The Overseas Purchasing Debate

[jasonc]

So over teh last six months we applied pressure on our suppliers and now we can not only compete with any online price but often undercut them and make more money than before.

good to hear it out of someone at the "retail" end of the game.

[simonn]

Can an Australian retailer compete with these overseas companies, our experience would suggest they can...if the suppliers and manufacturers support them. However why would the suppliers support the retailer unless they are forced too?

And why would retailers support their customers unless they are forced to?

Hey, hey, looky here, we got market forces at work. Competition and stuff.

[ThePhil]

With our suppliers we had a huge meeting and they agreed to basically set one world wholesale price in $US, you can't ask for more than that, but they are not then going to start adjusting it for each individual countries importing regimes.

So if the wholesale price is fixed globally why are retail prices in Australia at bike shops often 50% or more above that of overseas competitors? Please don't suggest it's Australian import costs or GST as I will start laughing.

Out of your 50%, one individual example would be say $100 wholesale item, then 10% duty, $110 then, (leave out the IPDC) then mark up, say 30%, $143, then gst, $157.30, compared to $130, thats 21% of the difference. The rest is like talking about how long is a piece of string, maybe ask Cranks?

[im_no_pro]

With our suppliers we had a huge meeting and they agreed to basically set one world wholesale price in $US, you can't ask for more than that, but they are not then going to start adjusting it for each individual countries importing regimes.

So if the wholesale price is fixed globally why are retail prices in Australia at bike shops often 50% or more above that of overseas competitors? Please don't suggest it's Australian import costs or GST as I will start laughing.

Out of your 50%, one individual example would be say $100 wholesale item, then 10% duty, $110 then, (leave out the IPDC) then mark up, say 30%, $143, then gst, $157.30, compared to $130, thats 21% of the difference. The rest is like talking about how long is a piece of string, maybe ask Cranks?

Are you pulling these number's out of a hat or do you actually have experience in such things? Every time you keep churing out the same thing, GST this, GST that. Wage costs actually have a significantly larger impact on local retailers ability to compete, in particular penalty rates. You can shop in an online store 24/7 without them having to pay public holiday rates (which were significantly higher than other developed western economies last I checked), try doing that in a physical store. Thing is, no-one will come out and say it, imagine the backlash. Oh my god, the poor workers are just trying to make a living, big businesses are trying to blame it on the poor worker etc (keeping in mind I am a retail worker). I could (and would) go further, but then we will start to stray into political discussion which is no go around here.

You want the reality of it from someone who has both worked in and studied retailers both large and small? Claiming that introducing the GST for imports under $1k will save Aussie retailers from being uncompetitive is like claiming if the farmers had pee'd in their paddocks during the drought it would have solved their irrigation problems.

Sorry, but you really are flogging a dead horse here IMO.

[boss]

So if the wholesale price is fixed globally why are retail prices in Australia at bike shops often 50% or more above that of overseas competitors? Please don't suggest it's Australian import costs or GST as I will start laughing.

Out of your 50%, one individual example would be say $100 wholesale item, then 10% duty, $110 then, (leave out the IPDC) then mark up, say 30%, $143, then gst, $157.30, compared to $130, thats 21% of the difference. The rest is like talking about how long is a piece of string, maybe ask Cranks?

Are you pulling these number's out of a hat or do you actually have experience in such things? Every time you keep churing out the same thing, GST this, GST that. Wage costs actually have a significantly larger impact on local retailers ability to compete, in particular penalty rates. You can shop in an online store 24/7 without them having to pay public holiday rates (which were significantly higher than other developed western economies last I checked), try doing that in a physical store. Thing is, no-one will come out and say it, imagine the backlash. Oh my god, the poor workers are just trying to make a living, big businesses are trying to blame it on the poor worker etc (keeping in mind I am a retail worker). I could (and would) go further, but then we will start to stray into political discussion which is no go around here.

You want the reality of it from someone who has both worked in and studied retailers both large and small? Claiming that introducing the GST for imports under $1k will save Aussie retailers from being uncompetitive is like claiming if the farmers had pee'd in their paddocks during the drought it would have solved their irrigation problems.

Sorry, but you really are flogging a dead horse here IMO.

Finally. Someone else thinks the same thing as me.

[ThePhil]

I have from the start of the thread made sure I've only concentrated on the duty, gst and ipdc, right back to the video, wages, rents, individual service complaints, public holidays, that's where all the other discussions fall down as it starts getting into a very broad and sometimes personal discussion.

I fully realise that this is only one tiny part of a whole lot of competitive factors, but it is still a decent part of it, 21% extra fixed costs is significant. That's the difference between making $100,000 on $1M or losing $100,000.

Again I realise it will not make some uncompetitive set-ups competitive again, but it will at least give the industry here a chance to compete and develop on a level playing field.

[ThePhil]

And I have heaps of retail and buying experience, but you don't really need it to work out that if you pay duty and gst and the others don't then you are disadvantaged to them. The term duty and gst free theshold sort of says it all.

[Ross]

But as has been discussed many, many, many times Phil, the price difference between local and o/s on a lot of goods is way more than the GST and duty.

[cobba]

Some Australian shops sell things at ridiculous prices.
Some Australian shops sell things at competitive prices.
Some Australian shops sell things at cheaper prices.

$139.16 locally with the $9.17 postage included.
or
$65.72 from the UK with the $12.58 postage included.
or
$59.00 locally with free postage
or
$53.93 from the UK with the $9.99 postage included.

$149.16 locally with the $9.17 postage included.
or
$71.77 from the UK with the $9.99 postage included.
or
$71.63 from the UK with the $12.58 postage included.
or
$66.50 locally with the $6.50 postage included.

[DavidS]

With our suppliers we had a huge meeting and they agreed to basically set one world wholesale price in $US, you can't ask for more than that, but they are not then going to start adjusting it for each individual countries importing regimes.

Well if that is the case you should be competitive. Don't tell me import duties don't exist in other countries, they do. Furthermore, we have a 10% GST, doesn't the UK have a 20% VAT? In the USA they have Federal and State taxes, often a GST or VAT. Most countries still have import duties and charges so, if the wholesale price is worldwide, then duties and consumption taxes should be a non-issue, especially since our GST is not particularly high, see http://en.wikipedia.org/wiki/Value_added_tax#Tax_rates

DS

[ThePhil]

Yea but when they export from the UK they don't charge VAT to Australian customers, so there is no VAT, we don't charge gst when we export to the UK, but they collect it off the customers when the goods enter the UK. So they can export to us GST and VAT free. I dont know what the import duties are in the UK.

[jcjordan]

Yea but when they export from the UK they don't charge VAT to Australian customers, so there is no VAT, we don't charge gst when we export to the UK, but they collect it off the customers when the goods enter the UK. So they can export to us GST and VAT free. I dont know what the import duties are in the UK.

The UK import duties are fairly similar to Australia based on the link I put up recently.

The difference mainly comes from our import model. Most of the Euro sellers are buying straight from the manufacture and done have another stupid layer of cost imposed on them

[twizzle]

LBS mentioned last year that CyclingExpress's sell price for Ultegra chains was lower than his buy price from Shimano Australia. He'd love to know how that worked.


Sent from my iThingy...

[rkelsen]

Sounds like he needs to be a bit more pro-active if he wants to be able to compete.

But does he really care? If he did, surely he would have done something already?

[human909]

LBS mentioned last year that CyclingExpress's sell price for Ultegra chains was lower than his buy price from Shimano Australia. He'd love to know how that worked.

Stop buying from Shimano Australia and start buying from overseas or CyclingExpress.


Buyers have gotten savy and started buy elsewhere, if some retailers aren't doing so then it is their own fault.

[jcjordan]

LBS mentioned last year that CyclingExpress's sell price for Ultegra chains was lower than his buy price from Shimano Australia. He'd love to know how that worked.

Stop buying from Shimano Australia and start buying from overseas or CyclingExpress.


Buyers have gotten savy and started buy elsewhere, if some retailers aren't doing so then it is their own fault.

If a LBS is found to be purchasing from wiggle or PBK the Australian distributor would stop supplying to them.

This is straight from the shimano rep

[boss]

LBS mentioned last year that CyclingExpress's sell price for Ultegra chains was lower than his buy price from Shimano Australia. He'd love to know how that worked.

Stop buying from Shimano Australia and start buying from overseas or CyclingExpress.


Buyers have gotten savy and started buy elsewhere, if some retailers aren't doing so then it is their own fault.

If a LBS is found to be purchasing from wiggle or PBK the Australian distributor would stop supplying to them.

This is straight from the shimano rep

And that's not just purely out of spite either.

If a shop is sourcing both from the distro and from somewhere else O/S, it would be incredibly difficult for the Australian distributor to know which products it should be supporting with warranty and which products they need support.

[Ross]

LBS mentioned last year that CyclingExpress's sell price for Ultegra chains was lower than his buy price from Shimano Australia. He'd love to know how that worked.


Sent from my iThingy...

They allegedly buy bikes in kit form and instead of assembling them they sell off the parts

[jcjordan]

LBS mentioned last year that CyclingExpress's sell price for Ultegra chains was lower than his buy price from Shimano Australia. He'd love to know how that worked.


Sent from my iThingy...

They allegedly buy bikes in kit form and instead of assembling them they sell off the parts

I keep hearing that being said from various sources but have yet to see any proof.

[twizzle]

LBS mentioned last year that CyclingExpress's sell price for Ultegra chains was lower than his buy price from Shimano Australia. He'd love to know how that worked.


Sent from my iThingy...

They allegedly buy bikes in kit form and instead of assembling them they sell off the parts

And put the chains in retail boxes? I don't think so.

I've bought a groupset from the U.K. that was a build kit, it's very obvious when you get OEM instead of retail.

[boss]

LBS mentioned last year that CyclingExpress's sell price for Ultegra chains was lower than his buy price from Shimano Australia. He'd love to know how that worked.


Sent from my iThingy...

They allegedly buy bikes in kit form and instead of assembling them they sell off the parts

And put the chains in retail boxes? I don't think so.

I've bought a groupset from the U.K. that was a build kit, it's very obvious when you get OEM instead of retail.

LBS mentioned last year that CyclingExpress's sell price for Ultegra chains was lower than his buy price from Shimano Australia. He'd love to know how that worked.


Sent from my iThingy...

They allegedly buy bikes in kit form and instead of assembling them they sell off the parts

I keep hearing that being said from various sources but have yet to see any proof.

Has anyone here personally got anything from CE that was OEM i.e. plastic bagged rather than retail boxing?

I've heard similar stories RE: Cycling Express but nobody has provided first hand evidence (or any evidence really).

[twizzle]

Sounds like he needs to be a bit more pro-active if he wants to be able to compete.

But does he really care? If he did, surely he would have done something already?

This guy has stopped buying shimano parts and tends to sell sram etc. now, he simply couldn't get SA to provide him with the quantities of parts he wanted and often they just don't have them in stock for months at a time.

He specialises in repairs for casual/commuter types, so his 'buy list' is things like chain rings and pedals. It didn't matter if he wanted to buy one set of pedals or 100, they wouldn't give him a discount. He waited months for inner chain rings for MTB triples, when they finally got them back in stock they had only imported FIVE chain rings for the whole of Australia. Distributor fail.

[rkelsen]

Distributor fail.

By the sounds of it, they will very soon.

[ThePhil]

What would be the point of buying from crc/wiggle, just to mark it up? You would have done nothing for the customer.

[rkelsen]

You haven't been listening at all, have you?