ACCC investigates aggreements to not ship to Aus

[bailz66]

THERE are growing calls for Australia's competition watchdog to conduct an inquiry into local apparel distributors who are preventing overseas suppliers from selling their products to Australian consumers on international websites or instructing them to increase their web prices.

Found this today which will be interesting. It more talks about clothing lines rather than bushwalking/camping but we all know that some products in the US (NeoAir for example) are extreamly difficult to get shipped directly to Australia unless you use a Proxy shipping company.

Hopefully this practice is banned and we can either buy our gear in Australia at a much cheaper price or get the product from overseas at their retail price with the High Aussie Dollar

http://www.theage.com.au/business/watch ... 1yrcf.html

[walkinTas]

Interesting. That investigation seems to be aimed at local (Australian) distributors who are blocking overseas suppliers. I'd like to see some action on US manufacturers & distributors who heavy their local (US) retailers and stop them selling off shore.

[blacksheep]

It is a difficult one ...I certainly see both side of the arguement, but here is a view from the otherside ..
We (macpac) have distributors in EU, UK, HK and Japan. In each region we sell into we recognise that the distributor does a lot of work in their market place. They carry the cost of sales reps visiting retailers, marketing and advertising costs and the cost of business (warehousing, cost of financing stock, staffing the warehouse etc). As part of an understanding of partnership with distributors when we recieve a sales enquirey via our webstore from regions where we have a distributor we refer them to our distribution partner to follow up on the sale. That is simply the right thing to do in a partnership, anything other would not be right as you have to credit local activity for generating interest ( yes, even in this digital age).

I know from a customers point of view that not being able to access an identical item offered for sale at better pricing in another market is frustrating. (perhaps the question has to asked if the supply chain is too long, with too many clips of the ticket on the way through ifthe end price becomes non competitive.)

But buyers must also realise that a retail business pays rent, finance on maybe 400k of stock on the shop floor, pays 3-5 full time wages per store so they need to make a margin if they want to be in business. An on-line retailer off-shore may have a very different model from a local retailer, a very different cost base, and can staff their business in very different ways (we don't have hour long discussions with websites then not buy).

If you had local retailers stocking your products (as a brand) and were looking to support your brand/products growth in developing markets, would you think you could develop a partnership with a distributor without some efforts to ensure he could succeed in his market?

I don't have the answers, but I know when I am disappointed that an item can't be shipped to me (yes, I buy on-line too) I can at least see why such a situation might occur.

Anyhoo...back to business. Cheers,

[wayno]

that may be so but there are numerous companies selling gear here that can be bought overseas for up to half the price online, i dont think it's justified marking up the products that much. doesnt help that shops are in high rent areas adding even more to the price of gear. i was looking at asics shoes, one model rrp is $250 here, can get it online in the stateses for $80 i don't wear that the added costs for the distributor add up to $170 per shoe...... yeah thats an extreme example but it's not that isolated. there are still massive differences in prices for numerous brands, theres a fair bit of gear to buy for the serious tramper and for a lot of people buying online overseas can mean the difference between getteng decent gear or getting something second rate or not getting it at all... a lot of the people on this site recognise and appreciate decent gear and are loyal to various brands but because of the big price differentials arent loyal to local suppliers. it just looks like the middlemen are making too much money.

[blacksheep]

I agree. I can buy retail o/s than wholesale here on certain items..thus my supply chain comment.

[sthughes]

I doubt anything will come of it, but nice to see the problem getting some attention none the less.

I understand there are a lot of added prices to retailing in Aus (10% GST for a start!), but the pricing of some brands is just insane in Australia. I'd expect to pay more, but not 200% + more, that's what annoys me. Even comparing local online retailers versus physical store retailers in the States there is often still no comparison. Some brands manage to be a bit dearer but still in the ballpark on prices, so why can't the rest.

I also know a couple of retailers who say wholesale here exceeds retail in the US at times. Do we really need importers, agents, distributers etc in the 21st century?

[wayno]

i think some distributors think like distributors in the fashion industry, they have a monopoly and brand recognition so lets make a killing. then you see last years products specialed with hundreds of dollars off and realise how much profit there is to be had.
it's the whole psychology of marketing and the silly people who will pay retail prices because they feel they "must pay whatever for that brand"
we all know about how much nike make in profit...
nz property multi millionaire robert jones said "the secret to making a lot of money is to charge a lot and people think they are getting a good service for their money."
people have discussed on here being willing to pay a dollar a gram for gear..... thats $1,000 a kilo for products that started out as a few bucks in raw materials.... i'm surprised clubs dont go out and reverse engineer outdoor clothes. buy the fabric in buil and make their own gear and save a bucket load.
or go straight to distributors and bulk buy in stuff to save something...

[Miyata610]

Do we really need importers, agents, distributers etc in the 21st century?

Exactly!!!!!

Retailers could get product landed here from the US for less than the Oz wholesale price. A famous brand of mat comes to mind. It's not difficult to deal directly with a foreign distributor. Get rid of oz distributors and retailers might survive here.

[blacksheep]

What would stores sell? Where do they buy it from? Where is the stock held, and who carries the liability here?

[Miyata610]

What would stores sell? Where do they buy it from? Where is the stock held, and who carries the liability here?

They would sell what they want.

They buy from whoever they want.

Their suppliers keep stock (delivery times from OS are insignificant, and how often has a retailer said they're waiting for stock from overseas anyway? Lots.)

Liability? Just like now. If its broken give me a new one. Works all the way up the chain regardless of location.

[Dale]

What would stores sell? Where do they buy it from? Where is the stock held, and who carries the liability here?

The question here is whether a bricks and mortar retail model selling multiple brands purchased through a middle-man is viable ? The disruptive technology that is the internet and the trend towards on-line shopping says no IMHO. Certainly not if the range and price is so different. Perhaps businesses which sell items with high weight penalties are more likely to survive - bike stores come to mind. The likes of Macpac, Kathmandu and MD who manufacturer / distribute and control their supply chain have more chance. Their longer term competition is competing OS brands that we can now all access, even if sometimes with the inconvenience of freight forwarders. This also turns on whether consumers are OK with the risk of buying sight unseen and forking out for extra postage for warranty claims.

Look at Golite, the US brand which has changed its approach to a direct sales model, canned its distributors and has a limited retail presence. Going by the amount of items sold out on their website, they look to be doing well.

[wayno]

parallel importing has already blown the monopolistic electronics distributors out of the water. money talks, people want the savings .... they'll take the risk of limited warranties more often than not you won't need it for a decent brand

[Strider]

Going by the amount of items sold out on their website, they look to be doing well.

Perhaps their manufacturing sector is in trouble. Or perhaps they have simply run out of fabrics? Who knows.

[Gusto]

Interesting discussion. Internet stores are all well and good for some things, but what happens when I want to buy good walking boots and there is no local shop left to sell them to me??

Shops need to stock, the stock needs to come from local warehouses. The smaller independent retailers rely on their being distributors like Sea To Summit and Outdoors Agencies etc. that have a wide range of stock that can be shipped quickly.

The larger retailers already do import some of their products direct from Manufacturers. That is why you see some international brands in only specific shops. eg. My AKU boots can only be purchased in Snowgum stores. If you removed local distributors all together then shops would need to do more of this. This may benefit the largest of the retailers. But it is likely to penalise the smaller independent and franchise stores.

As a flow on effect there maybe less competition in the market, which could lead to the larger shops having control of prices. This result in unlikely.

What is likely is that the bigger the store becomes, the more average it's product range becomes. The most specialist stores at the moment aren't the biggest ones.
own gear that

Only astute and knowledgeable purveyors of specialist outdoors gear probably don't need to visit an actual shop in person much as they spend time researching online.


This style of store has potential.
http://www.theinquirer.net/inquirer/news/2125917/ebay-physical-shop-london The outdoors store as we know it will just be a shop with one of everything, in all sizes, but not colors. The shop will only serve the purpose of allowing people to try on and feel the products. Then they just order them in the store and get them shipped to their door. It's not so bad an idea. It means that consumers will need to shift their mindset and purchase goods slightly more in advance to allow for shipping. This already is occurring with online purchasing though.
It's clever as a retailer wouldn't need to have much stock on hand, which does allow them to update regularly to the latest models. Particularly good for technology.

cheers

[blacksheep]

And think of all the jobs that would be created...in um...postal delivery?

[Moondog55]

I think the problem is more to do with greed on the part of some larger companies.
patagonia is the company that comes to mind here, I love the gear because most of it fits me reasonably well, but why should I pay double the US price just too purchase my clothes here in Australia??
The stuff is made in Vietnam, just a few hours away by plane and a few days by ship, why does it have to go to California first them come back here??
Cheaper to buy form the US and have friends or family post it for me. Perhaps even cheaper to take my next holiday in Vietnam and fill suitcases, although I have been warned that the stuff for sale in the markets is rejected as not meeting QC standards (Like the family friend who bought some ski jackets home, purchased in bulk,when he tried them on at home they all had one sleeve about 70mm shorter than the other, try everything on LOL and DO Not trust street dealers too much )

I find most distributors are still using an outdated profit margin of PLUS 100%, doubling their own costs, before on-selling to retailers, but part of the problem lies with our respective governments treating small businesses as cash cows, to be milked for all the money they can be.
small business just becomes impossible if taxed to death

[wayno]

i dont think anyone want to see the retailers go under, they are in a rock and a hard place. but a lot of people think twice about buying from them because of the reasons discussed here. in a way you're encouraging the distributors hiking their prices excessivly when you buy at those prices. as i've said, buying online can often be the difference between affording good gear or not at all.
i dont mind paying a bit extra to buy from a shop, but i'm not paying a lot extra unecessarily.
its not jsut the online shoppers driving the small retailers out of business,the big retailers and extortionate rentals also contribute to making it hard to make enough money. the modern shopping mall has spelt the financial ruin of many a business.
one independant outdoor retailer i know had his rent doubled on him overnight. he had to move shop to where there was a lot less foot traffic, even opening a smaller ship on a busy street coulndt save him. it didnt help that a majoor outdoor retail chain moved into his original premises he moved out of, instantly capturing most of his established clients....

[Dale]

Going by the amount of items sold out on their website, they look to be doing well.

Perhaps their manufacturing sector is in trouble. Or perhaps they have simply run out of fabrics? Who knows.

Possibly, but the prices are pretty amazing $49 for a softshell anyone ?

[JOCKs]

I think the whole ball game has changed and is still changing. Traditional retail stores will be replaced by warehouses soon. Trying and Fitting will be replaced by online reviews and word of mouth. Manufacturers are also putting up online stores and with prices $10 more than MSRP, keeps their retailers competitive. The only problem with some online retailers is the shipping rates, some do not offer reduced shipping on smaller items. So buying one item is not viable.

[wayno]

in a single year the no of postal parcels and boxes coming into aus went up by thirty percent,,, put down to online shopping.... it's an ireversable trend. with many online stores offering no questions asked product returns it's not a major if you make mistakes on the big purcha chases. the more mail that gets shipped cheaper it becomes.... unfortunately more shops will go to the wall. flagship stores y gear vendors may be the only shops really immune to having to close their doors.

[blacksheep]

A quick count of "for lease" signs on chapel st in Melbourne gives a clear message of the spending behaviour in Aussie.. it will be interesting to watch shifts in employment figures in this sector. Who'd want to be in retail? Who'd want to be in politics and be charged in creating employment in service sectors and stimulate localized economic activity? Who'd want to invest in commercial property in a country that prefers to buy overseas?
It's not supporting local manufacturers that consumers need focus on, its how their greater spending activity supports the total economy. I've wondered why many people don't ask what their purchasing supports, how profits are spent, what is the bigger picture..

[wayno]

its hard to compete with online companies that are servicing populations in geographical areas of hundreds of millions of people, the scale of economy they can work in is far greater than anything australasia can compete with seriously. until recently distance has has to a certain extent removed the ability to take the kind of advantage people can today with the internet. do any online shpping and you're bound to end up loking at an overseas shop whether you planned to or not. internet search engines will bring them up. doesnt take much research to work out where the real deals are with sites that specialise in comparative shopping.
do more research and you can get around the blockading of selling to offshore clients.
even befor online shopping really took off, warehouse shopping was very popular in the states... in some cases people are willing to drive hundreds of k's to warehouse outlets to buy at wholesale prices. online shopping has to a certain extent only circumvented the commute a lot of people made in the past to buy cheaply.
itmes are tough for a lot of people , disposable income short, and the smaller shops are the casualty....

[Miyata610]

Cam, like a lot of people here I want to support retail, but I also have a problem with the price differential between oz and the USA. Even companies like Apple now seem to have similar pricing between here and there (if you deduct our gst and ignore their state taxes). Why is it that we have such huge price differentials for products from Scarpa or Thermarest?

Scarpa particularly annoy me.... I can't buy the boots I want in oz and without half sizes I can't even buy boots that fit. But I'll continue to buy Scarpa boots.... What are my options?

I like the Macpac branded stuff, and I'll continue to buy my thermals and wet weather gear from you. But never a Scarpa or Thermarest product.

[Macca81]

ARB, a local 4x4 accessories manufacturer. 5 years ago i was looking for a couple of diff locks for my hilux, and being a supporter of Aussie business, looked towards ARB first. At the time, for the price of one locker locally, i could buy 2 from the USA and have them shipped here, and have a bit of change. At the time (im not sure now...) they were made in Aus, shipped to the USA where i could then buy 2 for around AU$550 and have them shipped back to Aus for a further $100. To buy one from here in Hobart, without the item having to travel around the world, was going to cost me $699... No amount of explanations can make that right...

[Liamy77]

I think a GOOD retailer will still stock good products at good prices regardless of where they source them - If they need protection from basic laws of supply and demand then maybe they should go get a job with the postal service instead! And if price wasn't a big decision maker macpac (for example) and Blundstone ( for another example) would not manufacture many (most?) of their products overseas!! What's good for the goose is good for the gander - getting close to being hipocritical to protect local (expensive) distributors while cutting your own costs wherever possible. IMHO

Blacksheep ( and other manufacturers) Don't sacrifice your customers to save a distributor!

[Strider]

Blundstone ( for another example) would not manufacture many (most?) of their products overseas!!

Blunnies are 100% overseas manufactured now I think.

[nq111]

Blacksheep ( and other manufacturers) Don't sacrifice your customers to save a distributor!

Steve Jobs said that if as a business you are not prepared to cannibalise yourself you will have to accept other businesses will cannabalise you. Same goes for a model of distribution in my opinion.

There are no right or wrong ways to do retail - just a variety of models that retailers will have to accept if they choose correctly or wrongly.The market is always right. The ACCC investigation is silly - businesses should price as they like but not complain if consumers find a way to go elsewhere. Sounds like they are trying to solve what the market will self correct over time anyway.

I think the online models have a lot more evolving to do - and will take a lot more market share in the next decade.

[JohnM]

Years ago, a few clued-in people told us that the internet was going to change everything. Not many people believed them.

Now, I think we're at the beginning of the big change. Massive period of reajustment in the next decade or two. Painful for some, profitable for others. Right now in Oz, there's more pain than profit, because we're not yet the ones benefitting from the change.

There's no point complaining about people not wanting to spend double, to support the existing bricks 'n mortar model. There's no point trying to cling onto the way it was because the genie is out of the bottle now.

Like it or not (and I don't always like it) we are now reaping the pain and pleasure of operating in a truly global economy, and an economy that is rapidly shifting away from the old jobs and old ways.

Shopping centres. miles of retail strip shopping. big department stores. These are on the way out. Got to adjust somehow, and it'll be hard.

I think brands like Macpac can and will prosper, if they focus on a quality specialist product, and use a select number of bricks 'n mortar stores as a support for their online business. I think bog-standard retailers, who just stock stuff other people make, and expect to make a profit just because they're stacking the shelves with other people's innovations and manufacturing prowess, are in serious and probably terminal trouble.

They're in trouble because we really have very little need for them. I buy maybe 75% of everything online now, and it's easier, cheaper, more enjoyable, and offers me a greater range. Consumer behaviour is shifting quickly in that direction in all demographics.

(the remaining 25% is spent largely in specialist retailers like macpac, but hardly ever at big dumb retailers of the Wesfarmers, Woolies, Harvey Norman variety)

Who's to say that in 10 years time you won't be able to do a 3D scan of your foot at home, and get a pair of boots custom made for you in the factory? What value would a retailer be to you then? Even today, what real value do the majority of retail stores offer to you now? With notable exceptions from specialist retailers, you get a poorer range and inexpert advice and service to go along with the much higher prices.

We can only hope that the country we live in is able to adjust as painlessly as possible. I really hope we can, but it won't be easy. You wind down the traditional retail sector, and you undermine the commercial property market. We have to be smart enough to replace this sector with something that's geared to thrive in the new world.

Unfortunately, all I hear from our political leaders is bickering and trivialities and stuff about pollies misusing credit cards, and speakers of the house sending naughty text messages.

[slparker]

Blacksheep,
I couldn't disagree with you more wholeheartedly. In a nutshell: companies are not charities.

[photohiker]

I don't think the ACCC has the power to attack the real problem: Overseas manufacturers include distribution territories in the agreements they write with all their wholesalers and retailers. These territory borders are there to protect high cost base markets against low cost base markets. They are an attempt to stop distributor A from poaching sales from distributor B, and the situation has in all likelihood been forced upon the manufacturer by distributors like distributor B. Australian distributors are high cost distributor B's.

Australian distribution and retail has historically been based upon large multi-tiered margins. These were the rewards for exclusively carrying a range of products, maintaining local stock when lead times were long and transport costs were high at both ends of the transaction, and often doing the promotion and marketing locally. The product had to be fed through the system of distributor-wholesaler-retailer and each level extracted a margin and a transport cost. It was easy for an Australian distributor to set a price that covered all this simply because these were real costs and there was no other way. The end user would rarely find out anyway! Ignorance is bliss

With the popularity of air travel, cracks began to appear. Now that the internet is going gangbusters, we can clearly see that the Australian distribution model has reached it's use-by date. Margins need to be slashed at all levels (and preferably a level or two removed completely) if retail is to survive in any specialty field. It is easy to arm yourself with information, and it is no problem whatsoever to spend a small amount of time on research and find you know more about a product than the poor sod down at the local bricks and mortar store trying to flog it for double the price you can bring it in for from overseas.

The benefit of buying it from the local bloke? Immediate stock and supporting an Aussie business or worker.

I still buy locally if I can, and if the product is within a bulls roar of what I can get it for online.