High price of buying Australian
I have a small eBay hobby business and I was always struck how some Australians would pay $ 30.00 or more in shipping to get certain items. In reading the article I’m beginning to understand why they would do that.
It gets worse… digital downloads from overseas are also more expensive.
Yes: for example, Photoshop Elements cost about $150 to download in Australia, and about $80 to download in the U.S. About $14 of that would be the Australian GST, but the rest is just straight profit to Adobe.
Book prices in Australia seem to be designed to keep the population illiterate or at least ignorant.
Not really.
We have a completely different economy with different wage structures and in general earn far more than Americans. Things are certainly expensive but it is everything not just retail goods. And taxes are astronomical including those added to retail goods. For instance the government makes huge amounts from petroleum sales.
Retail goods look expensive but the retailers are not rolling in ill-gotten wealth in fact many are struggling.
Even pubs are going broke nowadays. Imagine that, going broke selling grog to Aussies?
Yes, yes we are.
It’s not just Australian retailers.
For some amusement, check out the steamprices.com.au “Top Ripoffs” page.
THQ are very notorious for setting obscene price points for Australian customers, often charging $90-100 for a digital download-only version of a game that costs $50 or less in the US.
The Black Library is bad for it too. Their Horus Heresy Xmas 2011 eBook bundle is 165 GBP, which at the time of posting converts to $265.68 AUD. If you convert the price to AUD through their own page, it magically jumps to $370, yet the conversion to USD comes up with $252.50.
I contacted them about it, asking why there’s a jump of almost 40% to buy an online-only, digital copy of their books depending on what currency you use? Their answer?
Never mind that “one region gets a slightly better deal than others for a while” results in “Yeah, you gone get screwed for about 40-50% each time you buy from us” consistently for the last year and a half since they’ve had automatic currency conversion on their website.
The digital prices are the hardest to justify. Brick and mortar stores have high overheads - staff, rent, utilities - and shipping to Australia can contribute a lot to the cost but then you get things like iTunes selling the same songs for 99 cents to US customers and $1.29 to Australian customers. Our dollar for a short time was worth more than the US dollar and we were still paying the higher price.
I assume they’re locked in to contracts with the Australian music industry that were set up when 99 cents US was roughly equal to about $AU1.29, but that doesn’t explain other software. Microsoft Office 2010 Professional is $US349 as a digital download from Microsoft to US customers, and $AU849 to Australian customers. FYI, the Australian dollar is presently worth US98c, so that Australian price is $US836.
Even if our sales tax (GST, 10%) applied to this purchase - and it doesn’t, because online transactions under $1000 don’t attract the GST, that still doesn’t explain the immense price difference.
I’ve been buying clothes for my family from a UK site because the prices are similar, the quality is better, shipping is free (unlike most Australian online retailers), and their online shopping sites are so much easier and reliable to use. I did order from Target Australia this week and, as every time I’ve attempted to use their site, clicking links went to an error message close to a third of the time. I ended up ordering one product I needed in a colour I was less interested in because the site crashed every time I clicked on the correct colour.
Back when the US dollar was a lot stronger it didn’t seem as unreasonable. Ok, a game in the US cost $50 and the same game in Aus cost $100, but $100 Aus dollars was the equivalent of $70 US so the difference wasn’t as big as it first appeared. Now that the Aus and US dollar are 1:1 it looks a lot more ridiculous. Still, the fact is that if $100 was too expensive for a game Australians wouldn’t pay that much, yet they do, so that must be a reasonable price for the Aus market. If enough Australians moved away from the brick and mortar stores and started getting their games from online stores you’d probably see a change in the pricing structure.
Even US retailers are doing it. J Crew recently announced that they are now shipping to Australia and offering 2 months free shipping. What they don’t mention is that their pricing in AUD is much higher than the same item in USD. for instance a wool sweater is around US$70, but AU$90+, where it should be closer to AU$65 with the exchange rate (a similar sweater from say Country Road or Saba would be $129 here when not on sale). I found placing an order via a US reshipper saved me literally hundreds of dollars.
A number of people contacted J Crew and pointed this out - their response was a trite “cost of doing business internationally + taking into account the local market”. Meaning, Australian retailers charge crazy prices and we know you will still buy from us as it’s cheaper. Hopefully they will follow the lead of other retailers like Endless/Amazon and ShopBop who offer free shipping, or even Anthropologie who have US$25 flat rate shipping.
Aren’t you all talking about something completely different to the OP’s question? All the companies ripping us off for downloads are overseas companies J Crew, Adobe, Microsoft, Apple and US game companies are not our own retailers.
I think its more about ‘cant compete’ than ‘ripping off’ most of the time.
Otara
The answer to the OP is that it’s not really the retailers: the prices are more often set by the wholesalers and distributors. However, the retailers are the ones that complain about it, because the wholesale prices that they pay mean that they can’t compete with overseas prices.
Well, the waters get a little muddied when you consider accusations like this from the OP’s linked article:
Stampin’ Up is a company that sells rubber stamps and ink to bored housewives (like yours truly) through a party plan model like Tupperware. When they started up in Australia, their range was smaller and the prices were roughly double. Many women quickly realised they could purchase the same things and more from the US and save money. Stampin’ Up restricted their US agents from selling to Australians and used IP claims to shut down eBay auctions. One man’s “protecting the Australian arm of their business from being undermined by the US market” is another man’s “Charging Australian customers double for the same product and artificially limiting the range available to them”.
As I said, it’s not just our own retailers. International retailers have twigged onto the fact that they can push up the price, using the excuse of “bringing prices in line with the local market”, despite that they’re selling items that don’t even have a physical presence, so there’s no shipping or materials or local packaging or marketing they have to account for the pricing of.
It’s not an apples-to-apples comparison. You can’t just look at the dollar amounts they pay for things, you have to take the entire economy into perspective. Australia’s minimum wage is $15.51 per hour, or $589.30 per week. In America, it’s $7.25. And from some cursory reading, I believe Aussies have their own version of Medicare that’s accessible to everybody, so they don’t have to pay for basic healthcare needs like Americans do.
Things down under cost more because Aussies *make *more. It sounds ridiculously expensive until you take these things into consideration. It’s not just an issue of profiteering, but adjusting price so that demand doesn’t exceed supply. It’s why America pays so much for medications for which third-world countries pay a fraction of the cost. They have less money and less purchasing power than we do, so the price point gets adjusted. People with more purchasing power pay more for things, that’s basic economics.
Thanks, but it would be nice if you’d leave the speculation of how ridiculously expensive it is to actual Australians, most of whom are saying that actually, it is ridiculously expensive for certain items, especially in this day and age when there are more trade routes and agreements, as well as digital distribution for items and services that don’t require shipping at all. We’re the ones who earn Australian wages, and we’re the ones who pay Australian prices. There is an understanding that brick-and-mortar retail prices will be slightly higher due to differing wages and conditions, as well as shipping requirements - but a lot of the time that doesn’t justify what can end up being a 100-200% price increase. Especially when we’re talking about goods that are made in China or Indonesia, and so aren’t being shipped from the other side of the world.
Take back Mel Gibson and we’ll drop the prices.
Mel Gibson isn’t really ours, so no deal.
Is there a way to adjust it so that it was? I know taxes are different in each country, US Sales Tax and Australian GST are applied at different rates in different ways, but it’s not been fully explained to me what that means in the wallet department. There may still be a major price point difference after all that comes out of the wash, but I’d love some specifics.