When one oligopoly screws another.
So whats new? It sure happens here in the UK, check Apple's prices just for one example.
Australia’s retailers, led by high-profile Harvey Norman chairman Gerry Harvey, have shot themselves in the foot with a campaign demanding that the government apply its 10 per cent Goods and Services Tax to all internet purchases, and not only those over $1,000. The retailers, concerned that sales in the Christmas period were …
As an ex aussie, living overseas it's not surprising my knuckle dragging brethren have finally cottoned on to this.
There is almost no reason to use local retailers, as they gouge the hell out of you with no real benefit. With anything tech related, even the warranty is a RTM (return to manufacturer) so you may as well buy it from the source, and cut out the useless middleman.
Australian retailers need to get over the delusion that they matter to the market at all. They are a tiny market, at the arse end of nowhere, so will get treated accordingly.
Right, these anti-competitive whingeing bastards are trying to stuff it for everyone, but it's not a new an issue as everyone thinks.
Traditionally, this land-at-the-end-of-the-planet full of knuckle-draggers has had 3% of the world market so everyone--i.e.: retailers, importers and all of that ilk--have said that both distance/remoteness from markets and the lack of economies of scale are the main reasons why imported things are outrageously expensive here in Australia. And for eons we knuckle-draggers with our room-temperature IQs have actually believed* them.
Well, in the last decade or two it's turned out that some small operators in the IT industry (usually Chinese entrepreneurs) have imported computer components, peripherals--hard disk drives etc., and have been able to sell them about as cheap as anywhere else in the world. Clearly, the centuries-old 'necessary' 100% and 200% automatic mark-ups were looking very jaded and very artificial.
However, the brain-dead retail market hasn't really caught the message as yet, and now it's about to embarrass politicians into increasing prices for small items when really this tax discussion has stuff-all to do with the main issues.
Essentially, these are:
- the retail industry as currently structured is outdated and anti-competitive,
- it is moribund and stuck within a 19th Century model of thinking (but without good 19th C. service),
- it is very overpriced when compared to elsewhere in the world with similar standards of living,
- the retail industry in Australia notoriously doesn't offer sufficient choice of products (it brings in populist but not specialist items, even then it still complains about stock which doesn't move quickly enough),
- it provides stuff-all technical service--no one in the shops know anything about the products they're selling (although they're excellent at shrugging their shoulders),
- whose shop owners pay outrageous and exorbitant rents to shopping mall sharks (and like the rest of the knuckle-draggers, they're not organized in sufficient way to take on these overpriced monopolies),
- that retailers have totally failed to grasp the significance digital economy and adapt accordingly (the 19th C. is already over--so even is the 20th and they've not noticed it),
- not to mention their shops provide zilch in the way of customer experience and satisfaction,
yet they continue to blame everyone except themselves for their woes and ills.
Add to this shemozzle the ratbag industry lobby groups and carpetbaggers that have anything to do with so-called intellectual property, copyright, patents etc., and problems just multiply manifold. This mob of shysters always pulls rank by stopping the parallel importing of books, CDs, movies, pharmaceuticals, software etc., thus costs just become double or triple the price of anywhere else. Moreover, as they've the damn rights to this stuff, they bring in just what they want which usually means only popular stuff. Try getting a specialist techie book on any subject and you may as well ask the penguins in Antarctica for it. In the existing climate, even knuckle-draggers understand that getting stuff from the source is the only way to go.
Even more outrageous, these copyright Cretins want to stop parallel importing of books based on some strange logic that it will help local authors, performers and such--aren't these locals writing different stuff? I suppose this logic works if there are NO other imports. Damn them.
Well fuck them! If they want WAR then they now have it. For starters, we'll further boycott their stores, even if it's at our inconvenience. Right, even we knuckle-draggers understand such simple logic.
Although the high-profile Harvey Norman, chairman Gerry Harvey, (of this story), and his cronies have been shocked by our widespread vitriol, their continuing utterances still indicate that they've not yet gotten the message but they do so at their peril.
Revenge for any tax increase will be long and bitter. Even if it takes years, we will revel in every moment of Schadenfreude as they go under.
Whilst these retailers are true 19th C. dinosaurs, they nevertheless still have a T. Rex's bite and power to match. In the past, their influence on the establishment has been legendary; thus expect the end game to be messy and very bloody.
Nevertheless, eventually we consumers will prevail.
* In Australia, a significant majority, without question, believes all those with some seeming authority, especially radio shock-jocks. Words such as 'logic', 'truth', 'reason', 'question', 'disbelief' etc. are either not understood or are easily warped by shock-jocks or the sun, or they're morphed into a confused meaningless jumble by too much of the only things that really matter in Oz--sport and liquid amber.
I can simply summarise your inciteful posting as thus:
Australian retailers screw Australian customers because they can. That's the way it's always been and they don't want it to change.
When I first moved here I never believed the "small market, big distance" argument for the pricing as it always seemed they were gouging because they could. A perfect example from Harvey Norman was a Harmony One multi-controller that was priced at $399. I told my mate he could pick one up in Australia for around $200 online. He approached the sales guy and got a deal of $220 (he didn't buy it). That's a $180 discount for just asking and knowing the internet prices to force the deal. Mom and Pop would be tooled for the extra $180 though. Bastards.
Quite often, software is priced in the UK by changing the dollar sign to a pound sign (I'm looking at you, Microsoft, with your $99 = £99 attitude). How is this permitted without anti-competition laws coming into place, or is this another area where the colonies have the legal advantage over us poor Brits and we are missing the relevant anti-competition laws here?
Seems odd to quote transport costs, when a lot of those items would be built in a country that is much closer to Australia than the USA!
If they wanted to really save costs, they wouldn't ship them to the USA and then to Australia.
Whilst quantities can make a difference, IF the product is identical then the only difference seems to be the shipping address.
1. Have you removed the GST from the Australian price ?
There is no GST in the USA, local sales taxes are not payable by buyers from other states.
e.g Amazon outside Washington state.
2. The Acer 23" monitor is easily available from many shops for around AUD $150 ex. GST
3. The reason for the high prices in Australian retail is the retailers.
They hold oligopoly power over vendors & distributors.
There is only 4 major retailers in Australia & their margin & rebate demands are astronomical.
A typical deal for them is 30% margin & 10% rebate...on external hard-drives ???
4. ...but they have the stores & customers, Harvey Norman 400 stores, millions of customers.
5. The sooner Australian consumers learn how to spend their money properly the better for everyone...except the retailers ;)
Having worked in big box retail for years, I can tell you 30% is not a huge margin. Our average maintained margin across all products was around 27%, which resulted in around 2-3% percent net margin at the end of the year. And we benefited from doing about 60 million a year in sales, which most retailers do not do, so most would need to maintain a higher margin than that in order to run their business.
And consistently fail, ending up online (though like most online shopping in Aust. at Australian online shops - so the GST is paid anyway). The problem is that the corpreal shops are not interested in stocking what I want to buy. And the numpties* they hire as staff don't know or care as long as they get their pay for standing around all day chewing their cud. I would not be surprised if that was a significant portion of the case with the market as a whole, not just price (some of the freight costs are rediculous too).
*I know from personal experience that major retailers with a CE section (like good 'ol "Hardly Normal" - not my expression, it is part of the linguistic culture here) won't hire you if you can spell 'technical' let alone know something about the products beyond what it says in the brochure.
A lot of it seems to be just retail giants whining because people are waking up to the fact they are just having crap dumped on them for a premium and are refusing to play anymore.
I should also point out that there /are/ good stores around here too. I have a shortlist. It is very short. But those stores get a lot of business from me and I get good value for money, even at a higher price, as the service and convenience they offer is worth the extra.
Even speaking of Australia, Canada has seen the same thing happen. The dollar goes up, exporters aren't happy and yet we haven't seen a decrease in comparable prices. I find it frustrating because me as a common consumer is left wondering why we don't see better prices when the dollar is high.
When the Reserve raises interest rates, the banks are 'forced' to raise theirs immediately, but when the Reserve lowers them, the banks can take months to follow suit. And then they whine in the press about how put-upon their industry is because hopelessly-bad decisions might (but probably won't) cost their managers their bonuses.
"...a campaign demanding that the government apply its 10 per cent Goods and Services Tax to all internet purchases, and not only those over $1,000."
There should be the words 'overseas' between 'all' and 'purchases'. We cricket loooosers [*] already have to pay GST on any Australian internet purchases.
Mr G Harvey is just having another throw-the-toys-out-of-the-pram moment. As described in the article, what he's sucessfully done is show lots of otherwise unknowing Australians that they can shop cheaper via the Inner Tubes, and that we're getting right royally screwed by local retailers.
An item for the comparison grid:
A set of macro bellows for my DSLR (same make/model/etc) - Hong Kong = AUD$34.00 inc postage; Local Photo Warehouse = $340.00
Delete the word 'markup' and insert the word 'ripoff'.
[*] Laugh it up, there's always next season.
Paris, obviously for the 'You're screwed' angle...
Mr Harvey shot himself in the foot again by conveniently missing the fact that GST is levied on all goods imported to Australia (with certain special exemptions which need not detain us here).
What he is really challenging is the *administrative ruling* by Customs Australia (the appointed agent for collection of GST on imports) that they find it uneconomic to collect any amount less than $A100 - which includes customs charges, duty, tariffs and GST.
By skipping all the other things, and scaling up from a 10% rate for GST, he gets to the only partially correct figure of goods valued for import at up to $A1000.
For the boss of a billion dollar retail business, he really stuffed it up big-time with a total fail on his research!
The farcical nature of their claim the GST is the reason for the rise in purchase of items overseas can be easily shot out the water by the rise of grey/parallel importer businesses. As you say they would do better to talk to their official distributors about their pricing discrepancy than banging on about international Internet purchases lacking a GST mark-up.
For example, I happen to buy a lot of camera gear from a place that generally imports from the North American market and their prices are anywhere from 20-40% cheaper than the traditional retailers sourcing from Canon/Nikon Australia all while paying GST on every sale.
well written and from my experience, correct.
The oligopolies here do try hard to pretend that two "suppliers" is not a monopoly situation.
The words "price leader" and oligopoly are unknown outside of Economics 101 classes.
I assume the firms which fund what passes for political parties prefer it that way and the "clever people" like high priced consumer goods so they can berate the citizens for being wasteful.
They opened some stores in Ireland (North & South) a while back. I remember looking in the Belfast one when it opened a couple of years ago, it struck me as an odd mix of MFI and Dixons.
Around that time (mid-2009) the Belfast Telegraph had an article which noted:
"Sales at Harvey Norman's Irish stores have slumped by between 20% and 40% and all of the outlets are unprofitable" but they still seem to be there...
If anyone cares to compare prices, you can try http://www.harveynorman.ie/ A quick check on one item, a PS3 250GB, shows it at 349euros, or around A$450, about half-way between US & Aus prices in the article's table.
...but far too slowly, and even then not by a fair amount.
For example: my wife bought a major kitchen appliance for AUD$1075 which costs AUD$650 in the USA, and that was after the retailer dropped the price by about $100 "because of the strong aussie dollar" -- but for months before that there had been no shift in the price here...
It wasn't so long ago that the pound was worth twice what the dollar was, yet in many tech areas what sold in the USA for $X sold in the UK for the same number of pounds - or more - PLUS VAT.
It still happens, especially when american companies are foolish enough to lock themselves into exclusive distribution agreements, then wonder why international sales are so slow.
When approx 1 GBP=2 USD I wanted to buy CS3, Adobe currency conversion involved no more than changing the currency symbol. I tried buying from Amazon US - sale blocked. I ended up getting a friend in US to buy it and bring the CD on his next UK visit, saved hundreds.
Maybe some kind soul like to create a blacklist website of all the companies that do this kind of rip-off.
Typically companies justify the difference by allegedly funding "local support" (usually turns out to be in India anyway) and "localisation" (change the spelling of color to colour).
This has been an ongoing problem in the UK and Europe for more than a few years. As yet, no logical reason has been provided, there's been plenty of fact twisting in an attempt to make us see something the way it isn't. For the UK, even the new VAT rate doesn't account for the difference, and as for shipping, I would expect the whole cost to be spread across the entire shipment, (not as it seems to be), applied to each and every unit shipped.
I guess it all boils down to how much money the retailers believe they can squeeze from the consumer. You have already provided one solution, buy direct from the US and get it shipped over for the postage, surely a short wait for delivery is worth the massive potential $ savings.
"... buy direct from the US and get it shipped over for the postage,.."
Nice, but remember to declare it to HM Customs and pay the import duty. If you don't, and they intercept it, then you have to go to them to collect it and pay the import duty. For small packages of low priced consumer goods, most people get away with it because HM Customs have more important things to do with their time (or they're lazy/understaffed/whatever).
I was advised last time I had to pay import duty that there is no process for paying the import duty on small to medium items and that you just have to take the chance that you may get an extra bill when the goods are shipped. Personally I'd prefer to have a known price with import duty rather than a random extra levy but it seems that is not possible.
You don't need to collect it from HMRC, if it's coming in via Royal Mail or Parcel Force you just wait for the letter with the extra special number on it allowing you to pay the charges (and their extortionate fee for the pleasure), when you pay you get it the next day.
WIth other couriers they deliver it when it clears customs and you get an invoice attached, or shortly after in the post.
From what I've heard, the "official importers" are a large part of the problem. I've had this discussion several times with shopkeepers who sell mostly imported goods. The story is that they are forced to buy through these "official" sources who charge a massive markup for their services.
In one case, on a visit to England, I bought a pair of reasonably good handmade shoes for 80 pounds (around AU$125) - not cheap, but not exorbitant. A few months later, I took them to my local specialist shoe shop in Melbourne to get the heels fixed. He immediately remarked on my "$500 shoes", and asked where I had got them from. When I told him what I'd paid, he almost cried. He was paying much more than that wholesale. I immediately asked him why he didn't bypass the wholesaler and buy direct - he'd make a good profit even if he paid retail prices. His reply was that he wasn't allowed to. He'd be put out of business if he got caught, and so would the supplier who sold to him. Apparently, the manufacturers appoint a legally-enforcible "official distribution channel" for each country they export to, which must be used.
I had a similar experience with engine spares. I needed a new magneto for a small American-made agricultural engine (Briggs & Stratton). The best price I could get here was around $200. I got the part from an American online supplier for $30 plus $30 shipping. I then went back to my local shop to ask why they didn't use this supplier, and I got the same story. If they were caught, they'd be stripped of their dealership rights and forbidden to sell anything carrying the Briggs & Stratton logo (basically, just about all Australian agricultural equipment). The risk was too great.
This is not the only problem. In many cases Australia imposes stringent type-approval rules, which are deliberately kept out of step with the rest of the world (mostly to protect the local manufacturers - who are largely non-existent). This partly explains why imported cars in Australia are so late arriving and so expensive - it's not worth the manufacturers' efforts to make a special "Australian" version of everything.
However, I think a start could be made by outlawing the draconian practices of the manufacturers with their "official importer" rules, and their penalties for trying to bypass them.
The bigger the capatalist, the louder they scream for government protection when someone starts out-competing them in a fair market?
Thanks Harvey et.al. for the full-page adverts for where to get stuff cheaper than at your own stores. You can't write comedy that good!
The truth may shock, but any 'Capitalist' who petitions government for protection, is in reality Socialist corporatist gangster scum; they had a more obvious example of this corporatism in Nazi Germany.
Read Adam Smith and visit http:\\mises.org, and get an education in economics and Capitalism!
I asked an Oz Apple reseller why the mac mini is $900 - $200 more than in the US and he said (with a straight face) "GST".
I can see why Amazon may not be here. but this isn't really about economies of scale. Does ebuyer really have a larger customer base than Australia could support?
Harvey Norman was selling a mouse (Logitech G5) for $75 which I got online in Oz for $45 from a tiny owner-manager store. This is not about economies of scale. A motherboard I got for £78 ($121) in the UK two years ago is selling for $241 now. You can buy this stuff retail in the UK, air freight it to Oz and still come out well ahead. This is about charging whatever you think you can get away with. Historically this was easy as transport and communications are difficult all the way to Oz.
It isn't just in IT kit. Molasses sugar (89p in Sainsburys) is sold for $5.25. Bendicks chocolate box (3.99 in the UK) going cheap at $42. Gruyere cheese - £10 ($16) in Sainsburys - $50 in Australia. Even allowing for shorter shelf-life and more expensive shipping, this seems excessive. Belgian waffles from Belgium are sold at the same price as the same thing made down the road in Melbourne. I got BlackOps in the UK for £30 - you're still looking at £56 over here.
Showing it can be done is Costco which recently came to Melbourne. If anyone needs to be able to stack 'em high and sell lots it's Costco. They've already got plans for a second store, less than 50km from the first. Economies of scale are not the limiting factor.
So yes, it is a case of one oligopoly against another. However, there is a distinct failure in the willingness to compete which may be cultural. As internet shopping ramps up, Harvey Norman is going to wish for the good old days. 10% is nothing.
Writing from AU here...retail gross margins here are typically of the order of 100% yet most small business people I know are not rolling in money. Who gets it then?
--Their landlords--robbers like Westfield and other assorted gangsters aka property developers, the scum of the earth. Commercial rents here are mental, mainly to prop up many years of property speculation and uncontrolled land banking. This is a huge country but remember, there are only seven things in it: the capital cities (Darwin and Canberra = 0.5 each)
With all this space we have nonetheless managed to create overcrowded cities with enormous pressure on real estate prices. It's an epic policy fail at all levels of government, and it's getting worse.
--Their banks--the four large banks here have a very cosy setup here since they are big enough to have bullied successive governments for decades. Real interest margins (lending rate - deposit rate) and bank fees are the highest in the world. If you can get a loan at all. The other scum of the earth, and another epic policy fail.
--Other overheads--staff, energy, council rates and charges etc etc, which everybody has.
The internet exposes worldwide pricing to Australian consumers, who have been ripped off forever. Long live the grey market and to hell with distribution chains that add cost and no value.
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I run a company that distributes in Australia, Canada and the UK. I charge more in Australia because while freight from China is cheaper, the port fees in Sydney and Melbourne are astronomical compared to Canada and the people that work there are LAZY. It takes me twice as long to get a shipment off the docks in Australia and into my warehouse in Sydney than it takes me to get it off the boat in Vancouver AND across the rails to my warehouse in Toronto.
Fulfillment costs are at least 40% higher because of high labour costs and land costs in Australia (and I have shopped around extensively).
Petrol is more expensive.
What Australia needs is Wal Mart. I hate Wal Mart, but they get everyone into line on consumer pricing and supply chain as well. Big W just doesn't cut it. Imagine if a case of 24 Pepsi/Coke was $20 like it is in Australia in the US or Canada!
Australia is more expensive because the inputs are more expensive. IT's simple math.
These various arguments about local costs and taxes being higher in AU and the market being small only hold for some goods. Software is an obvious exception. There's no excuse for, say, MS Office being any more than 10% (GST) more expensive - never mind $354. Localisation just means adding the Macquarie dictionary to Word.
I'm constantly amazed at the software price differentials whenever I go back to AU. Games released at £30 in the UK are released at $99 (£66) in AU. Localisation for AU on COD? Don't make me laugh :).
cphi's example of Steam price changes is a classic case. Why should the price of software delivered completely online vary because your ip address changes?
These retailers really are daft. Do they not have a PR team? Why not at least attempt to window-dress their greed as something else. Perhaps a "Buy Australian Made" could stir some patriotic feelings. Anything's got to be better than out-and-out whinging about not making as much money as they'd like.
The retailers are dreaming if they think GST is the culprit. I'd happily buy goods from a local Aussie store (online or bricks-and-mortar) for warranty and return reasons if the price difference was only about 10%. The fact is that it's (almost) always a lot more.
I do believe the government itself has estimated that it'd cost more money policing the GST on imports than they would earn from it. In the end, then, it's naught but protectionism.
Keep whining retailers. The more consumers know shopping online is an option, the better.
Australia is a market characterised by:
A low population density
Extreme logistics challenges
A market that is not really all that attractive to business. Risks such as litigation and industrial action are similar to those inthe UK and the USA.
The workforce is overentitled and of generally poor quality. There ate exceptions, but most of them left the cointry years ago.
If there really is gross profiteering going on, then vendors will appear who are able to.undercut exiating retailers. If they *don't* appear, that tells you that gross margins may be good, but that nett margins aren't.
1. 90%+ of the population lives in the major cities - population density is only true if you average across the whole continent. You're just being disingenuous
2. Litigation levels are low and really only apply where companies have been grossly negligent
3. They're correctly saying it's the wholesalers more than the retailers gouging us, maybe you should brush up on your reading comprehension as well as your spell checking before you criticise others for being over-entitled and of poor quality.
4. A trucking monopoly does not qualify as an 'Extreme logistical challenge'
With this level of disinformation I'm curious as to what is your motivation?
"If there really is gross profiteering going on, then vendors will appear who are able to.undercut exiating retailers. If they *don't* appear, that tells you that gross margins may be good, but that nett margins aren't."
Part of the problem seems to be that parallel imports by retailers are either illegal or otherwise prevented, probably through some perversion of IP law (Remember Lik-Sang in the UK anyone?)
So if the wholesalers are gouging, and if you try to buy from another country you get the law pointed at you.... what is there you can do?
the new apple mac app store shows just how obvious this regional uplift is:
aperture 3: AU$99.99 US$79.99
keynote: AU$23.99 US$19.99
graphic converter: AU$46.99 US$38.99
BBEdit: AU$119.99 AU$99.99
...all more than a 10% difference.
remember, electronic delivery means there's not even any shipping charge!
And in a breaking piece of news, it's just been announced that the Tesla Roadster electric supercar is about to be launched in Australia. It's quoted at $206000 plus on-the-road costs. That's about twice the price of the US model. Part of that is the "luxury car" tax, and part of it is the cost of modifying it to meet the peculiar Australian type approval requirements. But a 100% markup???
Don't ever underestimate the influence of Marketing, especially the retailer.
Goods are usually sold to a price point, and not a direct reflection of the cost + profit. Essentially the price includes an elemet of what the reatiler can get away with - why else would most prices end in a 9.
$999 is far more attractive to the purchaser than $1000, despite being only 0.01% more.
Factor in competitor pricing and the pricers have a field day - the price will be set in similar regions to the competition, almost cartel-like.
As for those of us living in Europe; according to the EU directive 1999/44/EC http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:31999L0044:EN:NOT - Article 5(1), all manufacturers are bound to guarantee their products for at least 2 years; the way it's phrased it should be applicable even when for instance you pick up electronic goods in the US, originally from some worldwide manufacturer, then ship them across the pond - the definitions of consumer/manufacturer/etc are geographically non-specific, all you need is a defendant in the EU. However, I know that Nokia at least are pigs to try to make them respect the law - even for a cheap repair such as reflashing the firmware. National law implementations are patchy too.
cphi, Steam prices are set by the publishers, and because said publishers still rely on stores like EB to sell console games, they're in a precarious situation. Do they price their games in line with local retail prices (keeping the retailers happy and enraging consumers), or do they do right by the customer and pass on the savings afforded by digital distribution on to its customers, effectively undercutting (and pissing off) local retailers in the process? It's also why US Steam prices are essentially identical to US retail prices, even though they probably could be cheaper.
Of all the bricks-and-mortar retail store types out there, software retail is by far the most obsolete (that and video rental - I will gladly wager a fiver that Blockbuster Video will be in liquidation by the end of this year). I genuinely hope that the next generation of video game consoles will rely entirely upon digital distribution for content delivery. Retailers like EB will finally go tits-up and (hopefully) we'll see an end to digital distribution pricing shenanigans. Unfortunately, software and media giants still seem to believe that the concept of 'regions' is still relevant in what is (barring a few black spots) a global electronic market.
Whenever I see these types of article I do wonder if anyone ever has the sense to think about how international trade works. Company A sells and buys its goods primarily in AUS$, but decides to buy from company B who buys and sells in US$. Of course the plan is that company A will buy from company B set volumes over a period of time. During that period of time the AUS$ / US$ rate varies (in this case considerably) but as company A has either lost its crystal ball or does not have the fortune teller from Harry Potter working for them, they decide to hedge the currency risk this means that they buy US$ at a set rate for a set period or in a set amount. Meanwhile company B is also concerned about exchange rate movements so they base their selling price on a fixed exchange rate of say US$1 = AUS$ 1.5 for the next x months. Both companies are therefore ready for a movement in the exchange rate whichever way it goes and start transacting.
Therefore customers should not assume that the movements on a day by day basis in the exchange rates of currencies will automatically mean that the price of goods will change daily (unless of course its fuel which is one product that does change daily based on the spot price in the commodities market). It also means that stabilised pricing prevents inflation and that companies have a pretty good view of whether they are making or losing money.
However all that said, it is also true that companies have a habit (especially selling companies) of not adjusting their fixed sell rates very often. One company I know has used £1 = US$1.55 for at least 15 years to the best of my knowledge even when the actual rate was £1 = US$2. And retailers and distributors do use this exchange rate hedging as a method/excuse to keep the prices and therefore margins higher than they would be. But in the end over a reasonable period of time the pricing differences do tend to even out using this method and there will be times when pricing in one country is lower than in the US.
Everywhere there are a thriving band of people who buy things in another locale and grey import then flog them off at a profit because of this price fixing discrepancy.
One friend says Its cheaper in France to do a weekly online shop with asda and get it delivered by man with van and he bought a secondhand jcb in the uk because it was a fifth of the local price, toilets and showers are cheaper in france so I know someone who takes a van over to france and returns with it stuffed with white goods, and on the way out he takes all sorts of bric o brac to turn a profit in both directions. Someone else exports mobile homes to spain full time on low loaders, we send cheese to a friend in sweden etc etc.
And everyone knows about the dollar to pound direct conversion on goods.
Well done to the retailers for alerting people to this.
Have you ever seen an Australian website? They are typically horrible designs. Inefficient. Slow. User-unfriendly.
Have you ever seen a New Zealand website? They are typically simple and efficient, fast, useful.
Something about the technical (and morally unethical) culture in Australia that prevents strong websites and, therefore, online shopping.
Having said that MSY is the only store worth looking at for technology and consumer cameras. Memory prices, motherboard prices, whatever you need for a PC, is typically far cheaper at MSY. (Although be prepared to stand in a queue for 30 minutes with other lonely single men waiting for your best priced electronics).
Take a look at www.lotto.com.au
It may not actually look too bad at first, but if you take the time to register and attempt to purchase a lotto ticket you will realise that this particular monstrosity is possibly the worst website ever produced.
A team of retarded monkeys could have done a better job.
The best thing is that this is the the "new improved site". It was launched, to great fanfare, about 6 weeks ago. The old one was fugly, looked like a refugee from Geocities but at least it was simple to use. It ran on a VMS machine I think. This new one is 100% Microsoft and I hear they have trouble with uptime, it has to go down regularly for a reboot. They don't yet know why.
If you're seeing $1=£1 on the pricing, that's actually a good deal in the UK. More usually it'll be a higher number in £ than in $.
The ultimate example is clothing, and particularly branded jeans. The Levis online store for the UK is currently doing the amazing deal of "only" £84 for a pair of 501s, reduced from £105. The Levis online store for the US is selling the exact same jeans for $37, reduced from $46. As of today, £1 gets you $1.55, so the UK price should actually be £23.87. For those of you without a calculator, that's a 250% markup.
Unfortunately the UK High Court and EU Court of Justice allowed manufacturers to force pricing on resellers. This is actually illegal - once you have title to goods, you're entitled to do whatever you like with them, including selling them at any price you like - but Levis got it through (anyone else smell something fishy there?) and we're stuck with the case law until anyone with deep pockets decides to challenge it. At least in the UK and Wales anyway - Scottish judges were more sensible and told Levis to FOAD.
"Of all of these products, the only ones to require significant localization are the refrigerator and vacuum cleaner, which need to be built with a 240V supply to suit Australia (and, of course, other markets that use 240V)."
Vacuums, fine, but aren't American fridges wired into the same 240V appliance ring mains as their cookers, washing machines etc?
Neither my fridge nor my washing machine require 220v, which is what you get when you bridge across the tappings on the pole transformer. Indeed, the lighting circuit in your average US cooker is 110v, as are the timers, pingers, alarms, mp3 players and whatever other options you've sprung for. Only the heating elements need 220v and the hucking fuge breaker that comes with it.
It's interesting because all the skinny breakers in the box alternate on which tapping they draw current.
As I found out when I pulled some of them out and "organized things".
This 240v stuff is an Anglolectric standard. The electricity doesn't go up and down fast enough either.
Last month I saw a BBC Classic music mag, nominally £4.50, on sale for CHF 22.50 = £15. If I had bought 3 in England, I could have paid for the flight, but I didn't want to face that bad weather.
Seriously though, you are right about the internet exposing price differentials. Both sides are not good Europeans, and keep goods out with Customs terror. (A special hello to the British officers who wanted £60 for a box of chocolates we sent our daughter last Christmas.) Rumors are that this will be lifted between the Swiss and Europe later in 2011.
We keep hearing about Australia's low population density but if you only look at where people live, the country has a much higher population density than the USA does.
The real kicker for retail here is the major chains have significant owners in the Walton clan of Wal-mart fame as do the major malls. There isn't going to be any real competition when billionaires can go buy 4.9% of both companies and get their cousin to do the same thing.
A friend of mine imports welders and similar from China into Australia and he says that after dealing with the people in China, he has to import it - and share a container - that costs. Then he has fees for Customs, Import Duty and Clearance fees - just to get it from the docks, and then he has to transport, insure and then stock up his warehouse, and then he has to advertise and make sales and offer warranty etc....
Then he has to make a wage, cover his own costs, like insurance, vehicles, housing, bills, medical etc., etc., etc... etc...
And then he has to make a living from it all...... to realise a profit on the sale.
And this guy is being genuine with me.
But at the same time.... while I sympathise with him, Harvey Norman and so like the subsiduaries of Wesfarmers - they retail USB cables that cost $5 in the corner store for $35 each... the cheapest shit computer fans with the plain sintered bearings for nearly $20 each, and they die within 6 months in a dusty environment...
Wesfarmers own Bunnings and they sell the shit Stanley Block Planes (wood shavers) for almost $140 each, but you can buy them in the USA for under $40 + $14 postage.
Wesfarmers own an enormous range of BIG retailers in food and groceries and they are big time into mining and exporting coal and leveling the remaining Australian old growth forrests, by woodchipping them, and exporting premium old growth Australian timber, to be shipped back as toilet paper.
Trees that are hundreds of years old and all the wild life that live in these forrests - are being decimated by Wesfarmers - so that people can wipe their arses with them
There are many LOCAL retailers with bricks and mortar shops who apply GST, who undercut Harvey Norman to the max.
Then you get the online retailers that only have a warehouse and a server, and trucks coming in and couriers going out - that offer door to door deliveries.
They REALLY undercut the likes of Harvey Norman.
While Harvey Norman and his friends cry poor, Gerry Harvey who founded HN. his WIFE is the CEO of the franchise, the shares used to be worth $7.15 in 2007 and now they are worth $3.60.
He has rigged it so that he and his managers all get HUGE increases in their bonus's and renumeration. Gerry has his pay jumped from $250,000 last year to $500,000 this year. His wife Katie Page is getting a jump from $1 million last year to $1.5 million this year....
And the companies are trading at the same level in 2010 - 2011 as they were in 2003; that means they are under performing by 50%......
And Gerry Harvey has had NO scruples about buying in bulk, cheap and from overseas - and undercutting all the other local retailers, and putting them out of business.
And Gerry Harvey has no scruples about refusing to buy AUSTRALIAN MADE products from Australian Manufacturers, and getting the cheapest crap from slave labour countries.
And Gerry Harvey and his stores "Harvey Norman" has basically almost NO staff on the shop floors who are there to sell anything to any customers...
AND Gerry Harvey // Harvey Norman - has websites that are not worth shit as far as making online sales...
And Gerry Harvey blows millions on racehorses and then with all his mates, including Wesfarmers, they are secretly lobbying the government to slug the 3% of consumers that buy some of their purchases online and from overseas with a 3% Goods and Services Tax....
And they still are selling the same crap at 2 or 3 times the prices as local retails - and pumping their adds at full volume on TV, at 3am....
Gerry Harvey, Wesfarmers and Solomon Lew and all their "fabulous freinds" secretly lobbying the government with their 2 faced bullshit - I would not give these bastards a poke in the eye with a sharp stick.
Alaska's basically a small town with some really distant suburbs (total population 700000, half of them live in Anchorage). It really is a much smaller market than Australia.
Canada, on the other hand, has about the same population and area as Aus, and similar population density (almost everybody's near the southern border, though not always in the cities.) You could argue that shipping costs are cheaper there (closer to the US, good railroad system), but container ships mean that shipping stuff across the Pacific doesn't actually cost anything, and you can get food products from Southeast Asia at least as cheaply as the US or Canada can get them from South America in the winter.
So basically, yeah, you're getting ripped off.
I gave up buying things like DVDs at the local stores (JB Hifi etc) because they never had the ones I wanted. Battlestar galactica was a classic. The had all of the series as individual boxed sets and didn't have all of the minis. Even then to buy all of the individual boxed sets was expensive. I ended up using a local online AUSTRALIAN DVD store that was able to supply the complete battlestar DVD set containing everything INCLUDING GST at about half the best street price.
Same shit is happening here in Slovenia(EU). I recently bought a couple of sony lcd tvs to replace the old crt ones. Guess what the seller told me after the sale. That sony is demanding they buy the stuff at an extra 10% increase in price. I could go to austria or italy and get it cheaper but with fuel and road costs the difference becomes smaller. So yeah... manufacturers/distributors are forcing prices in different markets. This needs to stop.
I don't know if it's supply chain length slowing price changes but the 'competitive' shop prices are dropping pretty quick. I was in JB Hi Fi in Melbourne today and they had a 11" Mac Book Air for $1113, about £700 at current exchange rate. 15" Mac Book Pro was $1498. So pretty major savings there. The TV's seemed to be at most UK prices and in a lot of cases loads under.
Then you have other stuff like printers that cost 4 times as much. Phones are extortionate. Hi-Fi is pretty expensive.
Food is a killer though, $2 for a mars bar, $3.50 for a 600ml coke, $6 for a tiny loaf of gluten free bread, $7 for a beer in a pub.
Yes it's about time this over-pricing of goods in OZ is out there for all to see. What the large suppliers need to know is that their treatment of the population is no longer going their way. We will continue to buy directly from overseas where we pay an appropriate charge for shipping rather than inflated charges that show no real connection to reality.
The large suppliers have no claim to services provision as a reason to buy from them, especially HN whose after-sale service sucks big time with computing hardware as do most of the larger providers
As for suck-hole Gerry, F&@K OFF.
Wish the price savings worked for automobiles as well. I'd buy a European (read: German) car from the UK (already right-hand drive) and have them ship it here.
Though the luxury tax plus customes plus various other gouging drives the price to a smidgen of what, say, and Audi costs here in Aus. :(
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