Shock News! OK, not really. It’s a bit of a tired cliché to decry that we’re paying too much for our gadgets at retail (even though many of us are buying online anyway), but it looks as though something might actually be happening about it. Albeit only maybe, and only slowly.
Sydney Morning Herald reports on the latest salvo in the long running saga to get Australian retail prices at least somewhat in line with international ones, citing Labor MP Ed Husic, the member for Chifley, whose particular bugbear is software and hardware that costs significantly more for Australian purchasers. Husic’s quoted as referencing many Australian retailers who are afraid to speak out against big firms such as HP and Canon for fear of losing accounts.
It looks like the efforts are paying off, with the productivity commission said to be looking into the issue. The Parliamentary Secretary to the Treasurer, David Bradbury is quoted by the Herald as having written to Husic, stating
Treasury officials have met with the commission to discuss issues related to price discrimination. I am advised that the commission’s preparation of the final report is underway and that the issue of price discrimination will be examined further in that report”
It’s not just a closed door session, however; the story notes that the commission is welcoming submissions on price discrimination from consumers and businesses alike, which can be sent to retail@pc.gov.au.
It’s at least a step in the right direction, although whether anything will really change remains to be seen. At the very least, I’d hate to be whoever’s got to sort through the submissions at the end of that email address; there would have to be hundreds if not thousands of examples that could be submitted. [SMH]
Kai Howells
Friday, September 23, 2011 at 9:16 AMOK, that’s fine for consumer electronics, but what about something like a car – we’re now up against both the euro and the USD in the past four or so years and yet cars are still the same price. What gives?
wsDK_II
Friday, September 23, 2011 at 9:45 AMI especially agree about the car thing, i can buy an Audi A8 in the UK for 50% of what i can here…..IT DOSENT MAKE SENSE!
olearymo
Friday, September 23, 2011 at 9:49 AMTry shipping it.
wsDK_II
Friday, September 23, 2011 at 10:57 AMshipping it will be just as bad because of all the taxes i have to pay to get in inside australia and road legal :(
olearymo
Friday, September 23, 2011 at 10:28 AMThis is Chewbacca. Chewbacca is a Wookie, and he lives on the Forest Moon of Endor.
Think about that… that does NOT MAKE SENSE!
Barry
Saturday, September 24, 2011 at 12:10 PMNo Wookies don’t live 0n the forest moon of endor. Double check your info
Sana
Saturday, September 24, 2011 at 10:05 PMIt’s a South Park reference mate. It might be wrong re: Star Wars cannon, but the quote is correct :p
Shazie
Sunday, September 25, 2011 at 5:30 PMHahahah oh man, I thought the quote was funny but Barry your reaction was hilarious
Creesps
Sunday, September 25, 2011 at 10:47 PMActually the correct quote says Kashyyyk, I know it well. On topic, I think alot of the price difference on cars is due to taxes put into place to protect the economically inefeccient local auto industry.
Sam
Friday, September 23, 2011 at 10:16 AMI was of the understanding that there’s still some pretty nasty taxes on importing foreign manufactured cars; in order to keep the local manufacturing industry alive. I have no idea how it’s all taxed throughout Europe and the US, but I’d be willing to bet that’s a big chunk of the reason why there’s such a big difference in pricing.
Jordan
Saturday, September 24, 2011 at 12:11 AMimporting a new car used to have a 100% import tax slapped on, not sure if that’s still the case
Bcam
Friday, September 23, 2011 at 11:54 AMTariffs and taxes protecting the local car market would have ALOT to do with why cars cost more here than OS…
Aliasalpha
Friday, September 23, 2011 at 9:34 AMWhen I opened this article in a new tab, the truncated title on the tab itself said “Aussies Are Paying Too Much”, I think you could have stopped there…
Probably a good question to ask this commission is “If I, as an individual consumer, can import a product from the other side of the world for about 50% of the retail price why can’t these major companies with bulk purchase options field a competitive price? Am I a financial genius or are they ripping us off?”
A great example is Gears Of War 3, JB Hifi had it for $70 on launch day so they got my business. By contrast Space Marine was $90 everywhere I looked so ozgameshop got my $55 instead. A little bit over the price of an import will get me to buy locally but when I can get it for nearly half the price from england (admittedly with the hassle of waiting for delivery), retail has no bloody hope.
wsDK_II
Friday, September 23, 2011 at 9:44 AM+1
B3n
Friday, September 23, 2011 at 9:55 AM+1
Haven’t we been waiting long enough already?
Jason
Friday, September 23, 2011 at 10:17 AMAnother +1. Well put.
EckyThump
Friday, September 23, 2011 at 10:49 AMDon’t forget to factor in the tax you have to pay the Government! Cars in particular are a victim of it, but everything feels the sting of import tax! #{
red t-rex
Friday, September 23, 2011 at 2:47 PM+1. I happened to be in Singapore when Portal 2 came out and got it for $50 compared to the $90+ in Aus.
Also one of the software vendors we deal with notified us today that due to the Aussie dollar dropping below parity our purchases will cost another 5% yet over the last 5 months as the dollar climbed the price never once went down. Gouging bastards!
thernus
Friday, September 23, 2011 at 10:08 PM+1
I got gears3 at JB on launch because of the fairly reasonable price!
I never buy launch games these days because of the gouging local retailers and distributor do and just wait till sales or they drop below $50 cant be bothered importing most of the time
Shane
Friday, September 23, 2011 at 10:02 AMI guess the solution would be to place a “on-line” tax to bring it into equivlants…what a great idea Mr Norman :P
W
Friday, September 23, 2011 at 10:24 AMEven if they added GST for online purchases you’d still come out saving much more buying online.
I don’t know anybody who doesn’t shop online and save heaps for expensive things.
Jeff
Friday, September 23, 2011 at 10:27 AMI work for an importer of computer related products, our main product being SSD’s… We heard this crap all the time…
Their is a few points people miss.
1. their is a 10% gst on anything we bring in
2. their is frieght costs on anything we bring in
3. we need to add our margin on anything we bring in (usually 4-8% depending on the product)
We people forget it this… in america it works like this
OCZ to Newegg to customer… shipped locally to customer.
In Australia It works like this, extra freight costs, US Dollar difference (with the current drop expect tech to increase about 8-10%) GST plus importers margin, then frieght to resellers, then resellers margin…..not to forget the higher freight costs here in AUS.
No one is ripping you off, its just we have 20 whatever million people while america has 300+ so naturally their systems cuts out the middle man their volume is higher meaning lower costs ect….
TSH
Friday, September 23, 2011 at 10:53 AMI can get a product delivered to my home from overseas for cheaper than buying it at retail. If freight were as big a contributor to cost as you imply, surely the transport cost of getting an *individual item* from the other side of the globe to *my home* will be greater (per item) than getting *a whole stack of items* from the other side of the globe *to a limited number of retail locations*.
Therefore, the only difference you’ve pointed out are the various margins from middle-men taking their cut. Which is quite alright – everyone’s entitled to charge what they think is reasonable. But what benefit does that represent to the Austrlaian consumer?
The only thing I can think of is local warranty. But AFAIK only Microsoft (Xbox, specifically) and Apple have anything approaching a good reputation for warranty turnaround and service, at least in Australia. For anything else, it’s just not worth the ~40% markup. Kogan has realised this and they’re going gangbusters.
For things like food and certain other goods, I think buying Australian has tangible benefits. Not so for tech.
I don’t mean to sound like I’m having a go at you personally, but do you see where I’m coming from?
Theophilus
Friday, September 23, 2011 at 11:13 AMBut you also have to take into account things like wages and property rental etc. A guy working on a shop floor in Australia earns at least twice what someone earns in the US. Eg. Costco employee in the US gets $8/hour, in Australia $16/hour. I do believe we pay more than we should in Australia, but having worked for a number of Tech companies I can tell you that the gap isn’t as you think.
Sicarius123
Friday, September 23, 2011 at 3:53 PMWe get paid more than we should, but if we didn’t half the population would be homeless. Everything here costs more than it should, and paying people less wouldn’t drive that down much.
Jeff
Friday, September 23, 2011 at 11:27 AMYeah I understand what your saying, Im not saying frieght costs play a huge part but consider this.
for example lets say everyone has even freight costs in US it would work something like this.
Say an item is $100 and it costs 10 to ship the item to US so its 110ex now resellers margin of 8% which is 118.80 plus tax of 8% the item is now $128.304
lets do the same in Aus
item is $100 freight to Aus is 10 so its 110, now importer takes 6% which brings it to 116.60 then ships it to customer which costs 10 126.60 then add re-sellers margin of usually around 10% is $139.26 plus GST 153.186
Thats a $24.882 difference on a 100 buck item… the higher the value the less the freight percentage rise affects the price but the margin of each distributor and re-seller quickly increases the price… no one is ripping you off, its just the way is goes….
Thing is if you purchase that item from US for 128 and freight to Aus costs less then $25 you will save some money, now most likely you wouldn’t brother but if the item is worth 500+ which alot of tech usually is then it quickly becomes worth it to shop online and purchase from oversea’s partiually if its coming from the country its made in, this makes it seem like aussie re-sellers are ripping you off.
I purchased about 70% of my DJ equipment from china / taiwan its all the same gear you’d purchase here but all up i’ve prob saved about 7-10KK… (bought about 30k worth of gear)
Sam D
Friday, September 23, 2011 at 12:06 PMSo that’s all well and good, lets say that’s a 25% markup to keep things simple. Well how come many items are 100% markup (or close to) then? How about digital downloads (yes, I’m looking directly at you Adobe)?
Jeff
Friday, September 23, 2011 at 12:09 PMYeah digital downloads are a completely difference story, I don’t personally purchase that or deal in that industry so I can’t comment…..
Yes but,
Friday, September 23, 2011 at 1:10 PMpeople aren’t complaining about $24 more on a $130 item. Using your example figure of $100 for your goods becoming $153 after costs of selling it in Australia, why then will it usually have a sticker price of $200+?
That massive mark-up (often 100%) is what people are complaining about.
It’s even less defensible when it comes to digital downloads, where the software is delivered from a local server, but costs twice the price for us compared to other regions… where does the “costs” come in to that?
Jeff
Friday, September 23, 2011 at 2:30 PMWell in my industry that 200 ticket price doesn’t happen… my answers are relating to SSD ‘s and other computer components as that is what I deal in.
Australia in comparison to over countries has a better employeement rate, better wages, better living conditions ect, a reason for this is because their are distributors and re-sellers and then a third party repairers.
This creates more jobs, more freight which is more jobs again, more places being owned / leased which in return creates more jobs lol
If we used the same system as US, their could be a large ripple effect… for starters where would the 30 staff here work ? its not nice paying extra for stuff, but it creates jobs here….
how you going to buy tech cheap from oversea’s without an income ?
poedgirl
Monday, September 26, 2011 at 12:09 PMComputer components don’t really suffer from the same pricing disparity as other tech products. Markups on components are generally extremely small – I know retailers here in Perth that only have 1-2% markup on their products.
In fields that are extremely competitive and don’t have exclusive distributors dictating high wholesale margins, the retail prices will be similar to the US.
As so many people have said, it’s not the retailers, it’s the distributors.
Caesar Wong
Friday, September 23, 2011 at 1:01 PMSo basically what you’re saying is that the problem is not pricing, but supply chain (in)efficiency. So when consumers take matters into their own hands and import themselves, they are effectively creating their own efficient supply chain (which also includes freight and currency conversion – but admittedly not tax).
Single Malt
Friday, September 23, 2011 at 6:02 PMAs someone who works in IT distrbution, I can tell you that supply chain inefficientcy is not the problem – the distribution model in the US is primarily the same as that in Aus. Distributors buy directly from the vendors, and the onsell to the resellers who onsell to end-users. The GST and US sales taxes are comparable and distribution margins are quite low (usually sub 5%). The biggest discrepancy in pricing comes from the vendors themselves (HP, MS, Adobe, etc) and the biggest threat to local IT resellers is not from the online retailers, but from other local resellers who are buying directly from distributors overseas (commonly called grey marketing). If the vendors set the same prices for local distributors as those in the US, this problem would be much less of an issue than it is now.
Michael
Friday, September 23, 2011 at 10:54 AMIts funny how they say it is importing costs, yet say a sony ps3 still needs to be imported to the usa from japan just like here but is $150 less.
Alex
Friday, September 23, 2011 at 11:24 AMI feel bad for the sellers of electronic goods. No wonder consumers in Australia are down when we can’t match the overseas prices… It’s a mess that needs to be fixed or the shopfront will disappear entirely.
Question then becomes: ‘Is that a bad thing?’
smurfydog
Friday, September 23, 2011 at 9:38 PM“Question then becomes: ‘Is that a bad thing?’”
I think it is a bad thing.
You can earn a livable income in Australia working retail at minimun wage. Retail and it’s support industries is probably (I have no data) one of the largest employers of unskilled workers.
Who employs these workers work when there is no retail sector left in this country?
Don’t get me wrong – we’re all economic rationlists now – and I’ll buy where it’s cheapest for me to buy. But something needs to change in the current model, as the death or retail in Australia can’t be good for the country.
Pete
Friday, September 23, 2011 at 11:42 AMI’m looking at you ADOBE!
Bcam
Friday, September 23, 2011 at 11:52 AMDont even get me started on digital distribution of electronic software/games etc!!!
Ozoneocean
Friday, September 23, 2011 at 2:37 PMYeah, the problem is that retailers get all protective and defensive and cry about having to make their “margin” etc, offering seemingly reasonable explanations for price differences while completely ignoring the fact that what they’re talking about has NOTHING at all to do with the conversation and all they’re doing is muddying up the discussion!
No one really cares about paying a mere $20 or $50 extra, even $100 extra isn’t that much of a thing on something costing over $1000.
As people say what matters is large percentage increases like %80 or even %100! Those are indefensible and cannot be explained away by smaller markets, import charges and “margins”. Companies like Harvey Normal are a cancer on the face of our retail industry. They should go back to selling ugly armchairs with cup-holders to fat people.
Mat
Friday, September 23, 2011 at 3:09 PMOk. So when Sony launched the PS3 in the US for $399 and in Australia for $999 that was reasonable?
Or how about digital distribution? It comes from the same server, you have to download it at your own cost, and within your own data/speed limits. Yet when games launch on steam or PSN for $39-50 in the US they are $89-100 on the Australian stores?
We’re not being ripped off at all!
Matt
Friday, September 23, 2011 at 4:02 PM“Aussies Are Paying Too Much For “
Matt
Friday, September 23, 2011 at 4:03 PMBah, comment system screwed up my comment.
“Aussies Are Paying Too Much For (insert ANYTHING here)”
Derek
Friday, September 23, 2011 at 6:41 PMThe government should allow Australian Citizens to import “grey cars” from the UK. They are still going to be much cheaper than they are here. As they are being exported from the UK they won’t be subject to UK 20% VAT.
james_whatsit
Friday, September 23, 2011 at 9:43 PMworst offenders:
1-sony
2-apple (also most improved)
Zengster
Friday, September 23, 2011 at 9:49 PMAbout f**king time.
Sheeds
Saturday, September 24, 2011 at 3:03 PMWhat about the greatest scam of all – Region Coding. Artifical locking of content to split the globe into markets to allow price maximisation and reduced competition.
Screw that. I too am prepared to pay 5-10% more for local sourced content than overseas (excluding exchange rate variations).
A Region B 3D BluRay ex Amazon landed for between half to 2/3 the price of the locally available product….No thought required, hello Amazon.co.uk
Steve
Monday, September 26, 2011 at 11:46 AMThis is spot on… depending on how much merchandise you plan on buying, it’s almost worth flying yourself to china on a lost-cost carrier like air asia and buying it all at cost price. Top shelf Camera lenses alone have a MASSIVE price difference if bought in australia (thanks canon).
Kad
Tuesday, September 27, 2011 at 12:53 PMA book printed in Australia cost 110AUD at Dymocks, or you can have it from Amazon for 40AUD (including shipping). Funny thing is that the Amazon’s version is also printed in Australia, shipped to UK and back and cost lest than half ….
Wanted to buy goggles locally (Sydney) 375AUD but luckily for me I have checked bay and got the same model from US for 99AUD including delivery.…..
The retailers are just screwing us big time here ….
Bebop
Wednesday, September 28, 2011 at 7:03 PMEveryone here is focussed on “costs”…but it’s really about VALUE….
How much do you VALUE something (ie photoshop)…if you use it for work and it adds to your income more than $600 than it makes sense.
There is value to providing a bricks and mortar store (ie, experience of the product in the store, sales process, whatever), but for many consumers (probably most gizmodo readers) this doesn’t outweigh the cost savings of buying online.
We all know that an itunes song doesn’t cost $1.50 to deliver to us….but many of us would value having non-pirated digital music at around that point.