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Prices Drive Australians To Grey Market For Hardware and Software

Posted by timothy on from the markets-should-be-bright-green dept.

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.

29 of 280 comments (clear)

  1. Price fixing by camera makers push me there. by Lumpy · · Score: 5, Interesting

    I buy grey market Lenses from Canon. Because of the price fixing they do for the US market. I can save hundreds, and in some cases THOUSANDS by getting a grey market L series lens over the US market lens.

    --
    Do not look at laser with remaining good eye.
    1. Re:Price fixing by camera makers push me there. by Anonymous Coward · · Score: 5, Informative

      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.

    2. Re:Price fixing by camera makers push me there. by fuzzyfuzzyfungus · · Score: 4, Insightful

      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...

    3. Re:Price fixing by camera makers push me there. by Lumpy · · Score: 5, Interesting

      There is no "reasonable" markup argument when they do region and country price fixing. I can buy any canon lens significantly cheaper from friends in Japan and pay for shipping than at any location in the USA. Canon is marking up HARD the lens prices for other countries.

      I've been buying lenses at prices that many dealers would kill for. And the lens was bought at a retail camera stop in Japan and packed in a box and shipped to me here in the USA.

      --
      Do not look at laser with remaining good eye.
    4. Re:Price fixing by camera makers push me there. by Anonymous Coward · · Score: 3, Interesting

      I am very interested in this as well. I live in Norway and we always end up paying way more for everything, and I would really like to know why. Some things are obvious like food, because it is locally produced and there are high tariffs. However electronics, movies, toys etc has no import duties and yet often costs more. I think the pattern I have seen is that things which are quite expensive are reasonably priced here while small cheaps things are more expensive. Often by magnitudes. Perhaps they speculate that we would not import from abroad pencil sharpners and post-it notes because the hassle is not worth it given the absolute amount saved.

    5. Re:Price fixing by camera makers push me there. by ozmanjusri · · Score: 5, Interesting

      So why is downloaded software marked up by similar or greater amounts?

      And how come I can get a camera from the US cheaper than a vendor who would presumably have access to cheaper shipping than individuals?

      --
      "I've got more toys than Teruhisa Kitahara."
    6. Re:Price fixing by camera makers push me there. by green1 · · Score: 4, Informative

      You think that's bad... try being in Canada, our drug prices may be less, but our prices on almost everything else are significantly higher than in the USA. There was actually a news article here a while back about cars that were built at a plant in Canada, being $10,000-$20,000 cheaper in hawaii than they were at the dealership accross the street from the plant. I frequently buy other things online to avoid the ridiculous markup in Canadian stores too.

    7. Re:Price fixing by camera makers push me there. by xaxa · · Score: 5, Insightful

      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.)

    8. Re:Price fixing by camera makers push me there. by Nursie · · Score: 5, Informative

      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.

    9. Re:Price fixing by camera makers push me there. by Frankie70 · · Score: 4, Funny

      I am in USA and I'm holding in my hand a box of advil ibuprofen tablets 200 mg per tablet. Now its getting late in the morning so if a canadian out there could put down his second molsen breakfast beer for a moment and shovel the snow to make a path to his or her medicine cabinet and report the size of a canadian advil / ibuprofen tablet I'd appreciate it. My hypothesis is that skinny canadian advil tablets are a mere 100 mg per tablet or maybe only 75 mg as opposed to the fatty american 200 mg tablets.

      I checked with a skinny canadian friend of mine. He said that he usually just looks at photographs of American 200 mg Advil. That keeps him going for 2-3 days.

    10. Re:Price fixing by camera makers push me there. by RDW · · Score: 4, Funny

      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.)

      Well, that highlights the real dangers of buying grey market. Instead of the first four series (Hartnell and Troughton), they fobbed you off with some modern imitation with Billy Piper in it!

    11. Re:Price fixing by camera makers push me there. by tlhIngan · · Score: 5, Informative

      Is there a reason that there 'almost has to be a markup'(beyond the costs of shipping)?

      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).

    12. Re:Price fixing by camera makers push me there. by Miamicanes · · Score: 3, Informative

      > So why is downloaded software marked up by similar or greater amounts?

      My guess? Historically, AUD$1 == US$0.50, and quite a few people haven't realized yet that they're now more or less at parity. As a result, I suspect quite a few American companies are just doubling the nominal US price out of habit.

    13. Re:Price fixing by camera makers push me there. by Solandri · · Score: 5, Interesting

      There is no "reasonable" markup argument when they do region and country price fixing. I can buy any canon lens significantly cheaper from friends in Japan and pay for shipping than at any location in the USA. Canon is marking up HARD the lens prices for other countries.

      I'm not excusing Canon's pricing, but the higher prices outside Japan are not completely unwarranted. Being a Japanese company, Canon's budget projections and business decisions are based on Yen. Whenever they sell in a market which uses a different currency, they have to take into account the risk of currency fluctuation. That is, their pricing outside of Japan has to be based on their worst-case projection for what will happen to the local currency in the coming year. Otherwise they could end up in a situation where they're selling lenses for less than it cost them to make.

      You OTOH are not looking at an annual operating budget. You're looking at a single snapshot of currency exchange rates on the day you buy. That considerably reduces the window of currency rate movement, and so Canon's markup outside of Japan seems enormous to you. You're only concerned with how much the USD could drop against the JPY in the day it takes your Japanese friend to buy and ship you the lens. Canon is concerned with how much the USD could drop in the year it takes them to sell their inventory, then convert that USD back to JPY.

      I got burned by this a few years back. I took a cross-border job in Canada at near my then-current salary converted to CAD (about USD$0.97 at the time). The first few months were great - the CAD went up to USD$1.07, meaning I'd essentially gotten a 10% pay raise. But then a little over a year later it crashed, dropping to below USD$0.80. None of this affected my Canadian co-workers, since their living expenses were in CAD. But I had to convert my paycheck to USD to pay my bills, so it hit me hard. Any time you're conducting long-term business which involves currency exchange rates, you have to factor in potential movements in exchange rates. (I kept most of my pay in a Canadian bank until the CAD eventually went back up to around USD$1.00. But the money I had to transfer to pay bills at the time was "locked in" at ~USD$0.78. It's a loss I'm never getting back because I didn't consider the possibility of the currency value changing as much as it did during my employment.)

  2. Ah, the sweet smell of free trade... by fuzzyfuzzyfungus · · Score: 5, Insightful

    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!

    1. Re:Ah, the sweet smell of free trade... by girlintraining · · Score: 5, Insightful

      Yeah; I'm waiting for the day they abolish prices altogether and just list the cost of everything as a percentage of your income. That's the pricing model everything is moving towards anyway -- not what something is worth, but what they can get away with charging you. And if any of you asshats stand up and make an "invisible hand" argument, you're waking up tomorrow with a horse head next to you. This is not the result of free trade, but the restriction of free trade. Those corporations are shoving region coding down your throats, signing exclusive contracts and manipulating distribution channels to artificially alter the prices, and buying off government officials to make it all legal. That is not capitalism. It is not free trade. It is exploitative, and should be stopped.

      --
      #fuckbeta #iamslashdot #dicemustdie
    2. Re:Ah, the sweet smell of free trade... by vlm · · Score: 3, Interesting

      just list the cost of everything as a percentage of your income.

      Isn't this pretty much how housing has traditionally been priced for a century or so? Your mortgage payment will be 1/4 your income, the only thing that varies is how much money you rent from the bank = what price the house sells for, depends on the current interest rate and level of financial "innovation" at the time of sale?

      And the price of a average mens business suit has always been "about" a average weeks pay? (now at the higher end a fancy suit has been 1 ounce of gold for more than a century, but thats a cultural difference between income and wealth)

      Just saying its not new.

      --
      "Science flies us to the moon. Religion flies us into buildings." - Victor Stenger
    3. Re:Ah, the sweet smell of free trade... by macraig · · Score: 5, Insightful

      What that counter-argument does is justify institutionalized usury. Usury is inequity in a transaction when there is not an equal exchange of value. That leads to concentration of wealth. Before the Industrial Age, gross concentration of wealth wasn't as commonplace, but the Industrial Age and mass production has made it possible to concentrate wealth in a fashion never seen before that: rather than ripping off just a few people for a lot, it's now possible to rip off a lot of people for just a little and still get just as filthy rich. The people who control the means of mass production can get filthy rich without ever having to worry about villagers wielding pitchforks; the usury is spread so thin that individual villagers just don't notice the tiny knife being inserted and twisted. Multiply that by hundreds of mass producers, though, and the villagers notice but can't figure out where to march with their pitchforks. That's why the Occupy movements are so disjointed right now; they really don't know who to blame because they have so many tiny little knives in their backs rather than one big one. I miss the good old days when you knew who the Really Bad Guy was. Now there's hundreds of Slightly Bad Guys.

  3. because of the extra staff needed by Anonymous Coward · · Score: 5, Funny

    Companies like Newegg and Amazon must employ extra staff to invert the contents of all the packages to be sent to the Australian market. It's hard to have robots do this because of the sheer variety of size and contents. Most electronics are made in the northern hemisphere also to be sold there, so are naturally constructed rightside-up for that market. Employing so many people to flip the products over costs money, which is naturally passed on to customers in that market.

    It sucks for our AU friends, but it's the natural cost of being in such a small niche market.

    1. Re:because of the extra staff needed by crazyjj · · Score: 5, Funny

      Not to mention the fact that discs spin in the opposite direction down in Australia.

      --
      What political party do you join when you don't like Bible-thumpers *or* hippies?
  4. Very true by onyxruby · · Score: 4, Insightful

    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....

  5. 1960s Terminology in Y2K Marketplace by retroworks · · Score: 4, Insightful

    "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
    1. Re:1960s Terminology in Y2K Marketplace by Relayman · · Score: 3, Informative

      I can be more specific: Grey market goods are new, authentic goods bought through a distribution channel not approved by the manufacturer. Grey market goods do not have to cross borders; I can buy Cisco routers on the grey market in the U.S.

      You can also extend the definition to include used/remanufactured goods that cross borders as well.

      (I notice the British/Australian(?) spelling of "grey" is displacing the American "gray".)

      --
      If I used a sig over again, would anyone notice?
  6. Its not just technology by OzPeter · · Score: 4, Interesting

    I have rellies from Oz who when they visit the US stock up on hand and construction tools. Last time they were here they loaded up a suitcase with (among other things) a nail gun and as many of the brads as they could carry. They were really helped out by the fact that their 5 year old son was entitled to the full luggage allowance when flying. You don't do things like that unless it is worth your while.

    --
    I am Slashdot. Are you Slashdot as well?
  7. No way man! by JustAnotherIdiot · · Score: 5, Insightful

    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?
  8. Re:Can't really blame corporations by bug1 · · Score: 3, Insightful

    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.

  9. Mostly it's distribution channel lock by Zuriel · · Score: 4, Insightful

    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.

  10. Sweden has similar issues by mikael_j · · Score: 4, Informative

    Here in Sweden it's not just a matter of pricing but also with delayed releases since manufacturers want to sell localized products.

    What this means is that even if I'm fine with an English-language version of a product (or in many cases, Swedish-language version with a quickstart pamphlet in English) no one is selling the product because they hold off on introducing it to the Swedish market until the initial rush for the product in English-language markets is over.

    Case in point, the Nexus 7 tablet. No company in the US will sell it directly to Swedish customers, Asus has announced they're going to start selling it in october(!) and the only way to get one right now is through some grey import channel (have it shipped via some address in the US/UK or from some small fly-by-night company that caters to early adopters).

    It used to be that even software suffered from this, many older Swedish gamers will remember having to wait for months while games were translated to German, French and Spanish before being released to the Swedish market (with most Swedish gamers playing games with the language set to English with a handful using Swedish if its available).

    I'm all in favor telling corporations they can have their precious "free" trade only if the same freedoms are given to everyone, no "We own the trademark so you can't import our product from a market we give a fuck about and sell it on a market we don't care about" crap, if you're selling it anywhere then anyone should be free to ship it to somewhere else and sell it there as well.

    --
    Greylisting is to SMTP as NAT is to IPv4
  11. My own example ... by ras · · Score: 3, Insightful

    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.