Do retailers and wholesalers rip us off?

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#2169537 29-Jan-2019 11:57

WyleECoyoteNZ:

This thread is starting to really annoy me.

Is person\company not allowed to make money?? They’ve stumped up the money to start a business\venture, surely they’re allowed to profit\reap the rewards?

Yes, you as an individual can buy a widget off Ali Express for $3, pay a similar amount for shipping and have it arrive at your place. But that small parcel has come through the Auckland Mail centre where it was probably only x-rayed

For a supplier\wholesaler importing 10,000 widgets, that is more than likely going to get to NZ on a ship in a container. I’m not a importer, but I’d expect that container arriving on a wharf has a lot more costs associated with it (customs\duty\shipping\GST\fumigation).

Then the supplier\wholesaler needs to get there product off the wharf to a distribution centre, where it maybe then distributed across other satellite distribution centres. More costs. Now add on employee, utility, rent costs.

Somewhere in that 10,000 units is the suppliers\wholesalers break even point.

In Tony Quinn’s book, He's got his 2 + 2 = 7 theory, which he applies to making profit. If the cost of your product is 2 + 2, selling it for $4 will make you bankrupt. If you sell it for $8 and give the customer a $1 discount, everyone will be happy. This wording is taken from a stuff story, so it’s missing bits of his theory.

I agree. Its different these days, everyone is rorting. Apparently.

Rikkitic

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#2169541 29-Jan-2019 12:13

Dingbatt:

Are they compliant with NZ electrical standards?
If one of them malfunctions and burns your house down, where do you stand with regards to insurance?
I assume all electrical goods sold in NZ will have had to prove compliance, which comes at a cost. That cost (per unit) is high if the volumes are low.
In the end, in a consumer society, the only time we are being 'ripped off' is if the commodity is a necessity. Prices charged are what the market will bear. Just like surge pricing for an Uber.

Some compliance has a point but some is just BS that lines pockets. The only problem I ever had with a light bulb was when a CFL self-destructed. It was a complete melt-down that most likely would have started a fire if anything flammable had been nearby. Fortunately the fitting and surrounds were all fireproof. The bulb was one I bought at Mitre 10, so presumably 'compliant'.

Plesse igmore amd axxept applogies in adbance fir anu typos

Bluntj

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#2169624 29-Jan-2019 14:01

Dial111: I work for a wholesaler that imports goods and sells to retailers. The amount of people that walk in off the street and expect me to sell to them because they have the “I’m not paying retail” attitude is extremely high.

People seem to think if we sell something for X and it retails for Z than Y must be all profit. Wages, mortgages/rent, power, taxes, duty, shipping costs into the country, freighting goods around the country, surcharges on top of that etc, it all adds up before you can look a profit margins.

Not everyone is out to rip you off.

Why wouldnt you sell to the person off the street at wholesale? I dont understand this pre 2000 mentality.

Bluntj

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Ultimate Geek

#2169631 29-Jan-2019 14:13

NZ retailers and wholesalers seem stuck in the past to me.

If I want an item and a wholesaler tries to charge me retail, I simply walk out. The NZ supply chain is too large and they charge margins ontop of margins, and complain and lobby to have overseas companies penalised.

I am happy to purchase an item in NZ, but I refuse to pay over the top.

Like Rikkitic I also replaced my house with all LEDS last year and wanted a particular type supplied by a wholesaler. They refused to charge me wholesale price so my choices were to purchase from the likes of Mitre10 which were far cheaper or look to an overseas supplier. In the end the electrician I have used before charged me wholesale on the items plus labor for fitting. I was happy with that.

Suppliers in NZ keep complaining that NZ is too small and that is the reason for high prices. That may be slightly true in some cases, but in others we have too many people clicking the ticket on the item once it is purchased from offshore and adding no value to it.

mattwnz

20149 posts

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#2169640 29-Jan-2019 14:36

There are a few New Zealand online electrical websites, whose retail prices are close to wholesale. The listed RRP in some cases for electrical stuff can be more than double I have found, but a lot can only be purchased from an electrical wholesaler, as the manufacturer or supplier won't usually sell direct. You can save a huge amount by shopping around in NZ. I read an article that identified that one reason building in NZ was so expensive, was because of all the wholesalers around the country, who also held a lot of stock, and the inefficiency that come with that. Rather than it all coming from a single point of distrubution.

JayADee

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#2169641 29-Jan-2019 14:37

I'm buying vet stuff from Aussie. Costs me around half.

Geektastic

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#2169766 29-Jan-2019 16:29

WyleECoyoteNZ:

This thread is starting to really annoy me.

Is person\company not allowed to make money?? They’ve stumped up the money to start a business\venture, surely they’re allowed to profit\reap the rewards?

Yes, you as an individual can buy a widget off Ali Express for $3, pay a similar amount for shipping and have it arrive at your place. But that small parcel has come through the Auckland Mail centre where it was probably only x-rayed

For a supplier\wholesaler importing 10,000 widgets, that is more than likely going to get to NZ on a ship in a container. I’m not a importer, but I’d expect that container arriving on a wharf has a lot more costs associated with it (customs\duty\shipping\GST\fumigation).

Then the supplier\wholesaler needs to get there product off the wharf to a distribution centre, where it maybe then distributed across other satellite distribution centres. More costs. Now add on employee, utility, rent costs.

Somewhere in that 10,000 units is the suppliers\wholesalers break even point.

In Tony Quinn’s book, He's got his 2 + 2 = 7 theory, which he applies to making profit. If the cost of your product is 2 + 2, selling it for $4 will make you bankrupt. If you sell it for $8 and give the customer a $1 discount, everyone will be happy. This wording is taken from a stuff story, so it’s missing bits of his theory.

I would not disagree. People ought to be able to make money. I think the problem comes when the customer can see that X can be ordered from overseas for $100 and the NZ dealer wants $250.

Reasons behind that aside, the customer will soon start to feel like he is there just to subsidise the retailer. Perception is reality and all that.

A classic example I come across is SD cards. I purchased two 64Gb San Disk cards in Japan last year - top of the line, blazing fast ones - and two of them cost me the equivalent of not much more than the price of one of them in NZ.In NZ they are $300 EACH as opposed to $165 equivalent each I paid in Japan. Considering how small and light they are to ship, that is very hard to explain.

If you want to charge more and keep your customers, you need to compete on service and backup and as many posts on GZ attest, that is all too often not the case.

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WyleECoyoteNZ

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#2169779 29-Jan-2019 17:03

Geektastic:

WyleECoyoteNZ:

This thread is starting to really annoy me.

Is person\company not allowed to make money?? They’ve stumped up the money to start a business\venture, surely they’re allowed to profit\reap the rewards?

Yes, you as an individual can buy a widget off Ali Express for $3, pay a similar amount for shipping and have it arrive at your place. But that small parcel has come through the Auckland Mail centre where it was probably only x-rayed

For a supplier\wholesaler importing 10,000 widgets, that is more than likely going to get to NZ on a ship in a container. I’m not a importer, but I’d expect that container arriving on a wharf has a lot more costs associated with it (customs\duty\shipping\GST\fumigation).

Then the supplier\wholesaler needs to get there product off the wharf to a distribution centre, where it maybe then distributed across other satellite distribution centres. More costs. Now add on employee, utility, rent costs.

Somewhere in that 10,000 units is the suppliers\wholesalers break even point.

In Tony Quinn’s book, He's got his 2 + 2 = 7 theory, which he applies to making profit. If the cost of your product is 2 + 2, selling it for $4 will make you bankrupt. If you sell it for $8 and give the customer a $1 discount, everyone will be happy. This wording is taken from a stuff story, so it’s missing bits of his theory.

I would not disagree. People ought to be able to make money. I think the problem comes when the customer can see that X can be ordered from overseas for $100 and the NZ dealer wants $250.

Reasons behind that aside, the customer will soon start to feel like he is there just to subsidise the retailer. Perception is reality and all that.

A classic example I come across is SD cards. I purchased two 64Gb San Disk cards in Japan last year - top of the line, blazing fast ones - and two of them cost me the equivalent of not much more than the price of one of them in NZ.In NZ they are $300 EACH as opposed to $165 equivalent each I paid in Japan. Considering how small and light they are to ship, that is very hard to explain.

If you want to charge more and keep your customers, you need to compete on service and backup and as many posts on GZ attest, that is all too often not the case.

Maybe it's a bit of a catch-22 situation in NZ

Places with larger populations than NZ, like your example, can afford to be buying the product, probably in the region of 10's of thousands at a time, therefore the unit cost is a lot lower, whereas the NZ supplier\wholesaler isn't going to be buying in the same volumes, therefore a higher unit price.

A NZ supplier could probably do the same in buying in bulk, the same as the overseas supplier, but where the overseas supplier might sell all the items in a month or two, I'd wager it would take the NZ supplier a lot longer to sell the same volume, and as a business, having that much of a stock liability on your books probably isn't a good thing.

The volumes being purchased by the likes of the Warehouse Group would be tiny compared to what Ali Express or Amazon are purchasing.

https://www.warehousestationerycareers.co.nz/about-us/tw-group

NZ is a small couple of rocks at the bottom of the world with a relatively small population. It costs more to get things here, and in smaller numbers to boot.

But, being where we are keep us away from the rest of the strife going on (touch wood)

mattwnz

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#2169785 29-Jan-2019 17:14

The thing hat usually changes things is when market disruptions come in . So I suspect when Ikea and perhaps other giants, that is going to shake some retail and wholesale segments up a bit. A lot of these big box retailers that currently exist could be affected, which is ironic considering they are likely to have led to a lot of these small mum and dad stores to close.

Rikkitic

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#2169791 29-Jan-2019 17:24

I don't understand these arguments. If someone can buy something overseas for half the price, they can also buy several somethings and onsell the others, say, for two-thirds of the price. They still make a profit. Yes, I understand there are CGA complications and other things but this is just an example.

Plesse igmore amd axxept applogies in adbance fir anu typos

Eitsop

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#2169798 29-Jan-2019 17:35

I expect prices to be more expensive than USA, (cost comparison to China is different story) and generally happier to pay that extra cost living in NZ..

Just irks me when the cost is double plus

snnet

1410 posts

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#2169799 29-Jan-2019 17:37

Rikkitic:

I don't understand these arguments. If someone can buy something overseas for half the price, they can also buy several somethings and onsell the others, say, for two-thirds of the price. They still make a profit. Yes, I understand there are CGA complications and other things but this is just an example.

The problem is that if said importer got big enough they'd have to start paying tax, provisional tax, GST, ACC, customs fees, insurance, maybe some compliance/lab testing costs and all the standard overheads that come with operating a business. If you mean one person ordering in some odds and sods at different times, maybe.. they'd have to be motivated to do it though

snnet

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#2169801 29-Jan-2019 17:38

mattwnz:

There are a few New Zealand online electrical websites, whose retail prices are close to wholesale. The listed RRP in some cases for electrical stuff can be more than double I have found, but a lot can only be purchased from an electrical wholesaler, as the manufacturer or supplier won't usually sell direct. You can save a huge amount by shopping around in NZ. I read an article that identified that one reason building in NZ was so expensive, was because of all the wholesalers around the country, who also held a lot of stock, and the inefficiency that come with that. Rather than it all coming from a single point of distrubution.

For some items that sit on the shelf too long, suppliers sometimes increase the price to charge that item storage rent! You'd think they'd cut it to sell it but it doesn't always happen

Dunnersfella

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#2169802 29-Jan-2019 17:38

"I don't understand these arguments. If someone can buy something overseas for half the price, they can also buy several somethings and onsell the others, say, for two-thirds of the price. They still make a profit. Yes, I understand there are CGA complications and other things but this is just an example."

It will depend what it costs to ship the units... and whether the end NZ user is willing to pay, or if you, the importer has to pay.

It also depends whether or not you have compliance issues to deal with.

Or if you don't.

Or if you declare it on your taxes... or don't.

Or if you pay your internet bill.

Or if you pay your power bill.

Or if you pay your water bill.

Or if you pay your accountant.

Or if you pay your lawyer.

Or if you have someone working for you... doing things like compliance testing, servicing, selling it, maintaining / building a website, answering phone calls, e-mails, driving a company vehicle to help out customers.

Or if you pay that persons ACC, holiday pay, wages, KiwiSaver.

Or if you have a place of business that's not just your garage / spare room.

If you have someone else having the exact same idea and undercutting you by 15%... because they figured out how to move more / don't bother with compliance / are attempting to put you out of business / don't understand that selling just because you sell something for more than you paid actually equates to making money.

Maybe you get lucky.

Maybe you don't.

Business is a risk - don't let anyone tell you otherwise.

As an aside, I wanted to buy some of those tabs that fit under the tips of shirt collars, it cost $4 for 200 from AliExpress.

Of course I will buy them.

Will I then try to on-sell them on TradeMe / Facebook and make a profit?

No, because I know what I make an hour and even selling them for $20 wouldn't be worth my time / effort / hassle / success fees / posting things with couriers.

If you want to run a small business and survive on 30% margin, you won't have a small business for long...

Eitsop

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#2169804 29-Jan-2019 17:46

If I changed this from Starter Motor to Laptop..

and said.. USA has laptop for $1000, but here in NZ the same model is $2500 would you be happy? I would be grumpy at $1500 but pay for it here.. but I would balk at $2500

I get it that it may only cost $300 to build, so happy they price at $1000..

Before we allowed parallel imports, some businesses had a legal right to essentially print money. Now they are doing it in stealth with likes of car parts and housing materials

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