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Prices Drive Australians To Grey Market For Hardware and Software
An anonymous reader writes "The Australian government has been running an inquiry into why technology is so much more expensive to buy down under than in the U.S. In response to the price difference, many consumers are turning to the Internet to buy tech that is imported through unofficial channels at cheaper prices from the U.S. Not to miss out on sales, some retailers are starting to set up special websites that sell this way too. The so-called 'grey market' can save you cash, but could it cost you more in the long run? This article looks at some of the potential problems for people buying technology this way." A companion article examines some of the nitty-gritty of price differences between Australia and the U.S., including the observation that entry-level salaries skew higher in Australia.
This is a major factor.
A few years back, I bought Canon's 24-70mm f/2.8 L lens from the US. Including shipping, customs charges (which included GST), and the like, it was around $AU1400. The local price? A mere $2000 or so (can't remember offhand, but I do know it was a significant saving.)
A similar story: I bought a box set of the first four series of Doctor Who from the UK (Ecclestone and Tennant's series, basically.) Cost: about $AU60. A single series in Australia costs $AU90 - so I got all four series for less than the price of buying one locally.
There's no doubt that Australia is being gouged. The only question is, what's a reasonable markup, given that we are a small, geographically spread nation? (Population: about 7.5% that of the USA. Land area: about that of the 48 contiguous states. You do the math.) That there almost has to be a markup is a given ... but I don't think that what we're currently paying is particularly reasonable, all things considered.
This does not explain why it's often 30-50% cheaper to buy from a foreign source and pay individual shipping from overseas. Even taking into account the 10% GST it's obvious Australians are being charged more becsause people think they can get away with it.
These same people are now kicking and screaming because the internet destroys their easy scam.
Depends on the laws of the land, actually.
In Europe, for example, import duties (25%+) and VAT (20%+) are added on to the cost of a good you see. When the price tag says $700, you pay $700. Not like North America where it's $500+tax.
Of course, the other reason is local distributors are often the cause. You see, a manufacturer rarely if ever sells direct to the retailer. Instead, they sell to local distributors, who usually get exclusive distribution rights to a geographic region. Usually a country-sized portion, sometimes a continent, othertimes much smaller. Depends how big the manufacturer is, and how much product gets moved - the more popular, the smaller the regions tend to be.
That distributor is who determines the local price based on the MSRP and what they sell to retaliers at. And often times, that distributor enforces the distribution agreement for multinational retailers. Exceptions usually are the likes of Amazon (who may shift US inventory to other countries), or Walmart (who has their own huge logistical department who may receive goods from many distributors at a central warehouse in another region). Or have sufficient muscle to be able to shut out a local distributor if they try to gouge (e.g., Wal-mart).
In Canada, the retailers are often complaining that the Canadian distributors are the ones marking up the goods - they can't really move too much on prices because they're paying more.
And yes, I've seen many small businesses complain - they often will admit that a customer can buy the same product from Amazon.ca cheaper than what the store can get it from their distributor (which is why the store doesn't stock the product).
And there can be multiple layers of distributors as well. When some store claims to "cut out the middleman", they're lying. There's always a distributor somewhere along the line (and if there isn't, on of the existing distributors will offer it, if possible).
And yes, said distributor can often be a subsidiary of the company - e.g., Canon USA, Canon Canada, Apple Australia, etc. Or a separate company (e.g., Ingram Micro, Digikey). Sole distributorships are also possible (e.g., comic books and stuff are practically only available through Diamond).
And yes, they often do rather monopolistic things as well - like refusing to honor grey-market warranties - they'll suggest you send it back to the store you bought it from).