Yesterday I covered the new Trans-Pacific Partnership (TPP) trade agreement which will hopefully lead to lower prices across a wide range of goods coming into Australia. One important aspect which I didn’t cover in my post, however, was the expected time lag between the agreements being signed by every representative country and the actual lowering of trade barriers. Thus, before all the lower prices filter through to the market, it could potentially take up to a decade.
In the meantime though, if you weren’t already aware there is a place where you can find products for less and it’s called the ‘grey market’. Millions of Australian’s are already turning online to stick it to over-priced local retailers simply because they are fed up paying the Australia tax. If you are too, this article may be able to save you significant amounts of money on specific purchases if you just know where to shop online.
We all hate the Australia tax because frankly, there is no reason for it and retailers love to exploit it because more often than not we have no other choice but to buy from them. Whether it’s an iTunes download, a digital camera or even a mobile phone which are equivalently priced across Europe and the USA, when they arrive in Australia – whoosh – those prices soar for no apparent reason.
Consumer advocacy group Choice conducted an analysis which revealed that Australians pay an average of 50% more for PC games, 34% more for software, 52% more for iTunes music and 41% more for computer hardware when compared to the United States.
Our own deal hunter ‘CaptainJack’ previously covered how to circumvent geo-blocking for overseas online streaming services like Netflix (before it launched in Australia) through the use of a VPN. Well, this same technique can also be used to buy goods online outside of Oz. Online retailers are increasingly importing products through back doors and reselling them at significantly lower prices compared to brick-and-mortar stores such as Harvey Norman, The Good Guys and JB Hifi.
The reason these markets are considered ‘grey’ is because the products are brought into the country without the permission of the local intellectual property owner. David Jones, for example, may have an agreement to buy Sony products for a particular price. However, Sony will typically sell those same products for much less to a retailer in Hong Kong or China and subsequently our grey importers will buy from them.
Ruslan Kogan was the first of his kind to pioneer this concept in Australia with the launch of Kogan.com in 2006. Since then numerous grey importers have popped up. NAB’s most recent online retail sales index revealed that Australians spent roughly $17.5 billion on online retail in the 12 months prior to August 2015. This is equivalent to 7.1% of spending at traditional brick-and-mortar businesses.
The managing director of data analytics firm Invigor Group and the creator of the price comparison site ShoppingNinja, Gary Minitz, commented that large retailers are facing a big problem unless they can become more competitive. Shopping Ninja launched at the beginning of June this year and now attracts more than 50,000 users per month with the majority of those visits converting to sales with grey importers. The most popular categories or products are mobile phones, tablets, cameras and headphones.
Grey importers have been known to offer an average of 20-30% less on popular items such as those mentioned above compared to the likes of Target, Harvey Norman etc. A Nikon Coolpix P610 digital camera costs $384 from one of these grey importers, but buy it at Harvey Norman and you will be charged an extra 55% for the same product.
Mr Munitz, a highly respected tech entrepreneur who founded Global Group and helped start Menulog and Get Price comments on the matter: “In the past there wasn’t really a way you could bring in 1000 cameras from somewhere like China and sell them, because as soon as you add rent and everything else to the equation it was a different value proposition. Today e-commerce platforms make it easy to set up shop.”
However, as soon as the traditional retailers can get the same price for a TV or mobile from China, then the grey importers will struggle severely. But, who can blame us, the frustrated consumer who always has to pay more to simply line the pockets of David Jones or Harvey Norman.
Its about time retailers wised up to the reality of customers turning to the grey market and sorted their act out. The digital age has already caused massive dents in traditional retailer’s profits, so let’s continue fighting until we establish a fairer price for everything in Australia. If you disagree (or have anything to add) please let me know in the comments section below.