Importing APR products from the US

[whiteVR6]

Guy I have respect for you and the business you run and know that many customers rave about your service. My comment was not aimed at your business. It was in response to the article posted which talked about the need to maintain competitive pricing in a worldwide market and I stand by my comment that retailers in Australia in general need to think about restructuring their businesses to stay competitive in a worldwide online shopping market. I spend a lot of time with Gen Z in my job and I can tell you with absolute certainty that in 10 years time, when they are working and earning money, they will conduct most of their lives in an online world.

I guess retailers here are screwed then.
We pay higher rent,electricity,insurance,fuel,water,council rates/licensing,taxes etc than pretty much any other country in the world. How can you be competitive if the government doesnt help you, the importers where you get your parts from give you minimum discount and when your done working at the end of the week you have to do a bucket load of paperwork for the GST and BAS?

[entice]

in my experience the retailer is the end link of teh chain.

It's more of an issue that distributors have exclusive deals that create price hikes. Not suggesting that is the case in point.

I understand both sides of the argument. Unfortunately in bigger companies it's the local arms that are responsible for marketing and advertising (greater cost per item here compared to a larger market in say, the USA).

unfortunately the grey imports don't have to pay for said marketing, but definitely reap the rewards.

it would be a far more level playing field if the manufacturer was responsible for the promotion of the product, as opposed to the local market...

[TomC]

I guess retailers here are screwed then.
We pay higher rent,electricity,insurance,fuel,water,council rates/licensing,taxes etc than pretty much any other country in the world. How can you be competitive if the government doesnt help you, the importers where you get your parts from give you minimum discount and when your done working at the end of the week you have to do a bucket load of paperwork for the GST and BAS?

Agree entirely. I think the federal and state governments have done very little to assist retailers in being competitive. And, if you refer to my previous post, I pointed out that small business retailers are in a very tough situation as they are now operating in a global market.

[Bug_racer]

in my experience the retailer is the end link of teh chain.

It's more of an issue that distributors have exclusive deals that create price hikes. Not suggesting that is the case in point.

I understand both sides of the argument. Unfortunately in bigger companies it's the local arms that are responsible for marketing and advertising (greater cost per item here compared to a larger market in say, the USA).

unfortunately the grey imports don't have to pay for said marketing, but definitely reap the rewards.

it would be a far more level playing field if the manufacturer was responsible for the promotion of the product, as opposed to the local market...

It would be a fair level playing field if there was GST on everything imported & insurance on said item as well .
Until that happens local retailers are 2 steps behind !
I wont go on too much about the local price of electricity , water etc but a 5 person workshop with dyno is cheaper to run in USA than my 1 man operation in terms of overheads ...

[gareth_oau]

the aim is to assist the consumer - the level playing field you talk about is only going to increase prices across the board, and not provide any competition for local retailers to sharpen their pencils against.

I doubt that is the solution we are looking for

[littlejohn]

TomC,

I think the OP implied (even though he completely had the information wrong & was corrected) that everything should be the same price in Australia as it is in the rest of the world.

It has also been beaten to death over the past 8 pages that it's pretty normal for things NOT to cost the same as overseas (including a Golf R which is made in Germany & exported to other countries around the world).

Last trip APR made here (it was a calibration trip to Melbourne), they were shocked at the cost of EVERYTHING, from hotel accommodation, car-parking (apparently almost 3 times more than parking in Times Square in New York), rent, wages, superannuation, fuel, income tax, medical levies.

I think the cost of a vehicle (which is also under the luxury car tax threshold) is a valid comparison personally (and no, not being sarcastic).

Did you know that Australia has 4 cities in the worlds top 20 "most expensive cities in the world" to live in?

I'm happy to take any criticism, but I know (as I have visited a lot of tuning companies & dealers in a lot of countries) that the US prices do not add up to a retail price in ANY other country outside the US.

Simple fact & arguing page after page of it is not going to change anything. Simply, if you want US prices, US wages, US cost of living, US cheap cars - move to the US. Australia is a low volume nation when it comes to a lot of things.

Happy to give Australians jobs & keep exports flowing too, collectively the APR dealer network has around 130 employee's here & the associated manufacturers (in Australia) add around another 130.

---------- Post added at 06:04 PM ---------- Previous post was at 05:58 PM ----------



Why?

We have to service & support every product we import. Its APR's decision (WORLDWIDE) to put all products through distributors so there is seamless warranty (direct replacement of hardware, most kept in stock in Australia), support & technical assistance.

I think somewhere in this thread, someone purchased an APR exhaust OS & it may be faulty & he can not get warranty or support for it - do you think that is in APR's interest? If it was locally purchased, it would be warranted, replaced (including labor) and the customer would be on their way. Instead the customer is stuck, and faces having to send it back to the US. I know which way APR wants it handled & they wont pay for warranty on products unless returned to the source of purchase.

Guy,
With all due respect.. but much of what you say in the above reply is hogwash.
While the points you raise may have been valid 10+ years ago, they do not apply in today's economy. You can not compare global price differences in the retail sector to other sectors like hospitality, real estate etc etc. You can't post a house or a hotel via USPS ( They won't do it ) Therefore, those markets are localised.
Retail on the other hand has changed, for better or worse, it is now a global market. There is no reason for identical goods to be close 100% more here vs overseas. If it is, then the business model is outdated.
While I accept that a slight price increase is justified, but not by almost 100%

Your comparison between APR products vs complete cars/vehicles is also invalid. Imported vehicles by manufactures are slugged with tariffs amongst other taxes to protect the local automotive industry.
The goods APR AU imports only incur duty and GST.

Your comment about Australia having 4 cities in the worlds top 20 "most expensive cities in the world" to live in, is also invalid for comparison
These stats are based on rent, food etc etc.. not the cost of "toys". NYC is also right up there, but their citizens enjoy APR goodies at almost half what we pay.

Your point about warranty is valid and I agree 100%. If a person buys from OS, then they need to send the product back to the retailer of origin for warranty purposes. The local distribution network should not be expected to honour grey import warranties.
But I don't see this as much of an issue. APR make quality products, and the price differential is high enough that IMO, it is a calculated risk worth taking.

The points you have made this thread is nothing new coming from the retailer's side of the fence, Gerry Harvey has been tooting this trumpet ad nauseam. Although it may seem otherwise, most people here like myself are not criticising you/APR for the heck of it. Quite the contrary, we are merely suggesting that you/APR need to revise the business model you have adopted.
It may still work now, but it is an outdated model that is no longer competitive. All you need to do is look at other industries / sectors that have failed to adapt and embrace technology / the internet. They have FAILED!!!!

[gareth_oau]

The goods APR AU imports only incur duty and GST.

Your comment about Australia having 4 cities in the worlds top 20 "most expensive cities in the world" to live in, is also invalid for comparison
These stats are based on rent, food etc etc.. not the cost of "toys". NYC is also right up there, but their citizens enjoy APR goodies at almost half what we pay.

its not quite as simple as that littlejohn, especially if you understand management accounting.

lets take a hypothetical example - If you and your New York counterparts spend $100k on advertising, and from this adverts, you sell 100 units into your small market, and your NY couterpart sell 1000 units, then the unit cost of advertising is $10 versus $1, and this cost gets passed on to the consumer.

if the guy working on the counter in NY is earning a minimum wage of $7/hr, versus $20/hr in Oz (plus super, plus 4 weeks annual leave etc etc etc) then all these higher costs get passed on (and shared over a much smaller sales volume)

you cant just compare simple cost plus without understanding the whole picture, so I believe your comparison is unfair

[DkN]

Wow this thread is still going? Lol. My 2 cents (some of which I've said before):

1. Bigger overhead costs have some effect but do not justify the price gap as it is. If smaller importers offer better prices purely because of reduced overheads, you would be suggesting that APR has the same profit margin on selling its products as say, Ian @ Rennenhaus. Simply not true.

2. APR is not going to fail as long as the advertising keeps working. Simple fact of the free market is that prices reflect demand, which carries with it an unfortunate consequence if the demand is largely uninformed. But the trend has already been shifting, otherwise APR prices would not have come down slowly over time.

3. Legitimate money making strategies aside, it is those who look to the future that will make it through in the end. Consumers WILL catch up, it's a matter of time. When you obscure transparency and delay alignment with global prices in an attempt to make as much money NOW as possible and capitalising on the uninformed, you risk your own reputation and future business. How many computers does Harvey Norman sell these days?

4. Even if there were 10 more pages of these discussions I still wouldn't expect Guy Harding to change a thing with his strategy. Who wants to think 10 years ahead when you're making hundreds of thousands of $$$ now?

[aDg3]

Where do ppl import parts from?
I've seen mentions of ECS, is that the best/good/recommended place?

[Zoza]

The reason why prices in Australia are much more expensive than the rest of the world is because for generations people have accepted it as a way of life. Someone told them many years ago that 'Economies of Scale' was the reason and our lowly 20M people population had to pay more than the rest of the world.

Fast forward to today and today's generation. A lot of us still accept these false reasons because they've been passed on by our parents and elderly friends, but there are some that question it. Trying to apply logical reason leads us to the same conclusion time and time again = it doesn't make sense.

Now Gareth, no offense, but your hypothetical example fails in the first statement. Why would the cost of advertising between you and your NY counterpart cost the same when he has the potentially to reach an audience 15x larger?

To understand why the 'economies of scale' argument fails, you only have to look to our neighbours, NZ. They have 1/5th of our population and everything there is much cheaper than in AUS... Hell, even dealing with the Bluefin NZ distributor revealed different prices for NZ and AUS customers?

In the eyes of the global manufacturers, the symbol for Australia is a piggy bank. When it comes to software (i.e. ECU tunes) why do 1s and 0s cost a lot more here than everywhere else?

The reason our wages are 'higher' then everywhere else is because the cost of living here is a lot higher than everywhere else.

Its a domino effect, they keep raising prices, we keep asking for higher wages... at the end nothing really changes.

Until one day... it all comes crashing down.

p.s. why do distributors of US manufacturers have to pay import duties? Don't we have a Free Trade Agreement with USA?

[Bug_racer]

To understand why the 'economies of scale' argument fails, you only have to look to our neighbours, NZ. They have 1/5th of our population and everything there is much cheaper than in AUS... Hell, even dealing with the Bluefin NZ distributor revealed different prices for NZ and AUS customers?

I lol'd . You ever been to NZ before ?

[ranton-inc]

Actually Zoza things inNew zealand may be cheap for you guys for us it is over priced as hell

Im on a very good salary here and things are ridiculous...

Average wage here is like 40k before tax with petrol at 2.20nzd per liter and diesel at 1.50 per litre plus road tax of about 5cents per km for diesel cars this get expensive quick and 70 dollars at a supermarket barely gets you enough food for 3 days

[DkN]

Where do ppl import parts from?
I've seen mentions of ECS, is that the best/good/recommended place?

There are more places but ECS is pretty good. These days it may be hard to find somewhere that still exports APR products though, lot of pressure from APR to stop that.

Cost of living in NZ aside, the point on economies of scale holds true. Let's not forget also that regardless of how much of a smaller market AU is, the suppliers are still buying in bulk. Something is very wrong when an individual can import a product as a one-off with the inflated international shipping rates for single items and still end up saving over 50%. Sure you can bring up how much worse car prices are in AU, but that's a very different situation and I don't really consider "X is worse, therefore I'm okay" to be a valid argument...

[littlejohn]

its not quite as simple as that littlejohn, especially if you understand management accounting.

lets take a hypothetical example - If you and your New York counterparts spend $100k on advertising, and from this adverts, you sell 100 units into your small market, and your NY couterpart sell 1000 units, then the unit cost of advertising is $10 versus $1, and this cost gets passed on to the consumer.

if the guy working on the counter in NY is earning a minimum wage of $7/hr, versus $20/hr in Oz (plus super, plus 4 weeks annual leave etc etc etc) then all these higher costs get passed on (and shared over a much smaller sales volume)

you cant just compare simple cost plus without understanding the whole picture, so I believe your comparison is unfair

Gareth,
I'm fully aware of all the accounting intricacies.. perhaps I over simplified, but I felt my post was getting long enough. At any rate, the fairness or validity of my comparison is no worse than how Guy originally described it.
Nonetheless point I was trying to get across to Guy is that, at the end of the day it is irrelevant and academic why retail goods are cheaper overseas. Australian retailers like Gerry Harvey can list a thousand and one reasons why the retail market overseas is significantly cheaper, but when a consumer can import the SAME item for a 50% or greater discount. Then that distribution/retail model is flawed and outdated.
The majority of consumers are more than happy to take a 20-25% price differential. But a 100% difference? most will be willing to take the risk of a no warranty purchase.

I might add that the model where manufactures contractually prohibit retailers from selling out of region is nothing more than a band aid fix and shows lack of imagination.

[jboogie]

There are more places but ECS is pretty good. These days it may be hard to find somewhere that still exports APR products though, lot of pressure from APR to stop that.

Cost of living in NZ aside, the point on economies of scale holds true. Let's not forget also that regardless of how much of a smaller market AU is, the suppliers are still buying in bulk. Something is very wrong when an individual can import a product as a one-off with the inflated international shipping rates for single items and still end up saving over 50%. Sure you can bring up how much worse car prices are in AU, but that's a very different situation and I don't really consider "X is worse, therefore I'm okay" to be a valid argument...

ECS shipping is a rip off..

You want to find someone that has a consolidator in America that can ship to AUS for a fraction of the cost.. They do exist.