-in-crime of sorts, in helping source the overseas products they want.
“Australians can save an awful lot of money by having me buy them stuff over here,” says Claudia Sutton, an American who took over her brother’s overseas-buying site BoxVoyage.com in 2009 and says that now Australians comprise 95% of her clientele.
While many of her customers are foreigners ordering large quantities of goods such as watches, Australians tend to be personal shoppers ordering a bit of everything.
“We’re handling dozens of shipments per week,” she says. “Australia’s customs laws are relatively lenient compared to other countries. While business was originally very slow because the Australian dollar was quite a bit less than the US dollar, now they’re neck and neck.”
How to grab a bargain
You may already be excited about the lower prices you’re getting in the US, but you can do yourself some favours by searching the web for additional discount vouchers. Before you complete your purchase, drop by RetailMeNot.com or its ilk and see if they don’t have a discount for the shop you’re buying from. You may save 10% or more on your purchase, get free shipping to your US-based freight forwarder, or get additional promotional merchandise for free.
Guide to shopping online overseas via virtual tunnel:
A VPN is one of the tools you need to get around geo-blocked shopping, although it needs to be stressed that while you may be able to mask your identity and check the true prices of products (not ones adapted for visiting Australians) you will probably need to use the VPN in conjunction with a virtual credit card. A VPN establishes an encrypted connection to a remote server in the country you want to connect to and provides you with a temporary IP address, so the online store you are accessing in the US or the UK thinks you are living there. There are countless VPN services but one of the best and most affordable is TunnelBear. You download an app, set it up on your PC or Mac (even Android or iOS mobile device) and it creates an encrypted tunnel.
Go to www.tunnelbear.com and choose the download for your computer (Windows or Mac). There are three subscription options. Opt for ‘free’ to try it out but the free 500MB each month (and an additional 1GB free if you tweet about TunnelBear on Twitter!) isn’t going to last long. We recommend the ‘Giant TunnelBear’ option which costs US$4.99 a month for unlimited tunnelling.
Install the networking software that will establish the secure, encrypted tunnel between your computer and the server.
Once you have TunnelBear running, select the country you want to appear to be surfing from (either the US or UK). And that’s all there is to it. All programs accessing the net on your computer will now do so through the VPN.To check that TunnelBear is working, set the dial to ‘UK’ and go to the BBC Player catch-up service (www.bbc.co.uk/iplayer) which is blocked to Australians. If it works, TunnelBear is working.
New ways of cutting delivery costs
While some US vendors are clamping down on overseas forwarders — with many too-frequent mail forwarders blacklisted and a variety of techniques used to test whether shoppers are in fact coming from outside the US — other merchants are looking at new ways of cutting shipping costs to appeal to customers here and in other countries.
Amazon recently launched such a service — AmazonGlobal service, which automatically accounts for customs duties and allows customers to bundle multiple orders into a single shipment. It was originally only available in India but has since expanded to Australia, New Zealand and dozens of other countries.
There are limitations — AmazonGlobal is currently only applicable to a limited range of products and its duty calculations mean your prices may be increased. Furthermore, the service represents an explicit move to regain control of goods delivery through freight forwarders. In fact, Amazon has specifically excluded any liability for goods shipped through services like Price USA and, according to its terms and conditions, “is not able to provide a replacement of, or refund for, any goods delivered to a freight forwarder” unless they’re part of the AmazonGlobal range. In other words, AmazonGlobal represents both a carrot — convenience — and a stick, in that it signifies Amazon’s efforts to dictate the terms by which its products ship around the world.
Expect other online vendors to follow suit as overseas shipping becomes an even bigger issue for rights-concerned US brands. (Note that AmazonGlobal is not mandatory, and most of its products can still either be shipped directly overseas or to US-based freight forwarders).
Tips to improve your overseas shopping
Don’t get carried away just because you find a good price; retail competition in the US is intense and you may well find a better deal from another shop using price comparison sites like PriceGrabber.com. Most freight forwarders will hold onto purchases from multiple stores, then repackage them into one shipment for you.
It’s easy to get excited about the price difference between US and Australian stores for what appears to be the same product, but be sure you’re comparing apples with apples. Particularly with computers, Australian retailers often choose well-spec’d machines to justify their higher prices, while US stores offer low-spec’d versions of a model to get shoppers over the line. Make sure you’re buying what you want, and not just because the price is low.
Choose your partner carefully
Like finding a good hairstylist, finding a good overseas freight forwarder can make all the difference. The thing is, you don’t know if they’re good without trying them. If you’re considering a new service, try them with a low-value purchase first and pay careful attention to how responsive they are, how much they charge, what hidden fees they charge (for example, for combining shipments), how ready they are to help you with returning products, and whether they’re proactive in areas such as finding better prices or volunteering to cut down packaging to save shipping costs.
Consider return policies
Australia’s consumer protection laws end at Australian borders. Most products you buy from overseas will be fine, but every once in a while you may need to return something that’s damaged during delivery, or just not right. Be sure you read your US merchant’s return policies — many only offer free returns from within the US, which means you’d have to return the product to your freight forwarder or pay shipping costs back to the merchant.
Weigh your warranty
Many electronics products are designed for worldwide use and carry relatively generous warranty provisions, but some only offer warranties to US residents. Unless you’re happy to wear that risk, make sure you have at least weighed up the likely cost of repairs to an overseas-purchased product against the cost of a local buy and supporting warranty.
Read the T&Cs
US merchants are aware of the use of freight forwarders, particularly by Australians — who are becoming known for their love of a bargain. Most have no issue with where their products end up, but some will limit their exposure to returns and damaged goods. Amazon, for example, will not offer refunds or replacements for damage on any product delivered to a freight forwarder — unless that product is part of its limited AmazonGlobal range.