$A=$US - Are we getting ripped off?

[blueoval]

Originally Posted by vanman_75

I probably put it a little wrong , not blockage but more parity , not forcing our businesses to close through not bring able to compete .as it stands we are developing other countries and not our own . It may take some time but there is a real need to protect our future , end of story and if anyone believes that buying the cheaper product from OS is the answer , then we don't stand a chance .

That's all well and good, but the mentality today doesn't revolve around the future but rather the savings NOW.

The 'Joe & Jane Savings' of today don't care about whats gonna happen in 20 years time, they want the savings now and will shop around anywhere to get it. At the back of their mind they may ponder about the future, and wonder what will happen, but unfortunately we live in a society of convenience and getting what I want, when I want for as cheap as possible, and let someone else take care of the consequences later.

Unselfishness needs to be at the forefront for all, not just some. Until that happens there will always be a large quantity of greed and 'me first' attitude that will eventually consume the economy or lead to a larger gap between the have's and have nots.

[trippytaka]

Erg... this again.

Owning a small t-shirt business on the side has taught me a few things about scales of economy. Basically, as a wholesaler, or distributor - when you order a thousand of the one product, you can buy it at a certain rate. When you order a million of the same product you get it a hell of a lot cheaper. Thus you can pass on savings and you keep your prices down in order shift more stock, and the cycle continues.

The problem here VS America is simple. There are 21m people in Australia. There are over 310m in America. All sales markets are much bigger, so manufacturers of items are able to reduce their costs because they will be selling so many. Wholesalers then buy more, because they have a bigger maket to sell to, so they enjoy the reduced costs too.

Other MAJOR considerations are:
- Excessively high commercial property rents (not going to start a debate here about property prices, but look at America for a comparison to how much a shop will cost you to buy or lease, and then look at Australia).
- Comparitively high wages for unskilled workers (look at miniumum wage in USA vs here)

Both of the above add to the overheads of the Australian retailers.

Is it sustainable? No.

Interestingly, there was a brilliant piece the other day on the burn out of China. Basically, the USA manufacturers are starting to fire up again because China's wage growth is starting to level out the manufacturing costs and the USA is starting to draw level with the Chinese again on locally produced goods. Very interesting.

[MAD]

Originally Posted by trippytaka

Erg... this again.

Owning a small t-shirt business on the side has taught me a few things about scales of economy. Basically, as a wholesaler, or distributor - when you order a thousand of the one product, you can buy it at a certain rate. When you order a million of the same product you get it a hell of a lot cheaper. Thus you can pass on savings and you keep your prices down in order shift more stock, and the cycle continues.

The problem here VS America is simple. There are 21m people in Australia. There are over 310m in America. All sales markets are much bigger, so manufacturers of items are able to reduce their costs because they will be selling so many. Wholesalers then buy more, because they have a bigger maket to sell to, so they enjoy the reduced costs too.

Is that example of 1000 vs 1mil realistic?
Saying there is a bigger market in the US is a bit ambiguous.
In our population of 21m people, let's say there's 100 companies like yours. In the 310m people in the US, stastically speaking, there is a high likelihood of there being around 14,500 companies like yours. (310/21 * 1000).
So there is a bigger population to sell to, but there's also more competition.

[Rodp]

Originally Posted by MAD

Is that example of 1000 vs 1mil realistic?
Saying there is a bigger market in the US is a bit ambiguous.
In our population of 21m people, let's say there's 100 companies like yours. In the 310m people in the US, stastically speaking, there is a high likelihood of there being around 14,500 companies like yours. (310/21 * 1000).
So there is a bigger population to sell to, but there's also more competition.

Haven't you just outlined another reason to why prices are cheaper in the US?

[MAD]

Originally Posted by Rodp

Haven't you just outlined another reason to why prices are cheaper in the US?

Sort of.
The manufacturer of the item sells a lot to the US, but it is shared across all of these businesses. Unless they are franchises, they don't have 'buying power' so similar prices from the manufacturer would entail.
If, both in Aus and US, the companies have access to an equal share of the market (around 21,000), then why would those businesses in the US be ordering more than you would here. In which case the only difference is shipping. And depending where the item originates, it may be cheaper to ship to Aus.
That gets us to competitiveness; The manufacturer is making millions of items because it is selling to the US market, it doesn't care about competitiveness at the retail level. That is up to the sellers to have some sort of edge over their rivals, be it profit cutting, extra service levels, less staff, whatever.

All of this is irrelevant if there are the same number of companies to support the increased population of the US, but I'm 100% sure that is not the case, but to what level is another story.

[Rodp]

Originally Posted by MAD

Sort of.
The manufacturer of the item sells a lot to the US, but it is shared across all of these businesses. Unless they are franchises, they don't have 'buying power' so similar prices from the manufacturer would entail.
If, both in Aus and US, the companies have access to an equal share of the market (around 21,000), then why would those businesses in the US be ordering more than you would here. In which case the only difference is shipping. And depending where the item originates, it may be cheaper to ship to Aus.

All of this is irrelevant if there are the same number of companies to support the increased population of the US, but I'm 100% sure that is not the case, but to what level is another story.

Exactly.

The number of like business servicing the US customer base will be larger than the amount of Australian businesses servicing Australian customers, but to what degree? Who knows. I very much doubt each industry falls within the disparity of population ratios, you're more likely to find a lower ratio but larger companies. With more/larger companies fighting for the consumer dollar, one sure fire method to compete is lowering prices.

[Rodp]

Originally Posted by trippytaka

Interestingly, there was a brilliant piece the other day on the burn out of China. Basically, the USA manufacturers are starting to fire up again because China's wage growth is starting to level out the manufacturing costs and the USA is starting to draw level with the Chinese again on locally produced goods. Very interesting.

I was hoping the same would happen with the outsourcing of IT to India. It's happening to a point, however, instead of bringing the work back (some of it has come back), management is just scouring the planet for the next cheap source of labour.

Having to deal with Malaysia and wait onsite for 2.5 hours for someone to re-zone a fabric at 3am in the morning..? (I left as they were no closer to getting it done after 2.5 hours) If they'd just handed me the password I could have had it done in literally 30 seconds flat.

[trippytaka]

I hear what you are saying about the buy Aussie only, but there is a more realistic way. Here's a really left wing crazy idea. How about we try to boost our locl manufacturers with the biggest thing in our economy at the moment - resources!

Basic protectionism is alive and well all over the world, so why don't we do it? Let's make it mandatory for mining companies to use 75% Australian products - arbitrary number, but you get the idea.

[vanman_75]

Originally Posted by trippytaka

I hear what you are saying about the buy Aussie only, but there is a more realistic way. Here's a really left wing crazy idea. How about we try to boost our locl manufacturers with the biggest thing in our economy at the moment - resources!

Basic protectionism is alive and well all over the world, so why don't we do it? Let's make it mandatory for mining companies to use 75% Australian products - arbitrary number, but you get the idea.

Spot on ! Stupid things like Queensland rail getting trains made in China , we are fools to ourselves .support ( subsidies to manufacturing ) like ford holden ; Toyota .make some effort to make it worth them being here and feeding our society with employment ....local suppliers , make it harder for all the cheap priced goods getting here , more support for farmers etc etc ....if we can't do these things , kiss our economy goodbye when the quiet times come back .
A lot of it is poor governing rather than people wanting to buy overseas .it amazes me that we are in such bad shape ( politically / financially) , and I'm not sure that will be fixed anything soon .
I'm living the Aussie dream , doing my best to support us .but I am only 1 , basic math tells me buying anything from anyone else is gunna see a lot more business go down the drain .

Rant over :/

[Hulsty]

The whole cheaper overseas thing has come to me this week, had an eye test, turns out I need glasses. Found some frames that look decent and fit my big head at the local OPSM and various other outlets. Because they are a "designer" brand they are near on $400 for the frames plus $187 for lenses, near enough to $600 locally, out of my budget at the moment.

Got home, 2 minute google and I can get the SAME frames, WITH lens, DELIVERED from the UK or USA for about $220-$250, thats a massive difference that I cannot over look. I like to buy locally etc, but cost of living pressures are not easing.

[blueoval]

Originally Posted by Hulsty

The whole cheaper overseas thing has come to me this week, had an eye test, turns out I need glasses. Found some frames that look decent and fit my big head at the local OPSM and various other outlets. Because they are a "designer" brand they are near on $400 for the frames plus $187 for lenses, near enough to $600 locally, out of my budget at the moment.

Got home, 2 minute google and I can get the SAME frames, WITH lens, DELIVERED from the UK or USA for about $220-$250, thats a massive difference that I cannot over look. I like to buy locally etc, but cost of living pressures are not easing.

I just go to Spec Savers and they do frames and lenses for $200 total with a second pair free. Sure the frames arent big branded named but they look good and do the job well.
My sister in law used to be a Optical Dispenser and said the mark up on frames was sometimes 400%. Since Spec Savers came in I noticed all other companies having to drop prices dramatically to compete. Profits are still there to be made, just not the insane mark ups.

[Hulsty]

I'll check spec savers out, brands dont faze me, but I have a wide head haahah and nothing else fitted to well or suited.

[blueoval]

Originally Posted by Hulsty

I'll check spec savers out, brands dont faze me, but I have a wide head haahah and nothing else fitted to well or suited.

Im the same. Wide head and limited options. But I found some frames that suited me well. Worth looking at a minimum.

[EL97]

Originally Posted by blueoval

I just go to Spec Savers and they do frames and lenses for $200 total with a second pair free. Sure the frames arent big branded named but they look good and do the job well.
My sister in law used to be a Optical Dispenser and said the mark up on frames was sometimes 400%. Since Spec Savers came in I noticed all other companies having to drop prices dramatically to compete. Profits are still there to be made, just not the insane mark ups.

I agree with you on Spec Savers, I've brought glasses from them for $60, including lenses, which is great as I'm a poor uni student, can't really afford the brand names. Sure you could make an argument on their quality, however I've landed on them, bent them multiple times and they're still in one piece. Long lasting $60 that I've spent

[Franco Cozzo]

Originally Posted by EL97

I agree with you on Spec Savers, I've brought glasses from them for $60, including lenses, which is great as I'm a poor uni student, can't really afford the brand names. Sure you could make an argument on their quality, however I've landed on them, bent them multiple times and they're still in one piece. Long lasting $60 that I've spent

$60 frames or $350 frames didn't matter when one of the other fat bastards at work stood on my $350 glasses....

I'm going to Specsavers this time.

[gtfpv]

Well there is supposed to be money in Sydney inner suburbs . I asked a Lebanese business friend I know where does the rich lifestyle come from . Answer , inheritance or buying and selling. And that is what has disgraced us as a. Nation. It's no different to investing . I'm not talking about inheritance it's the others that create free money for very few .

[MAD]

The new range of businesses making money for doing very little, are these 'free' comparison websites. Something that no-one needs, but is somehow marketed as invaluable and very necessary, and best of all it's a free service! right.....

[blueoval]

From what I have experienced with online shopping, I will write below.

I usually buy cycling goods from a popular UK website. The prices there do not compare with the AUS market here, and to top it off, if I spend more than $85 in goods, I get FREE postage to Australia from the UK. The last 3-4 times I have also shopped thru this cycling website, I also get additional discounts for being a loyal customer.

I have shopped at Australian and US Online stores and while I like to support the local underdogs, it makes it harder to shop locally as the local shops I like to shop at usually have more expensive products and no free postage option for a minimum spend limit. Or if there is a minimum spend limit, it is far higher than I am willing to purchase goods with. (this does not include Ebay which I know you can get free postage with)

To compete, I feel you need to adapt and think of new ways to generate interest in your business rather than being strict in not reducing your own margin. Sure don't undercut yourself to oblivion, but look for other ways to make the customer feel like they are getting a good deal while still making some profit and still surviving.

Those that shop online who know what they want are usually interested in a) a good deal/cheapest price, b) a quality product and c) getting a warranty/return option on those goods if required.

Customer service I have found in my experience is mainly reserved for in-shop customers who want to ask questions, get advice, and prefer to deal with a person face to face, and they are happier to pay more for the privilege.

Take this how you will.

[Duffman]

I moved from Australia to the US (New York) and apart from the rent it is very cheap to live here.. then again rent is probably on par with Sydney. I pay $3.50 (pretax) a day for unlimited transport and around $15 a day for food which is breakfast, lunch and dinner all purchased out. The liquor is dirt cheap ($9-12 for a 750ml spirit bottle) and the bars are amazing and you will often receive free shots/beers every 2nd or 3rd round. A big boozy night will typically cost $60-80.

Australia is great as well though. They both have their ups and downs. Some days id like to get up and go for a swim in the beach and well the Hudson river isn't really up to par!

[Franco Cozzo]

It only took me 5 days from pushing the buy button to a lawn mower arriving at my door, only cost $120 freight too and it was a big box.

This was from Amazon USA.

[Angeldust]

the price of McDolnadls has gone up again, and for once i am now starting to really hurt especially when purchasing 'normal' items like food, cigarretts and alcohol. These things are now a 'luxury' to me. I am slowly sinking into poverty.

Time to elect a National Socialist party, close all borders, kick out all foreign mining companies and start again.

[Yellow_Festiva]

Originally Posted by Angeldust

the price of McDolnadls has gone up again, and for once i am now starting to really hurt especially when purchasing 'normal' items like food, cigarretts and alcohol. These things are now a 'luxury' to me. I am slowly sinking into poverty.

Time to elect a National Socialist party, close all borders, kick out all foreign mining companies and start again.

I know a few countries where a pack of durries costs between 50c and a dollar and an 'average' bottle of Vodka costs $3......

And to think I don't drink and smoke......

[Angeldust]

well i had 'SPAM' sandwich for dinner last night.

Funny thing is, i like it, as from where i came from, this was once a luxury item (eastern europe).. hehe

+10 for 50c cigga's and $3 vodkas

[Karnage]

So those who blame economy of scale and local wages for the price differences, please explain this:

4 Munroe shocks for an f100 allegedly Australian made. Made here, shipped to the states, taxes paid, warehouse costs etc etc wholesalers sell to retailer, and then sends them back to australia to my door for Aus$114 so that comes in at $28.50 including shipping. Locally the same shocks are $996 or $249 each.

So from what i understand, the cost involved in these items staying withing Australia and going from the manufacturer to the retailer is nearly 9 times as much as sending them around the world?

[Rodp]

Originally Posted by Karnage

So those who blame economy of scale and local wages for the price differences, please explain this:

4 Munroe shocks for an f100 allegedly Australian made. Made here, shipped to the states, taxes paid, warehouse costs etc etc wholesalers sell to retailer, and then sends them back to australia to my door for Aus$114 so that comes in at $28.50 including shipping. Locally the same shocks are $996 or $249 each.

So from what i understand, the cost involved in these items staying withing Australia and going from the manufacturer to the retailer is nearly 9 times as much as sending them around the world?

We have to go through case by case basis now?

It's impossible to give a definitive answer as to why there's such a disparity. Perhaps the US distributor sells tens of thousands of them per year and the Australian distributor sells 3?

I'd guarantee you that the US distributor purchases a significantly higher volume. The price that they purchase them at has to be a price that is competitive in that market (and hopefully a price the manufacturer can make a profit on), otherwise the distributor wouldn't have incentive to import them.

[Karnage]

Originally Posted by Rodp

We have to go through case by case basis now?

It's impossible to give a definitive answer as to why there's such a disparity. Perhaps the US distributor sells tens of thousands of them per year and the Australian distributor sells 3?

I'd guarantee you that the US distributor purchases a significantly higher volume. The price that they purchase them at has to be a price that is competitive in that market (and hopefully a price the manufacturer can make a profit on), otherwise the distributor wouldn't have incentive to import them.

Surely you jest?
$249 vs $28.50 yet the cheaper one has been around the world twice.?

It's not a matter of going through this case by case, I think many here would have a similar story of being Robbed by a local supplier.

[Rodp]

Originally Posted by Karnage

Surely you jest?
$249 vs $28.50 yet the cheaper one has been around the world twice.?

As I said, it's impossible to say why it's that much more expensive - you'd have to be part of the loop to have any hope of giving a definitive answer. To simply say that the US pay less than us for the exact same product therefore Australian businesses are obviously price gouging is simplistic and patently false.

[UberKnee]

Originally Posted by Karnage

So those who blame economy of scale and local wages for the price differences, please explain this:

4 Munroe shocks for an f100 allegedly Australian made. Made here, shipped to the states, taxes paid, warehouse costs etc etc wholesalers sell to retailer, and then sends them back to australia to my door for Aus$114 so that comes in at $28.50 including shipping. Locally the same shocks are $996 or $249 each.

So from what i understand, the cost involved in these items staying withing Australia and going from the manufacturer to the retailer is nearly 9 times as much as sending them around the world?

That's what really stings, when you find Aussie made goods that are shipped across the world twice and sell for cheaper than you can buy them from here locally.

[Cabbage]

Rodp,

Not wanting to harp on a point but if you were in karnage's situation you would pay $250 for the shock in Aus rather than the $30 odd dollars for the same shock from the US?.

The Aus distributor could do as karnage has done, order the shock from the states and still sell it for under $250.

There is no way buying in bulk could offset the price difference to this extent.

At least your still buying Aus karnage.

[Rodp]

Originally Posted by Cabbage

Rodp,

Not wanting to harp on a point but if you were in karnage's situation you would pay $250 for the shock in Aus rather than the $30 odd dollars for the same shock from the US?.

I wouldn't have even looked at the price in the US, so I would have paid the $250.