[LINK] Kogan on Online Retail....

Tom Koltai tomk at unwired.com.au
Sun Jan 9 22:15:11 AEDT 2011


> -----Original Message-----
> From: link-bounces at mailman.anu.edu.au 
> [mailto:link-bounces at mailman.anu.edu.au] On Behalf Of Richard Chirgwin
> Sent: Sunday, 9 January 2011 6:04 PM
> To: marghanita at ramin.com.au
> Cc: link at mailman.anu.edu.au
> Subject: Re: [LINK] Kogan on Online Retail....
><SNIP> 
> 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)
> 
I beg to differ, a price break of a million units versus 50,000 units
will indubitably be identical for both the USA and Australia[with
appropriate adjustment for container shipping costs...]

If a purchaser only orders 50,000, the Manufacturer doesn't care about
the location of the purchaser. He only cares that there is 950K less in
this order than the premium customer over there...

Ergo, no geo-location price discrimination - just pure economics of the
transaction.

On the other hand if we all understand that Australia orders in single
container units [i.e.: <10 containers per order] and organisations like
The Good Guys in the US order in 30-40 container lots [pre 2009], then
it might be understandable that the LC payable on FOB has a discounted
face value of possibly as much as 35-40%.

This alone explains the main pricing differentiation between the USA and
Australia.

There is no "conspiracy" to charge Aussies more. There just aren't
enough of us to warrant 30-40 container load orders.
Mr. Harvey considers he is a big retailer. Compared to Costco or
Wal-Mart, his annual sales don't quite add up to a weeks worth of the US
retail chains national turnover.

That's approximately a fifty to one price break.

N.B.: The Good Guys USA has no connection with the good Guys (AU). In
fact, I used the Good guys because they were acquired by CompUSA and are
now out of business having closed their last Store in Berkeley C.A.
early last year. 

<Snip>






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