Have you heard about ‘ghost stores’? Let’s not mince words – they are a scam! They aren't even real stores.
While the ‘ghost store’ term used by the mainstream media may sound innocuous, these online retailers are far from harmless. It’s the latest scam targeting Australian consumers and undermining legitimate local businesses.
Hiding behind slick websites and heartfelt backstories, these so-called retailers are falsely promoted as Australian and exploit the public’s inclination to support struggling local businesses. Jeweller has been monitoring this troubling trend closely.
In recent weeks, the alarming proliferation of this particularly misleading and deceptive tactic used by overseas operations.
An investigation by The Guardian outlined more than 140 scammers that operate offshore while masquerading as local businesses.
The scams have become increasingly sophisticated with emotionally manipulative narratives that paint a picture of a small, family-run business facing closure due to hard times and encourage consumers to make the most of closing down sales.
Some use stock images of storefronts in Australia’s iconic locations, such as Sydney’s Double Bay and Melbourne’s Chapel Street, to strengthen the illusion of authenticity.
An example of a supposed small high street retailer in Byron Bay was highlighted, with the owner’s retirement used to justify dramatic discount pricing. The problem is that the store and the owner never existed - the photos are ‘fake’.
Indeed, prices have been slashed, and remarkable discounts are readily available. Consumers are told that this is their last chance to support an independent retailer beloved by the community. It’s all a lie!
Who could have seen this coming?
Jeweller’s 2024 State of the Industry Report documented the increasing viability of retail businesses operating exclusively online.
The COVID-19 pandemic accelerated this trend and created opportunities for these shameless scammers.
During lockdowns, bricks-and-mortar stores were forced to shut their doors and consumers migrated online.
The research noted that many overseas retailers create websites with an Australian top-level domain (.com.au) to give consumers the appearance of dealing with a local business.
This misleading practice gives consumers the perception that these companies are Australian-based and, therefore, must comply with local laws, including those that cover warranties, guarantees, and returns.
Jeweller also noted the rise of ‘showroom businesses’ — online retailers with interstate offices rather than stores. This is done to give the appearance of having a store in many capital cities; however, the premises are typically located in serviced office environments.
The premises are often unmanned, and phone calls are answered by the serviced office staff or are diverted to the business’ head office in another state.
The rise of showrooms and the increasing viability of online retailers presents more competition and the need for a ‘point of difference’ for traditional high street stores.
Furthermore, increased competition from different business models makes it more challenging for consumers to compare jewellery on anything other than price.
What can we do about it?
As mentioned, the mainstream media has taken to describing this phenomenon as ‘ghost stores’; however, I think that terminology is a little too ‘cute’ and softens the reality of the situation.
A ghost is defined as an “apparition of a dead person which is believed to appear or become manifest to the living”. The word describes the lingering presence of something that once existed.
The problem is that these stores were never real. These online retailers are committing a hoax engineered to exploit and mislead consumers. Let’s be blunt — it’s a scam!
A spokesperson for the Australian Competition and Consumer Commission is investigating the issue of ghost stores after increasing complaints about online retailers.
The industry watchdog said that the products these retailers provide are typically shipped from overseas warehouses.
In The Guardian’s report, a spokesperson for the Consumer Policy Research Centre didn’t mince words – what these online retailers are doing is against the law.
Lying about the location and operation of a business, promoting fake closing down sales, and using stock photos to create a sense of legitimacy is misleading and deceptive and breaches Australian Consumer Law.
With that said, enforcement is a challenge when the perpetrators are based abroad. As a result, encouraging consumers to be cautious is an obvious strategy.
The advice for consumers is straightforward – the best defence is vigilance. Before making a purchase, take a few moments to research the retailer. Read consumer reviews, call the contact number, or perform a reverse image search on product photos.
However, herein lies the dilemma - these scams thrive not in spite of online shopping habits, but because of them.
Shopping online is appealing because it is fast, convenient, and frictionless. Taking time to investigate a business runs counter to that experience. It’s within this tension of convenience and caution that scammers find their opportunity.
Consumers are warned to be cautious; however, these scammers are betting that in a marketplace increasingly designed for speed and efficiency, most people won’t be.
While these shameful strategies will continue to evolve, I hope an unintended consequence will be a renewed appreciation for the traditional retail experience.
Bricks-and-mortar stores offer assurance, and what you see is what you get. Community presence and reputation forge accountability and a level of trust.
In a world where not everything online is what it seems, the enduring value of local retailers may shine brighter in the end.
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