Do retailers and wholesalers rip us off?

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#2169851 29-Jan-2019 19:32

It doesn't really matter. Its a free world, there is competition, we can all buy at the local store or online. If the local stores mainly shut down that's also fine, it's nature. As long as no one complains that local store are gone, no issue. If the local IT store shuts down and we all deal with India, also fine, but no complaints.

Our purchasing power decrees where it is sourced from, and its not just starter motors. Maybe one day retail stores won't exist. Food for thought. Although I probably wont buy a sausage roll online, so as has always been said, get into food!

mattwnz

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#2169856 29-Jan-2019 19:39

tdgeek:

It doesn't really matter. Its a free world, there is competition, we can all buy at the local store or online. If the local stores mainly shut down that's also fine, it's nature. As long as no one complains that local store are gone, no issue. If the local IT store shuts down and we all deal with India, also fine, but no complaints.

Although the problem comes when these big players end up putting all the small stores out of business due to not being able to compete. Then you end up with perhaps a couple of big chains that can set their own prices, due to a lack of competition. It tends to be worse in NZ because we have such a small spread out population, so it doesn't attract the big global players as much. Auckland is a bit different, because it is now starting to attract those big players due to a largish population in a smaller area.

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#2169893 29-Jan-2019 19:44

mattwnz:

tdgeek:

It doesn't really matter. Its a free world, there is competition, we can all buy at the local store or online. If the local stores mainly shut down that's also fine, it's nature. As long as no one complains that local store are gone, no issue. If the local IT store shuts down and we all deal with India, also fine, but no complaints.

Although the problem comes when these big players end up putting all the small stores out of business due to not being able to compete. Then you end up with perhaps a couple of big chains that can set their own prices, due to a lack of competition. It tends to be worse in NZ because we have such a small spread out population, so it doesn't attract the big global players as much. Auckland is a bit different, because it is now starting to attract those big players due to a largish population in a smaller area.

Exactly right. The benefit of a small country are higher prices, better air, better water, not many terrorist attacks. If the stores all folded, then the bigger players would still be online? And still cheaper? Might be like Netflix, cheap as chips, runs at huge losses then ups prices?

Freight is an issue

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#2169935 29-Jan-2019 21:48

I think I shared my recent example on another thread but I'll re-share it here as its relevant.

I needed to replace my Haldex primer pump in my Skoda 4wd system recently. The official local supplier wanted 977.50 NZD including tax.

https://skodaparts.co.nz/clutch-haldex-filter/715-repair-kit-for-primer-pump.html

I found the exact same genuine OEM part from a UK retailer for 140.86 GBP. They charged 30 GBP for shipping bring the total to 170.86 GBP or just under 330 NZD delivered to my door.

https://www.haldexrepairs.co.uk/shop/pumps/0ay598549a-generation-4-pump-haldex-vag/

Now I understand there a local costs involved and I will never begrudge a local retailer/distributor/wholesaler from making a profit but that is just insane. They can make their profit from a less informed lazy consumer but they won't be making it off me.

SATTV

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#2169940 29-Jan-2019 22:38

Senecio:

I think I shared my recent example on another thread but I'll re-share it here as its relevant.

I needed to replace my Haldex primer pump in my Skoda 4wd system recently. The official local supplier wanted 977.50 NZD including tax.

https://skodaparts.co.nz/clutch-haldex-filter/715-repair-kit-for-primer-pump.html

I found the exact same genuine OEM part from a UK retailer for 140.86 GBP. They charged 30 GBP for shipping bring the total to 170.86 GBP or just under 330 NZD delivered to my door.

https://www.haldexrepairs.co.uk/shop/pumps/0ay598549a-generation-4-pump-haldex-vag/

Now I understand there a local costs involved and I will never begrudge a local retailer/distributor/wholesaler from making a profit but that is just insane. They can make their profit from a less informed lazy consumer but they won't be making it off me.

You assume the local supplier pays they price as the UK supplier for the same part.

The local supplier will only get one pallet and that will last them a year or two ( depending on what the suppliers MOQ & MOV is )

The UK supplier could be doing a container a month of parts so of course gets a way better price.

I used to work for an importer, one example from my boss was that it was cheaper for him to buy a bunch of Maglights from wallmart than buy them from the local suppler. We were the also the distributor of a brand of semiconductors ( same boss different company ) and it was cheaper for us to buy a lot of our components from an autherised distributor in Singapore, the downside was that it did not go against our sales, once we dipped below a certain level we would lose the agency. When you lose the agency you lose support.

There are so many factors involved.

Simply put NZ is a small fish in a very big pond and we will never have the volume.

Also manufacturers in most cases do not want to deal with end users and that is why they have distributors.

Manufacturers may also dictate a minimum stock hold you must keep, that costs money.

Distributors will often consolidate orders to A - keep freight costs down & B - The manufacture does not want to deal with piddly little orders.

One of my colleagues when to work for a lighting company, he had an order for 750,000 light bulbs, he thought it was an amazing order, the manufactures responce was to buy them from a retailer as the order was too small.

There are many factors involved when dealing with an authorised channel, I dont believe in most cases we are being ripped off ( Briscoes & the like excluded ), we are just a small fish in a big pond.

John

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#2169943 29-Jan-2019 23:03

SATTV:

You assume the local supplier pays they price as the UK supplier for the same part.

I'm not assuming anything. I know that the local supplier pays a higher per unit price than the UK supplier. I know the local supplier has other overheads and costs associated with doing business in New Zealand. None of that matters to the final consumer of the product, me. All that matters is that I can source the identical product from the UK delivered to my door for 1/3 of the price than I can source it locally. And I can do that for one individual unit which is all I needed.

amiga500

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#2169976 30-Jan-2019 04:16

Geektastic: The distribution model strikes me as outdated.
If the public can order over the internet, so can retailers. Camera shops here have, for example, been known to circumvent official suppliers by ordering from the USA using their credit card.

Agree completely, go to any of the malls early in the morning & see couriers drop off a few boxes at one shop, 2 boxes at another shop. One box at another shop. So the only people who win are the retailers and the mall owners we consumers pay through the nose. The marketing model at the high end shops seems to be to sell very little but at incredibly high prices. Talking of cameras the last camera shop at the Riccarton Mall seems to survive by selling truckloads of photo frames and by printing photos. Yes, they sell cameras, but it seems to be a tiny part of their business.

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#2169979 30-Jan-2019 04:52

amiga500:
Geektastic: The distribution model strikes me as outdated.
If the public can order over the internet, so can retailers. Camera shops here have, for example, been known to circumvent official suppliers by ordering from the USA using their credit card.

Agree completely, go to any of the malls early in the morning & see couriers drop off a few boxes at one shop, 2 boxes at another shop. One box at another shop. So the only people who win are the retailers and the mall owners we consumers pay through the nose. The marketing model at the high end shops seems to be to sell very little but at incredibly high prices. Talking of cameras the last camera shop at the Riccarton Mall seems to survive by selling truckloads of photo frames and by printing photos. Yes, they sell cameras, but it seems to be a tiny part of their business.

The problem is that the alternative is in no way attractive to the manufacturer. When you have a small market it is very difficult for a manufacturer to effectively service it without distribution. You don’t have the scale in the market make it economic to service.

It’s ok for mass market products with high sales volumes but for niche products (eg cameras) which have limited sales volumes and demanding after sales support needs then it becomes really unattractive to have a local sales channel unless it’s through distribution. The cost of sales and support means it’s not viable for the volume.

Distributors get to achieve scale by bundling products from different manufacturers. If you don’t have distributors you would find many brands disappear from local retail and only be available via parallel import.

trig42

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#2170036 30-Jan-2019 08:48

Bluntj:

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.

Because then they would likely be violating agreements that they have with the retailers that buy off them.

Imagine if you could go the LG warehouse and buy a TV direct from them for the cost price that they sell to a retailer for (never mind rebates etc.). The retailer would pretty soon stop buying LGs TVs as there wouldn't be any point. LG would then have to set up it's own showrooms and distribution (ie., become a retailer themselves) which they don't want to do.

Dunnersfella

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#2170038 30-Jan-2019 08:55

Bluntj:

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

Because it has the potential to hurt the relationship between the wholesaler and the retailer -

Some wholesalers will setup to go direct to public - meaning they have to deal with everyone, whether they're skilled resellers or mums and dads. This makes them a wholesaler, distributer and retailer.

It has ups and it has downs.

Once you go direct to the public, retail outlets are often wary as the wholesaler has every opportunity to undercut their retailers due to their (obvious) cheaper buy price. More often than not it makes the concept of a retail store / website dealing with a direct to consumer wholesaler... well, untenable.

Effectively the wholesaler is trading a team of retailers for the opportunity to go direct.

This CAN make sense as it could potentially (but not always) drop the street price of the goods to enable price parity. However, not all companies do this. In a limited market where only a handful of certain SKU's sell per annum and the customers aren't overly price sensitive, this means they'd simply be giving away profit.

Plus, now they're selling direct they have to pay for time / effort / materials for marketing, running their own retail and online store (staff costs are always FAR BIGGER than people realise) etc.

It's not a golden goose situation.

Whatever approach a wholesaler chooses to run with will have good... and bad consequences, depending on who you talk to.

Now days there's quite a few retailers with both brick & mortar + e-commerce who import a certain range of products (say 30%) and focus on moving as many of those as possible (due to increased margins and capitol restraints caused by importing / meeting demands of manufacturers etc).

The other common theme is for distributors to own shares in retail stores... that way the retailer has no choice but to sell their goods!

surfisup1000

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#2170048 30-Jan-2019 09:25

Certainly supermarket owners are ripping us off. As evidenced by the number of supermarket owners suddenly appearing on the NBR rich list.

https://www.stuff.co.nz/business/money/106288425/supermarket-owners-banking-super-profits-nbr-rich-list-shows

tchart

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#2170061 30-Jan-2019 09:53

I was behind someone at the checkouts at Mitre 10 over the holidays. I saw their total sale amount and then he said he had a trade account - the total dropped by more than 50%.

I'm sure that if the items purchased for a job that he wouldn't be passing on that discount.

Yes I'm aware that markup would be different on a range of items but he had a range of items and a +50% discount makes it seem like normal consumers are getting ripped off.

Rikkitic

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#2170068 30-Jan-2019 10:05

Something like this will be self-correcting in the long term. Retailers who abuse it will go out of business as more and more customers shift to e-commerce. Shops that survive will adapt and become boutique operations, where the selling point to justify higher prices will be service and the appeal of actually being able to handle the items.

Plesse igmore amd axxept applogies in adbance fir anu typos

tdgeek

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#2170078 30-Jan-2019 10:28

Rikkitic:

Something like this will be self-correcting in the long term. Retailers who abuse it will go out of business as more and more customers shift to e-commerce. Shops that survive will adapt and become boutique operations, where the selling point to justify higher prices will be service and the appeal of actually being able to handle the items.

Maybe. There will be some stores that its not worth buying online. The boutique stores will find it tough as sales will be low, overheads won't change, shopping may just be supermarkets, pubs, and eateries, and entertainment. Goods availability would drop, range would drop, be interesting times. Couriers probably go out of business

We would be mainly a service economy, goods mainly individually self imported. DIY industry will be ok, and some others, but shopping as a time out activity will probably cease. Along with the employees laid off. Its a similar effect to AI, just a different reason

rb99

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#2170092 30-Jan-2019 11:11

You did say mainly, but fairly sure I won't be self importing a washing machine...

“The modern conservative is engaged in one of man's oldest exercises in moral philosophy; that is, the search for a superior moral justification for selfishness.” -John Kenneth Galbraith

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