GAD­GET PRICES

A war is rag­ing over how much we should pay for gad­gets, writes Jen­nifer Dud­ley- Ni­chol­son

Sunday Tasmanian - Tassie Living - - Front Page -

Why Aus­tralians pay more than Amer­i­cans.

WANT to buy a new lap­top? In Aus­tralia, you could snap up a neat por­ta­ble, me­di­asavvy com­puter for about $ 3900.

Buy the same lap­top with the same spec­i­fi­ca­tions, the same form, made by the same com­pany from a US store and you’ll pay al­most $ 1500 less.

It’s one of many ex­am­ples of a tran­sPa­cific price gap.

Aus­tralians are pay­ing a mark-up as high as 39 per cent for gad­gets and soft­ware over US con­sumers, an E Guide sam­pling shows, with most priced more than 30 per cent higher than US equiv­a­lents.

It’s a trend that has gained more at­ten­tion with the strength­en­ing Aus­tralian dol­lar and pro­lif­er­a­tion of on­line stores, spark­ing a war be­tween Aus­tralian con­sumers and re­tail­ers.

Many tech-savvy buy­ers have fled on­line to for­eign stores to avoid the price gap and the trend is hurt­ing re­tail­ers.

But the re­tail in­dus­try is fight­ing back, ask­ing the Pro­duc­tiv­ity Com­mis­sion to rec­om­mend the 10 per cent GST be ap­plied to all on­line pur­chases shipped to Aus­tralia; not only those above the cur­rent $ 1000 thresh­old. The rea­sons be­hind Aus­tralia’s high gad­get prices are much more com­plex than a 10 per cent tax, how­ever, and may not be tack­led so eas­ily.

E Guide ’ s sam­pling of five tech prod­ucts found an av­er­age mark-up of 28.5 per cent at our end, and ev­i­dence shows more con­sumers are recog­nis­ing this price gap and ac­tively avoid­ing it.

The Aus­tralian Cus­toms Ser­vice re­ported an in­crease in off­shore on­line pur­chases of 43 per cent be­tween June 2010 and March this year.

Sim­i­larly, PayPal Aus­tralia ex­pe­ri­enced a 74 per cent in­crease in money sent over­seas in the past year.

Na­tional Re­tail As­so­ci­a­tion ex­ec­u­tive di­rec­tor Gary Black says the trend is se­ri­ously af­fect­ing niche re­tail­ers and will ex­pand to hit main­stream out­lets within five years.

‘‘ De­liv­ery times be­tween Aus­tralia and the US aren’t that far apart so price is go­ing to be the dom­i­nat­ing fac­tor,’’ Black says.

‘‘ Price dif­fer­ences will have a pro­found ef­fect on con­sumer buy­ing be­hav­iour.

‘‘ If it’s a gap of 10 per cent or more, it be­comes un­sus­tain­able that’s what our mod­el­ling says.’’

Black, who heads the re­cently es­tab­lished Re­tailer Coali­tion, says if the sit­u­a­tion is al­lowed to con­tinue some shops will be forced out of busi­ness and re­tail jobs will be cut.

‘‘ We’re fore­cast­ing that in five years’ time we will see a con­trac­tion in the Aus­tralian labour force of over 80,000 re­tail jobs,’’ he says.

It is why the Re­tailer Coali­tion is ad­vo­cat­ing adding a 10 per cent tax to all on­line pur­chases shipped to Aus­tralia, no mat­ter how small. Black says the move would de­liver ‘‘ a more level play­ing field’’ and would reap an ex­tra $ 460 mil­lion a year.

He ac­knowl­edges there will be de­lays in­volved in such a sys­tem but says couri­ers and postal car­ri­ers could col­lect the GST from buy­ers.

But the gap be­tween what Aus­tralian and US con­sumers are charged for tech­nol­ogy is of­ten much greater than 10 per cent, due to a se­ries of fac­tors.

An Aus­tralian re­tailer im­port­ing a $ 1200 cam­era, for ex­am­ple, would be charged 5 per cent cus­toms duty, fol­lowed by ship­ping and in­surance fees and would have the 10 per cent GST added to that. The fi­nal amount could be $ 200 more than a US on­line store would have to pay.

An­other fac­tor widen­ing the Aus­tralian price gap, on­line store owner Rus­lan Ko­gan says, is poor ne­go­ti­a­tions with over­seas man­u­fac­tur­ers. Ko­gan says many man­u­fac­tur­ers do not set com­pet­i­tive prices for Aus­tralian busi­nesses.

‘‘ If you look at the price of cam­eras, they are sell­ing them cheaper in Amer­ica than Aus­tralian re­tail­ers would be buy­ing them for,’’ he says.

‘‘ Aus­tralia has 21 mil­lion peo­ple to Amer­ica’s 300 mil­lion, so the econ­omy of scale just isn’t as great.

‘‘ They’ll say an Aus­tralian re­tailer can buy this cam­era for $ 400 while Ama­zon can buy it from us for $ 250.’’

Ko­gan says re­tail­ers should seek deals with over­seas distrib­u­tors be­fore adding a ‘‘ pro­tec­tion­ist’’ tax that will raise the price.

The Pro­duc­tiv­ity Com­mis­sion will re­lease a draft re­port on the is­sue next month and a fi­nal re­port in Novem­ber.

Mean­while, Black says the re­tail in­dus­try will seek to ed­u­cate con­sumers about the ben­e­fits of buy­ing in Aus­tralia.

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