[LINK] Kogan on Online Retail....

[Richard Chirgwin]

Marghanita,

I realise the difference in price quotation. My assertion is twofold:

1. Tax quotations don't account for enough of the difference between 
Australia and the US.

2. When I see products whose prices do not change in spite of a 20% 
appreciation in the Australian dollar, I think we can safely ignore 
differences in tax regimes.

I have, in fact, identified a couple of products that are *cheaper* in 
Australia than the US: so some vendors actually allow prices to move 
with exchange rates.

In all of this, the point I want to get across is that while "blame 
Harvey Norman" is easy and populist, it's not entirely accurate.

As for other factors:

Localisation - less important than it used to be. For example, power 
supplies are now universal - you're not making a different 240 V / 110 V 
version of the product any more, except for stuff like large whitegoods. 
Local approvals are now aligned with international approvals for most 
things, and manufacturers can self-certify things like electrical / 
electronic goods.

Small Market - important. The supplier doesn't discount in Australia for 
50,000 units anywhere near as much as it would discount in the US for a 
million units. But doesn't that also suggest that suppliers are 
indulging in geographic price discrimination? (Of course they are)

A final point. I know from experience that "online is cheaper than 
bricks-and-mortar" is a gross oversimplification. When I bought a chest 
freezer in December, the best price I could get was from a no-glitz, 
not-in-the-mall shop in Parramatta. By going "low rent" - after all, the 
warranty is backed by the manufacturer, not the retailer - I beat the 
local online prices by about 20% (and the "big retail" prices by about 
30%). It's just that I had to give up the convenience, and spend an hour 
on the street instead of clicking my way to a deal.

RC

On 9/01/11 4:46 PM, Marghanita da Cruz wrote:
> Richard,
>
> The point is that in Australia, prices are quoted including
> the Tax - which retailers may wish to change. In the US, it
> took some getting used to, to discover the price at the
> Checkout was higher than the price on the shelf or the menu.
> I think it was something around 15% - though I can't confirm
> this.
>
> You also need to allow a bit for exchange rates - we may see
> some change as the Australian Dollar has only relatively recently
> made and exceeded parity with the US. So, you could allow
> 10-20% there too.
>
> So, we could be looking at a 10-20% price difference between the US 
> and Australia - perhaps partly justifiable by product localisation 
> costs for a small market/lack of competition.
>
> Deals with retailers/telcos etc are likely to be more complex than 
> markups on individual products.
>
> Marghanita
> Richard Chirgwin wrote:
>> Marghanita,
>>
>> I haven't compared to the UK.
>>
>> With regards to the US, Internet sales are, as I understand it, 
>> exempt from state taxes (something which several states are lobbying 
>> to change).
>>
>> However, when the price gap is more than 50%, the issue of sales 
>> taxes becomes moot.
>>
>> RC
>>
>> On 9/01/11 4:01 PM, Marghanita da Cruz wrote:
>>> Richard,
>>>
>>> In the US VAT/Sales Taxes are added onto the purchase price, at the 
>>> point of sale,
>>> whereas in Australia GST is included in the RRP.
>>>
>>> Are you including VAT/ Sales Taxes in the US price?
>>>
>>> Marghanita
>>>
>>> Richard Chirgwin wrote:
>>>> Fred - I don't know about it being good for products. But if you're 
>>>> one of ten retailers of a must-have product, do you:
>>>>
>>>> a. Rock the boat by exposing resale price maintenance?
>>>> b. Rock the boat by importing lower-cost supplies from the US and 
>>>> damn the consequences? or
>>>> c. Shut up and draw attention away from the supplier's role in 
>>>> price setting?
>>>>
>>>> RC
>>>>
>>>> On 9/01/11 2:23 PM, Fred Pilcher wrote:
>>>>> Richard wrote:
>>>>>> It's quite clear that vendors - not just in the IT industry - impose
>>>>>> what amounts to "penalty pricing" on markets like Australia. I'm
>>>>>> assembling some price samples out of curiousity, and I can see 
>>>>>> vendors'
>>>>>> "recommended retail" prices in Australia that are more than 60% 
>>>>>> higher
>>>>>> than their US counterparts. It's easy to pretend that this is just
>>>>>> retailer greed, but how do you account for it when you're talking 
>>>>>> about
>>>>>> people who own their retail outlets (eg Apple)?
>>>>> It's one of the basic principles of capitalism: charge what the 
>>>>> market
>>>>> will bear. Australia's pretty much a captive market for them - 
>>>>> it's not
>>>>> easy for us to pop across the border into another country, and they
>>>>> often place restrictions on international sales.
>>>>>
>>>>> Australian retailers are probably happy to go along with this price
>>>>> gouging since it enhances their profits.
>>>>>
>>>>> Fred
>>>>> _______________________________________________
>>>>> Link mailing list
>>>>> Link at mailman.anu.edu.au
>>>>> http://mailman.anu.edu.au/mailman/listinfo/link
>>>>>
>>>>
>>>> _______________________________________________
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>>>>
>>>
>>
>>
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>
>