Do retailers and wholesalers rip us off?

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#2169364 28-Jan-2019 23:23

chevrolux: When the likes of Jaycar sell an Arduino clone for $30 that can be bought on Aliexpress for $3, I would say, yes, they rip us off.

But there are plenty of industries where the margins just aren't there from the wholesalers.

comparing a retail outlet to a massive overseas website grinds my gears.

Surely you realise Jaycar have different expenses to a site such as aliexpress, even if jaycar do pay minimum wage for life? electronics cost tiny fractions of a cent, do you expect jaycar to sell you a bag packed with electronics for the same?

You're not on Atlantis anymore, Duncan Idaho.

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mattwnz

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#2169365 28-Jan-2019 23:26

Part of the problem with the wholesale / retail model, is how many businesses are in the chain clipping the ticket. A wholesaler selling direct to customers is often going to give a better price, and if they use a middle man to sell through, who have their own overheads.

sudo

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#2169366 28-Jan-2019 23:27

NZ has a lot of serious marking up by importers/middlemen (I had a friend who used to mark up car parts before they arrived in NZ via an offshore intermediate company so they align/proportional with local pricing) but also this is an expensive country in general.

Go to Hawaii and look at the prices they pay, general food can be cheaper but a lot of stuff can be similar to NZ prices.

Dunnersfella

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#2169371 29-Jan-2019 01:17

I agree, NZ is typically more expensive than America for consumer goods.

However, the population difference is vast.

They could not be more different to do business in.

Yet no one ever compares the pricing in NZ to the pricing of another country with 4-5 million people living in it.

It's a lot easier to point at the Juggernaut that is the U.S.A. and try to pretend that all things are equal.

Globalisation may help things, but ultimately it can't overcome the tyranny of distance, population and a mass market economy vs the tiny (on a global scale) economy that NZ has to offer.

This is why we are wasting our time complaining about it on-line, instead we should be pushing the product manufacturers to open on-line stores / retail shops in NZ in order to reduce the number of middle-men and bring better price alignment AND the CGA.

Sidestep

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#2169382 29-Jan-2019 03:14

attewell:

I need a new electric starter motor for my ride on lawn mower,

*Go to 'AliExpress'
*Choose the supplier with the best feedback from the 20 sellers who have your starter motor
*Have it arrive at your door in NZ in a couple of weeks for NZ$100
*WIN!
(wait a while)
* watch your local retailer close because they have to pay Shipping Costs, Import Duty, Warehousing, Taxes, Wages, Rent, Insurance, Power, H&S, ACC

Handle9

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#2169384 29-Jan-2019 05:15

mattwnz:

One thing some retailers do seem to do in NZ, is have a higher RRP, and then regularly apply discounts.

This is the same in every country in the world. Consumer behaviour is pretty similar worldwide.

Handle9

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#2169385 29-Jan-2019 05:21

I work for a global OT OEM. The thing that most consumers miss about distribution is that the real value is to the manufacturer. Compliance and sales costs in small markets make them profoundly unattractive to many manufacturers. It's much easier to just ignore them unless a distributor takes those risks.

If a manufacturer sells 5 starter motors a month why bother selling them? It's easier just to not bother.

Bung

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#2169395 29-Jan-2019 07:24

Years ago the Listener had a list of maybe 10 of the most popular cars sold that year with the amount spent on advertising for each model. For some of them it was over $500 per car sold. Similarly every ridiculously signwritten "truck" promoting Milwaukee, DeWalt or any other product adds to the end cost.

sbiddle

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#2169396 29-Jan-2019 07:29

attewell:

Do NZ retailers and wholesalers rip us off?

I need a new electric starter motor for my ride on lawn mower,

- here in NZ retailer sells for $480 incl GST (RRP was 550+GST)

- in USA it sells for NZ$200, $250 landed (excl GST).

Surely the wholesaler in NZ is getting for a reasonable price and can ship via sea for cheaper pricing..

Why do you automatically assume that a wholesaler in NZ is paying less than the retail price in the US? In many cases this is certainly not the case.

Many distribution models are volume based, and prices paid by distributors in smaller countries can be similar or even more than retail prices paid elsewhere.

So to answer your question the answer is both yes and no, and the whole thing is very complex. You can start the discussion by looking at economies of scale and thinking about how many of those starter motors would actually be sold in NZ in a whole year..

Dial111

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#2169398 29-Jan-2019 07:29

Lias: Couldn't disagree more. If your business can't import goods in bulk from the manufacturer and get them to customers in country for less than a customer can purchase retail overseas and self import, then your business exists solely to rip off and gouge customers. Enjoy that while it lasts, but I'd be job hunting if I was you, because progress is coming and it ain't gonna be pretty.

A few generalisations with your post.
Who said we are not importing cheaper than you can get from overseas?
My point is about overheads, consumers think overheads don’t exist. Wholesalers have overheads, retailers have too. Your looking at this with one eye open.

And the job hunting part, we are the biggest importer in our sector in this country, I’d wager my house against what ever you have that it ain’t happening, that was laughable I must admit.

sudo

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#2169406 29-Jan-2019 08:13

sbiddle:

Why do you automatically assume that a wholesaler in NZ is paying less than the retail price in the US? In many cases this is certainly not the case.

Many distribution models are volume based, and prices paid by distributors in smaller countries can be similar or even more than retail prices paid elsewhere.

So to answer your question the answer is both yes and no, and the whole thing is very complex. You can start the discussion by looking at economies of scale and thinking about how many of those starter motors would actually be sold in NZ in a whole year..

Volume pricing distribution is a factor. but doesn't explain the disproportionate prices we pay in NZ for a lot of goods.

A few of the companies pushing those goods are leftover from a time when they had exclusive rights to import/sell (master agents) and they could set prices to the highest the market would stand.

This has been changing over the last few decades, as NZ market has opened up and there is much more variety available. Newer business tend to undercut the established products to gain market share. Also the brand companies tend not to be as restrictive for distribution due to competition.

Yes, you would be paying a lot more for a dozen starter motors than a few thousand, but I doubt the price difference will be double from a wholesale/distribution perspective.

Handle9

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#2169409 29-Jan-2019 08:24

sudo: Yes, you would be paying a lot more for a dozen starter motors than a few thousand, but I doubt the price difference will be double from a wholesale/distribution perspective.

Economies of scale don't only relate to the price of the product, they have much more influence on the overhead margin you need to run your business. A small volume business has very high fixed costs in proportion to its variable costs.

Selling niche products to a small population means you have to make relatively high gross margins compared to higher volume businesses. This isn't always gouging it's just what it costs to do business.

tdgeek

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#2169414 29-Jan-2019 08:25

dfnt:

Oh don't worry, it'll become an even playing field once "Amazon tax" is in place and GST is charged on more goods being imported by the average joe in October /s

Rubbish. GST isn't being charged on more goods, and you should know why

tdgeek

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#2169417 29-Jan-2019 08:29

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.

Profit seems to be a dirty word for many. That profit makes it viable to pay wages and salaries, and the endless costs to run a business which is also more wages and salaries for those businesses that support your business

Rikkitic

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#2169423 29-Jan-2019 08:41

There are always examples that can be cited to prove anything. Here is one:

I just replaced all the lights in our house with standard LED bulbs. The cost of these varies (15 watt, if you can find them here) but seems to be around $8-$13 or so apiece. So instead, I bought them on Aliexpress for US $2.50. Of course the quality may be crap but all work so far and some have been working for nearly a year so no complaints up to now.

I am not suggesting anything with this example, just putting it out there. People can make of it what they like.

Plesse igmore amd axxept applogies in adbance fir anu typos

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