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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.
Worldwide scrounging for the cheapest labor, juciest tax breaks, and laxest regulations for them, region coding and 'grey market' for you.
Low friction international capital markets for them, border and immigrations controls for you.
See, 'free trade' is awesome!
If we want to talk US, the oh-so-terrifying-scourge of drugs-identical-to-their-us-counterparts-but-marked-'only for sale in Canada' is probably worth mentioning. Based on the amount of not-at-all-self-interested hysteria about the safety concerns surrounding these (much, much, cheaper) drugs, you'd think that Canadians were some kind of alien organism with a metabolism based on cryogenic sulfur compounds for which drugs had to be specially formulated...
Traveled there for work over the years and checked out the computer stores while I was down there. Everything was more expensive by a fair margin, enough to put me in shock. Not just computers either, food, clothes, household goods etc.
Talking to the locals they got in the habit of buying from the US and hoping the warranty wasn't needed. Massive problem and I'm surprised they are finally doing something about it.
I still want a Ute though. Was very disappointed when Pontiac got axed right before they were going to import 500 of them....
"Grey Market" used to mean refurbished product, especially the warranty-return product which either worked to begin with (brought back to retailer out of "buyers remorse") or was simply repaired or upgraded. As sales became more global, Corporations negotiated different warranty expectations on new products in different countries, so goods sold in a country with lower consumer warranty guarantees were cheaper, and might find themselves transported to where they were covered by stricter warranty (increasing risk to the manufacturer if the product was faulty).
Today, few of the products sold are actually made by the Corporation whose name is on the warranty. Factories like Taiwanese-owned Han Hoi (Foxconn) churn out product not just for Apple, but for defunct brand names like "Polaroid". The term "grey market" today is applied (by groups like Anti Gray Market Alliance) to patent claim products and plain old "used" sales. The term "grey market" as used in the article is so general that it is really meaningless. Even the product you buy from a "factory direct" website may be the exact same good as the one you buy with another corporation's name on it, entirely. How "grey" is that?
Gently reply
Is there a reason that there 'almost has to be a markup'(beyond the costs of shipping)?
I don't know if this applies to Australia, but some products are more expensive in the EU because the legally mandated warranty for the product is longer than for the US. I can buy a TV here in the UK, and if it breaks within three years there's a good chance it's the place I bought it from's problem (there's some complication, depending how long it lasted). If a manufacturer makes shoddy products, they're either going to do some QA and try and send the better products to the EU, or increase prices to cover the increased costs.
(Similarly, a company might increase costs in the USA to pay for the higher cost of liability insurance.)
You mean when you artificially jack up prices, people will try to find a way around it?
I'm shocked.
What do I know, I'm just an idiot, right?
Companies set a suggested retail price in each market to maximize profit.
Yea, usually its not the companies fault that capitalism has failed to create a competitive marketplace, well unless they have taken steps to manipulate the market to reduce competition, like region coding, price fixing, cartels, mergers and buyout etc.
Its probably the governments fault for not regulating the market and making corporations understand they trade at the pleasure of countries in which they operate, they cant do whatever they like.
Well, unless the government doesnt even have any control over what buisness can and cant do in the country they are supposed to be governing, because of WTO rules, free trade agreements, international cartels etc.
So yea, dont blame the corporations.
The exchange rate is part of it but locked down distribution channels are the larger part.
A while ago, one US dollar was worth 1.7 Australian dollars. So something worth US$50 in a US store would be put on shelves here for AU$85. And then the exchange rate changed. One US dollar was worth one AU dollar. But things don't sell for their cost, they sell for as much as the seller can get and that's the pricing Australian consumers were used to. So that US$50 item would still be sold for AU$85 and someone would pocket the AU$35 difference.
The second part of this is distribution channel lockdown. Companies producing goods make deals with their US distributors to force those distributors to refuse to sell to Australian buyers. That leaves Australians and Australian retailers forced to buy from the designated Australian distributor at inflated prices.
What the grey market does is break that distribution lock. That's all. Some US citizen buys goods in the US from the US distribution channel, pays the US price, ships them over and sells them in Australia for far less than the authorised Australian distributor charges Australian retailers. If it wasn't for the locked down distribution, Australian retailers would skip the authorised Australian distributor and buy from a US distributor at US prices.
Another reason Australians are complaining is, with Internet sales, people nowdays can *see* the prices being charged elsewhere. 15 years ago, you'd have no idea what something sold for in another country. Now, we see Skyrim appear on Steam for US$50 for US gamers and US$90 for Australian gamers.
Yes, we get charged US dollars on Steam. 90 of them instead of 50, because the US Steam site sees I have an Australian IP address. And you have to send the packets much harder to make sure they get all the way across the ocean, you know? There's sites where you can order a game and they'll go to their local retailer, buy the game, open the box and then email you the Steam key. You can type it in your Steam client and download the game. Absolutely ridiculous.
An example that has been pissing me off for weeks. A Dell M4700, with a 2.6GHz i7-3720QM, 8Gb RAM, 500 Gb HDD, IPS 1920x1080 display, 3 yr warranty.
From www.dell.com.au: AUD$3600.
From www.dell.com: $1550.
Surely they can't be serious. That's 230% more for the same thing.