Last week I went online to price an item. The price delivered from an Australian company is $261.15. The freight component is $11.20 or four per cent of the transaction value. I then searched for the identical item in the US and the price delivered (all prices converted to AUD) is $191.38 – a discount of 27 per cent off the Australian price. Bear in mind that the freight component is $49 or 25 per cent of the transaction value! Here are three emails that followed. EMAIL ONE Hi, I unde
rstand the benefits of buying from an Australian company. I can import the latest XXXXX with all accessories from a reputable seller in the US for $191 delivered. Can you match this?
Regards, Stuart
EMAIL TWO
Hi Stuart,
Thank you for your inquiry.
Could you please provide a link to the listing you’re referring to?
Kind Regards,
Max
EMAIL THREE
Dear Max,
Many thanks for your prompt response. Much appreciated.
I am sure that you are aware that some suppliers in the States and Canada attempt to protect their goods being exported at discounted prices to other countries, Australia included. When they find leakage, they immediately set about blocking supply. This is a tough job bearing in mind the third party providers who will nowadays ship from the States. I understand the predicament that this poses for retailers, both online and bricks and mortar and I have in fact written several articles on this.
From a consumer point of view, while recognising the benefits of buying from a local supplier and while wishing to support Australian retail, significant differences in price naturally drive customers to purchase offshore. It is due to this that I always like to give local retailers the opportunity to sharpen their pencils, even if not reducing their prices to the level offered off shore. I also appreciate that with the LVT, GST is a factor, but it is not the 10 per cent differential that is the real issue.
Overseas suppliers have got to listen to their Australian distributors and offer them (much) better prices. A long winded response as to why in the interests of free trade, I cannot provide the link you request!
The poor camera retailers can actually purchase goods retail in Hong Kong cheaper than they can purchase here from the distributors and this is not the only example of this.
I thank you for reading this. Perhaps it will assist you with your overseas suppliers.
Needless to say there was no response to email three and the item is winging its way to Australia as we speak. Had the retailer responded with even a modest discount, I may well have been swayed.
Incidentally the actual item price excluding freight is as follows: Australia $249.95, US $149.50.
Perhaps this provides an opportunity for someone. Trawl the net for items like this, import say 100 at a sharp price direct from the manufacturer. The freight will come right down importing in bulk. The cost of the item is say $125 plus freight of say $10. You could retail it here for $199 and make a reasonable margin.
When will (some) Australian online retailers wake up? Compete or wither.
Stuart Bennie is a retail consultant at Impact Retailing and can be contacted at stuart@impactretailing.com.au or 0414 631 702.