Duty free shopping has become one of the latest crazes on the Internet. This type of shopping is mostly valid in case of foreigners traveling to other countries. This is a diplomatic call on part of the nations to allow the foreign companies to sell without charging duty on them. On the other hand, when the nation’s citizens travel to that country, there are no duties charged on those products and hence everyone stands to benefit. This sort of quid pro quo dealing is very common for the purpose of diplomacy. Taxes and duties, when not charged, also help the prices of the products to remain low. Otherwise, the buyers would have had to buy at higher prices, as normal. In fact, when the duties are charged, the products become even higher in cost than what they cost nationally or to the national customers. That is why foreign customers are allowed to buy at lower rates and the same is done in the country from which the customers are coming. This is a mutual understanding that helps fostering the global free trade and capitalist economy.
It must be remembered that duties and taxes are added to the basic valuing and pricing of the product. These duties are generally very high on the luxurious products. This is because, their utility is lower and hence it is generally assumed that the rich people will consume such products. The assumption is not entirely wrong. But because of the duty free shopping opportunity, many people can now buy the favorite brands of Cigarettes online without having to dole out a large amount of cash. So, in turn, it means that more and more of the customer base can be increased. This is therefore, also beneficiary even from the point of business.
There is greater vertical penetration into the target market because of the increase in the range of the income levels of the people who can buy these products which were earlier solely meant for the rich.So from a duty free shop, one can now buy otherwise expensive brands of cigarettes online and also other kinds of luxury products like perfumes, trendy bags, apparel and other luxurious items. This duty free shopping is even allowed during some special occasions. This is because the companies realize that the rush of the customers will be the highest at this point and even if the prices per piece are brought down, the total sales will be very high and this will yield enormous profits on the aggregate for the company.
If people buy these top class brands of cigarettes, like the Cuban cigars, from the conventional cigarette tobacco stores the prices would have been prohibitively high. But it is the deduction of the tax and the duty component of the price that totally makes the branded tobacco cigarett affordable to the not so rich people also. The government also gains because the more the sales from the company, the more payment in taxes collection will be there. Those who love to collect the most desirable branded items will also find these Duty free shop very attractive.