KUALA LUMPUR, March 23 — Danny is a fashion enthusiast with a passion for “slow-wear” brands, a clothing philosophy built on the old school ethos that the shirts or pants you wear should last a lifetime.
Because most of these brands are not available here, Danny, a millennial who just wanted to go by his first name, said he has to order them from countries like the United Kingdom or Japan.
Not a problem since most online shops today provide super-fast delivery, thanks to courier services like DHL, Fedex or USPS.
“You can get your items in just three days,” Danny told Malay Mail.
“But you pay good money for the service, of course, and it can come up to RM140 per shipment depending on the courier or shops.”
A RM100 shipping bill is not something most Malaysians can afford to be casual about. But for avid online shoppers like Danny, it’s typically a no-fuss.
In fact, most people Malay Mail spoke to said they penny-pinch just so they can foot the bill, and get those items jetted in time for Saturday.
For Germany’s courier giant DHL, online shopping demand for parcel deliveries helped boost third quarter earnings up by 4.7 per cent to 14.8 billion euros (RM68.4 billion). The group said it expects revenue to grow further until 2020.
But in Malaysia at least, some online shoppers have started to ditch DHL following claims that the courier charges “excessive” fees to process Customs duties or tax papers for items imported through its services.
Over a dozen people that Malay Mail spoke to said they felt the RM50 minimum charge to process the Customs forms was too expensive. On top of the standard charges for its courier service, the total bill could go up to nearly RM200.
“If I buy a pair of shoes online for RM500, RM200 is almost half of the price already,” said Adli, a graphic designer who regularly shops online for rare sneakers.
“That’s without import duties. You add that and on average we pay around RM250 or RM280 just for delivery and processing fees. It’s becoming more unaffordable for me,” he added.
Unreasonable or just the cost of doing business?
The government charges a 5 or 10 per cent sales tax on most imported consumer items. And flying in your online purchase requires importers to declare the goods with Customs, usually done by filing the relevant import forms.
The process typically involves a seller’s invoice, airway bill, packing list or import permit (if necessary), which importers file together with the import forms for the Customs to calculate duties or taxes.
There are a few ways to do this. Individual importers can personally file the papers themselves, but must contend with the hassle; filing must be done either at centres in Sepang or Subang, where the two main airports are, and can take hours depending on the volume.
Most couriers hire third party agents, usually companies set up by former Customs officers.
The cost, however, is passed on to customers with different couriers charging different rates.
DHL charges what it terms as a “disbursement” fee, at a rate of 3 per cent of Customs duties and taxes, or a minimum of RM50. The company’s website said it would collect whichever is higher.
Say Danny buys a pair of shoes for RM678.90 and sales tax is set at 10 per cent, the levy would only amount to RM67.80. A three per cent processing fee rate on this sales tax would only cost around RM2. But DHL will charge you RM50 instead, and an additional service tax of 3 per cent.
Add everything up, the total cost of the purchase inclusive of delivery and tax would be RM939.70. That’s RM260.80 for shipping alone, which is nearly half the shoes’ price.
The disbursement fee, according to the company’s website, helps hasten the Customs process, with DHL making prompt payment of relevant charges while the receiver defers payment until an agreed date.
But online shoppers said their complaint is not so much that DHL is charging customers to clear the goods, but the quantum. Competitors like FedEx, they claim, only charge between RM25 to RM30 or 2.5 per cent of total tax and duties.
“Customers can understand that filing those papers involves a cost,” said Zara, who has been shopping online for years.
“But you charge RM50 minimum just to process one form? So if 10 goods a day you collect RM500 already and even if you pay the third party half, you get a profit of RM250 for processing forms?” she added.
Internally, word about the backlash quickly reached company ranks; sources say that middle-level managers had raised the issue with senior management and warned that DHL risked losing their customer base to competitors if it did not scale the fees down.
“We saw our customers running to our competitors. I mean look at FedEx, they’re definitely cheaper,” a former mid-ranking manager, who requested anonymity, told Malay Mail.
Complaints about the processing fee is “common” and is among one of the most frequently asked questions by customers.
In most cases, the courier will point to the third party agents to justify the fee, even when import and duty processing is virtually free. The import form itself is sold at RM1 each.
“One of them told me the charges are based on agents’ fees, so there was nothing they can do,” Danny said.
A senior-ranking Customs officer said DHL’s goods disbursement fee is strictly a company decision.
“The fees they charge has nothing to do with us because no Customs duty payment fee is charged to importers on our side,” the officer told Malay Mail.
Attempts to reach DHL for comment were not successful at the time of writing.