Internet purchasing ...

So recently on Radio 3MTR where I do an occasional contribution we had a number of phone ins regarding internet purchasing. At a time when Gerry and Terry (the CEO’s of Harvey Norman and JB HiFi) have been raising a hue and cry about internet resellers affecting their business this was a very salient conversation to be having with the broader buying populace.

There are a couple of particular pricing issues for the Australian purveyors that are of note: one is that the Australian dollar is at an unprecedented high making overseas prices look very attractive, the other is that goods purchased overseas for less than $1000 are currently exempt from the 10 percent Australian Sales tax.

The particular case for internet purchasing was raised in the afternoon by a gentleman who rang in who had very successfully been buying expensive camera equipment from overseas on the internet and was therefore exhorting the Australian consumer to get online and follow suit whenever they had a purchase to make.

Now it turns out that “John” is a professional photographer who knows exactly what and who is what in the industry … and the nature of photographic equipment is that it is portable and crucially … non dependant upon a mains power supply connection …

John’s ring-in however was followed by a litany of issues from other people ringing in who had suffered the other side of the internet appliance buying experience - vis:

- Monies being given to an attractive looking internet reseller and then the goods simply not being received, followed by the reseller’s home page evaporating into the Ethernet …

- Goods being received from overseas that are damaged in transit with very difficult and complex recourse to restitution …

- Having been assured by the internet reseller that the goods were the right power requirement for Australia the device on arrival self immolated on plug in …

- Region locked video disc players that won’t support local software …

- Radios and tuner sections that don’t play back local radio stations ….

- Non Australian compliant electrical goods without C-tick that render the users home uninsurable against fire …

- Having been assured by the internet reseller that the goods were covered by local international warranty, when the product actually had an issue and was taken to a local repair agent it was found to be not covered at all, and actually not repairable at all in Australia …

- The person who wonders why, having spent some time in a camera store scrutinising product and gaining advice on different models and applications, they were treated so rudely when they took their internet purchased Canon into the store for some further advice on settings and use. They found they were alienating the goodwill of their local specialist retailer who had taken the time and money to stock and demonstrate the product only to have the fellow purchase online overseas … …

- The manual for the product they receive being written in Chinese and Slovakian ...

- Purchasers finding that the price they thought they were paying did not include the local taxes, shipping, and Australian GST …

- Being sprung by customs on incorrect valuation of the goods and then suffering a fine and confiscation …

My personal experience of clients who have purchased products over the internet is often across the service counter when we are attempting to explain either the lack of applicable warranty or that the unit is in fact not repairable at all due to electrical damage incurred by connecting a 110v 60Hz device to Australian voltage.

Sometimes I get that particular type of phone call where in a rather desperate tone an individual is seeking set up assistance for a component that has obviously been purchased overseas and is resisting attempts at functionality in their home.

Whilst it is a hallmark of a good specialist store that they are able to offer respectable advice and help to clients where should we draw the line with this? Should we institute a set of criteria before we give our time to somebody with a problem? In truth the Hi-Fi retailer with old fashioned service values would appear to be especially vulnerable to exploitation by a callous online consumer in this fashion.

My attitude is that “what goes around comes around” and that if we as a retailer find opportunities to treat people decently they usually reciprocate by purchasing our goods and services. This is especially the case with online purchasers of expensive CE equipment who very rarely in my experience repeat their first purchase online due to difficulties and uncertainties and are therefore open to our service offering.

Often people see an attractive price online and have no idea of the actual final price of getting that product to their door. So for example if one purchases a product such as a surround amp or floorstanding speaker for the online advertised price of $1000US ($1200AU ish ...)
(Actually we are damn near parity with the American dollar now ...)
Shipping is typically for an Amp or Speaker in this class is typically $300US.
Acceptable payment is by bank transfer and your bank will charge you $30AU transfer fee and $20AU currency conversion fee.

Total costs so far therefore - $1640AU (and it hasn’t reached Australia yet)

Once landed in Australia your amplifier will be required to go through Australian Customs for inspection. The freight company (eg FedEX, DHL, UPS) will normally charge you $65AU for Customs clearance and brokerage. On top of this, duty tax and GST will be applied.

This is apparently how duty taxes are calculated:

5% duty tax charged on the $1000 US = $50 US = $60 AU ish
10% GST charged on the $1300 US = $130US = $160 AU ish

Total costs therefore - $1925 AU approx from a $1000 US purchase ... subject to exchange rate of course ...

The initial price was $1000 US, but in the end it can cost nearly double that in Australian dollars to land it here. If its a mains operated product it wont work properly and if it's a speaker the probability of shipping damage is very high.

So if the price locally from an official dealer is $2000, and the one you bought for $1925 ish from overseas ever needs to be returned for repairs you have to fork out $780 to ship it to the seller and back. The savings you havn't made by purchasing overseas are totally outweighed by this single warranty claim.



(Since Ive written this the Aus dollar has occasionally reached parity with the $US ... the extra ten percent still leaves you paying for $1800AUS for a local $2000 item in this typical instance ...)



Further to the local retail online response I note with some dispassionate interest that Myers and Harvey Norman are considering the establishment of outlets in Shenzen specifically for the purveyance of under $1000 product back into Australia,

Perhaps this is the appropriate future business model for manufactured commodity product

High Street retailing will actually be less vulnerable to this new to be motifed age ... however exactly how a national level retail group a la Myers/ Harveys will sufficiently embargo itself from new consumer purchase methods is yet to be a given in the Australian marketplace.

They may well become their online competitors with consequent loss of quality local employment.


In our particular industry sector we are a purveyor of enthusiast product that is a hundred times more fun as an experiential process on the part of the client to properly attain ... properly reliant on direct contact ... auditioning and viewing ... with the client so as to empower them to correctly select a purchase … you can't buy good speakers and related AV kit without trying them first.

Regards

Rab Turner