American manufacturers ripped off by Aussie greed

[Andrew Peters]

I'm an Australian living in Australia and like to head up to our Snowy Mountains for a bit of backcountry ski touring most weekends. I was recently looking for an excellent, lightweight sleeping bag to replace one that I bought thirteen years ago. Enter the awesome USA-made Western Mountaineering GWS Antelope. Now there happens to be one Australian retail chain that stocks this beauty – Paddy Pallins – and the price their asking for it is US$1,250. I checked the bag out on the Western Mountaineering website before deciding to buy it only to find out that the RRP in USA is US$565!!! I tried to order it online from an American e-business only to be told that it could not be sent to me because of a Limited Distributor Agreement. In the end I managed to get the bag for $550 from a small store in the German village that my girlfriend comes from and her parents sent it to me. Most Aussies would not have that option and would just buy something else.

Now no matter what stupid excuses exist for this situation I thought it would be worth making an important point. 220% mark ups chase away customers. Personally I think a large proportion of the greedy Australian outdoor gear retail industry is doomed as more and more of its customers abandon it for the internet. But what on earth prepossesses an American manufacturer to destroy its overseas market by endorsing such ridiculous pricing with a Limited Distributor Agreement?!!!

[Bob Gross]

"But what on earth prepossesses an American manufacturer to destroy its overseas market by endorsing such ridiculous pricing with a Limited Distributor Agreement?!!!"

Andrew, you will have to sit in on one of Western Mountaineering's executive marketing strategy meetings and then report back to us.

–B.G.–

[Robert Cowman]

same thing in Canada. everything is an extra 25-45% extra and our money is worth more.

[Dale Whitton]

I'm also from Oz and I feel your pain !

Don't understand the rationale behind the mark-ups. I think with the strength of the aus dollar and the move towards online shopping it's a zero sum game for retailers here who don't recognise they are competing with the online world.

I voted with my feet or in this case my mouse clicks and ordered online from the States. There are some sites which don't comply with the embargo and others who will ship to US addresses – eg. relatives etc…

I bought an Apache and Summerlite for less than half the local price.

[Franco Darioli]

Andrew
One often not considered point is that Australian retailers operate in …Australia.
The cost of doing business isn't the same as in the USA.

To better understand this , I will ask a question to anyone that happens to work in a retail shop in the US.
How does this sound to you :
A senior (not in management role) outdoor shop worker here works for :
38 hours a week for around $20 an hour. (conservative figure)
Any over time is paid at 1.5 x the std rate and 2x after the first 3 hours.
So your 42nd hour (and after) will be paid at $40 regardless of when or what day .
On Sat you get 1.5x , 2x on a Sunday.
So an 8 hour shift on Sunday is paid at $320. (on a $20 an hour pay…)
We get on average 12 PAID holidays per year# (it varies per state) on top of the 20 days (4 weeks) annual PAID holidays.
Does it still sound like you are getting ripped off ?
BTW, leases and transport ( I don't know about other operating costs…) are also generally higher here.
As a comparison a junior wage (IE minimum wage…) for a shop assistant here is $16.47.
Franco
#
Public Holidays in Victoria this year
Jan 1st New Years day
Jan 3rd (as above)
Jan 26 Australia Day
March 14 Labour Day
April 22 Good Friday
April 23 Sat before Easter
April 25 Easter Monday
April 26 ANZAC Day
June 13 Queen's Birthday
Nov 1 Melbourne Cup Day
Dec 27 Substitute for 25 Dec (a Sunday)
Dec 26 Boxing Day
All of those days are paid at the standard wage. If you work on one of those days than it is at 1.5x your rate or 2x if it is a Sunday.

[Javan Dempsey]

Franco,

I know you're trying to give businesses the benefit of the doubt, and I always hear some argument trying to rationalize unethical pricing by saying that there's some obscure "cost of doing business".

Realistically, it's rarely ever the case that the framing, represents the truth. In reality, the "costs" associated with doing business, by a certain company, are often specific to a company's "mode of operation" as opposed to the oft quoted "realities of business, in a specific market".

For instance, maybe they spend excessive tons on marketing, and expect to reap a certain percentage over that investment, banking on the good reputation of Western Mountaineering as one of the best sleeping bag manufacturers in the world. Or maybe, they simply have a monopoly, on a coveted item, and are simply charging what they think they can get.

I'm sure plenty of people that work for the company, and an infinite number of staunch defenders of the dogmatic "free market capitalism", could come up with tons of various justifications. However, personally, as a small business owner. I'm going to call BS. There's likely no it's a necessity of business realities in Australia, more likely a perception of deserved profits, and shrewd business. i.e.: They have exclusivity, and they intend to bank on it.

That's what exclusivity is all about after-all, no matter what BS anybody invents to feed you contrary. Corporatism is only about the customers interest, in-so-far as it pays dividends. That's a core truth.

Of course, there is always the argument that "If you don't think it's worth what they're asking, don't buy it." I agree, don't buy it, but do it on principle instead of price.

What I'll say to our Australian contingent: Boycott price gouging, and buy from individuals/small businesses that ship international directly, and shun corporatist monopolies.

Just my 2c, admitted, highly opinionated.

[Javan Dempsey]

Just want to add, that the actual cost to the retailer for these bags is almost definitely 50% (or less, depending on volume) of the U.S. retail price, which should be taken into consideration. That might drive the numbers home as even more significant.

They're not asking double cost, they're asking over four times cost.

Even considering import duties, and slightly higher shipping, I can't see how the rest can be justified other than the "what the market will bear" scenario.

edit: grammatical.

[Franco Darioli]

Javan
With all due respect, talk is cheap…
Why do I say that ?
It is because I have worked for almost 30 years next to the major outdoor retail shops here in Melbourne and in fact their situation is not that much different than my ex trade, photo retailing.
Leases are very high here so you need a good turnover to justify the space. However there isn't all that much turnover here for WM bags even at 30 or 40 % less than the RRP…
In the same small street, Lt Bourke, we have 7 outdoor shops (two owned by the same company).
I can assure you that just as it is with the camera trade, those shops are also there to try to take as many customers as they can from their opposition.
If lowering the prices was a long term viable proposition, they would.
Keep in mind that most outdoor gear here is twice or more the cost in the US. This is not limited to one brand or one shop.
Contrary to your "corporatist" idea,four of the above mentioned shops are owner operated.
For your information , Javan, a similar "rip off" argument exists here for virtually every retail item.
Computers, books,cars,bikes, tools, clothing, toys … do you get the picture ?
If you go to DPReview you will find Aussies complaining about camera prices but again you can't get any of them to work for the same wages and conditions US workers do…
BTW, I do not have a retail business here, I just don't like how some use expressions like "rip off" without considering the facts.
Franco
And
"Just want to add, that the actual cost to the retailer for these bags is almost definitely 50% (or less, depending on volume) of the U.S. retail price, which should be taken into consideration"

Wrong . I happen to know that for a fact.
American shops don't make 100% mark up on WM, so you expect Aussie shops to buy for less than their US counterpart ?

[Michael Williams]

I totally agree that Australian retailers have an incredible mark up. Sure it probably is more expensive to operate in Australia, although the outdoor stores near me only seem to have one or two uni students (cheap) employees who don't really know much. I just wish there was a competitive online Australian store you could buy from. Surely they could operate out of some dirt cheap warehouse and run a small number of staff and reduce their costs that way.

I don't mind that stores make their profit but I really wish that companies didn't prevent the export of their product from the US. I've had a number of products not available in Australia either online or from local stores that I couldn't order from America because those sorts of rules.

[Khader Ahmad]

+1 Javan

One question: How it is possible to find the same jacket (I know for sure it was'nt a copy) I can buy for 300€ in Europe at Namtche for 30€?

[Ole Saether]

Same thing in Norway. I have the Puma GWS which costs NOK 8899 in Norway. With today's exchange rate this is around USD 1600. I have seen it for USD 715 on the net in the US.

[Arapiles .]

Franco

Sorry, the prices Australian retailers and importers want just aren't justifible. Their pricing has more to do with econmomic rent-seeking arising out of import monopolies and Australia's traditional physical isolation than any cost base.

An egregious example: A couple of months ago I bought some natural history and dinosaur books for my son: had to do it at short notice so bought locally. Got the books home and noticed that the RETAIL was 24.95 pounds sterling in the UK, so about A$37 – want to guess what they charged locally? $75. All of the books had similar mark-ups. And no, these were not academic titles. The three books cost A$220 – knowing that I shouldn't, I checked them on-line: Book Depository would've delivered them to my door for $120, shipping included.

Another egregious example – I moved back to Australia from Japan a couple of years ago and eventually needed to replace my Gel Kayanos. In Japan they range from Y10,000 – Y13,000 which at the time was about US$130, which is what they cost in the US. In A$ that would've been about $160. Want to guess what they were in Australia? $250 – and they recently RAISED the price to $269, when the A$ is the strongest it has been for, what, 30 years?

How can any of those mark-ups be justified? You talked about Australian salaries – do you think that Japan is a cheap place to hire staff?

I've lived in both Tokyo and London, and Melbourne is now far and away the most expensive city of the three.

" "Just want to add, that the actual cost to the retailer for these bags is almost definitely 50% (or less, depending on volume) of the U.S. retail price, which should be taken into consideration"
Wrong . I happen to know that for a fact."

If there are any importers or retailers paying more than 50% of US retail for any of this stuff then more fool them.

[Nick Gatel]

If it is too high, then don't buy it. And if enough people think it is too high and don't buy it, then they will sit on the shelf until the price is lowered.

I looked at their website and things "look" expensive. For example an Osprey Aether 70 goes for around $259 USD here in the US. Paddy lists theirs at $329.95 AU and an online currency converter says that is $353.15. About 36% higher.

Currently the GWS Antelope is listed by Paddy at $909.96 AU, which converts to $973.93 USD.
WM site lists it at $565 USD. About 72% higher. Unfortunately it sounds like if you want a WM in Australia, they are the only game.

Maybe not a great move of WM's part either to set up a sole distributor. But there are a lot of things that could have created the situation, and we don't know what they are.

The facts Franco presented about pay are pretty much similar to the US, only the base wage seems a lot higher in Oz. And American workers generally do NOT get 30 days a year off with pay! And somehow our good friends in Oz are paying for that free health care and other benefits. When you add in all the other costs of doing business, prices down under are higher overall. The WM pricing may well be "what the market can bear."

Interesting that AC/DC sells their T-Shirts in Europe and the UK for 30 Euros ($42.12 USD), and they sell them in the US for $24.95 USD (17.77 euros). What's up with that?

[Arapiles .]

"And American workers generally do NOT get 30 days a year off with pay!"

Neither do Australians – the standard is 20 days a year, not 30. Don't know what the other 12 days are that Franco is referring to – Christmas Day and New Years Day are holidays in most western countries, so that's nothing more than standard.

And in any case, Japan now has 15 public holidays – most of which are arranged so as to give a long weekend or a "bridge" week off. I have a lot less leave here in Australia than I did in Japan or in the UK.

"If it is too high, then don't buy it. And if enough people think it is too high and don't buy it, then they will sit on the shelf until the price is lowered"

Prices don't get lowered. But Aussies are cashed up and pi$$ed off, so there are now dozens of big global on-line retailers targetting Australian consumers – just for bike stuff I get constant emails from 3 different UK retailers, most of whose prices are about 40% of Australian prices and some of whom have special web-pages for Australian customers. Free shipping too usually.

By the way, Paddy Pallin used to sell the Arc'teryx Theta for … A$1,000.

[Aris Dennis]

this is why I no longer buy anything but water tabs locally. When I can ship anything to Oz for less than half the local price, why wouldn't I?

[Arapiles .]

These guys have the Antelope MF for £430 … it's not the GWS but you're probably better off without a membrane in there anyway …. and you can take off 20% VAT, so it works out at £371.17 including shipping. That's $562.79 at current rates.

http://www.ultralightoutdoorgear.co.uk/western_mountaineering_antelope_mf_sleeping_bag.html

Their prices are more expensive than the US, but still way cheaper than Australia.

And they have their own Australian web-page too ….

http://www.ultralightoutdoorgear.co.uk/clpaustralia.html?gclid=CLmir6TkiqoCFZGCpAod9GGIzg

[Ben]

I live in Adelaide and work for a large outdoor retail company that has stores Australia wide. Pretty much everything we sell comes from China and I know for a fact that some items we sell are up to 1000% mark up on cost price. That is the extreme, but generally, items made in China are sold at around 400-500% of cost price. That is why Australian retailers can have 60 and even 70% off sales and make money while customers think they are getting a bargain.
USA and Australian branded items, ie. Therm-a-rest, black-diamond, Western Mountaineering, Sea to Summit generally have a 100% mark up. Sometimes a little more.
Almost everything I have acquired before working for an outdoor shop, I have purchased online from the USA at a retail cost that is very similar to the cost price that our retailers pay over here.
As far as I see it, prices in Australia are ridiculous, and I can blame no-one for spending the Aussie dollar in other countries to get the same items for half the cost. But, it is a mix of both retailer and supplier greed that causes such high prices. Our mark up on Chinese made equipment is inexcusable and in my opinion, morally wrong. A mark up of 100% on USA, Canadian, European and local brands is much more acceptable in most situations and the higher prices we pay here are largely due to a higher cost price on those items.

It would be interesting to compare cost price on some items here with the cost of the same item in the USA. Does anyone on the BPL forums have access to cost prices of any brands such as Therm-A-Rest to compare?

For example, we sell a regular Prolite Plus at work for $229.99. hermitshut.com sell the same item for $88.76!

Cheers :)

Benen

[Brian Johnson]

I Manage a retail outdoor store and website here in Aus.

There are some points that need to be brought up:

The retail costs are much higher for retail here than in the states – can't deny that, most costs are even higher than described in a previous reply. Margains are much higher, due to expensive fixed and variable costs.

Most products are distributed by wholesalers not direct like in the states – which adds another 20-30 percent on the cost. – Cut the middle man, its simple business.

Import taxes add around 10% on top of all goods imported over $1000. Plus another 10% for GST paid by the retailers.

Since the population is quiet scarce most retail locations are found in Metropolitan areas like Melbourne, Sydney, Brisbane – some being very expensive areas.

There is no excuse for the pricing of Western Mountianeering bags, considering Paddy's imports them. As well as Osprey, Exifocio, Scarpa, Primus, and various other brands. Most retailers are part of buying groups or import their own brands – Mountain Desings, Kathmandu, Snowgum and Macpac. Many outdoor stores are connected – normally the brands they carry will tell you what buying group they belong to.

All products are purchased and budgeted 1 year in advance. Forcing retailers to also indent 1 year in advance.

With all this being said, many retailers are struggling due to the US exchange rate and Internet popularity. If it keeps up many retailers will consolidate, reducing the range and selection – not good for consumers. Some franchises and chains will close and we might even see some suppliers to disappear. The only way to be successful is to import your own brands to make up for the loss of margin do to middle men. Paddy Palin being in the most trouble because most of their products can be bought online from the states at half price. They will have to change their pricing strategy if they want to survive – as long as the US dollar stays above parity.

Its not just outdoor goods, everything in Aus is over priced. But the amount of goods sold is nothing compared to the states, Europe, and Asia so top brands dont like to take a risk here to reach tiny profits.

PS – It will be interesting to see what Patagonia's pricing will be like, since they are setting up a Sydney location.

[Arapiles .]

"Import taxes add around 10% on top of all goods imported over $1000. Plus another 10% for GST paid by the retailers."

Any GST a retailer pays would be claimed back as an input – it's the consumer at the end of the chain who wears the GST. I didn't think that there were any duties left at the 10% rate – but again, that gets passed down the line and ultimately it's the consumer who pays it.

"But the amount of goods sold is nothing compared to the states, Europe, and Asia so top brands dont like to take a risk here to reach tiny profits."

That's a common argument, but try telling that to Wiggle, ChainReaction or Evans Cycles (or the German bike chains continually emailing me) – they're doing huge business with Australian consumers. The truth is that Australia's a rich country, despite the rhetoric of the last 30 years (e.g., the poor man of Asia stuff – as I used to like to point out, if you took Indonesia out of ASEAN, ASEAN's total GDP was only the same as Australia's – but ASEAN had a much higher total population, even without Indonesia).

[Simone Zmood]

I live in Melbourne and many of the earlier posts have expressed the frustrations I have also felt with Australian retail prices and it has completely changed my buying habits. Unless I need something to fit my person or I want the product to be under warranty, if i can get it cheaper overseas i do. I think that retail in Australia will change dramatically over the next few years. As people become more Internet savvy they are less prepared to pay such a big mark up on overseas prices for the same product.

FYI, there are U.S. Companies which will receive goods and forward them overseas when the supplier won't. Obviously this service costs but it is often far cheaper than buying in Australia. My personal favorite is getting gear shipped to a friend in the US and picking it all up when I travel for work though not everyone has this opportunity. I have probably set some female lightweight luggage records just so I have an empty suitcase for the gear coming home.

.

[Sarah Kirkconnell]

I would suspect that this is why I have had so many orders over the years to OZ for outdoor gear even with the high shipping fees I have to charge (it is about the priciest place to ship to from the US!). Many a stove and pot has gone your way……

[Michael L]

""And American workers generally do NOT get 30 days a year off with pay!"

Neither do Australians – the standard is 20 days a year, not 30. Don't know what the other 12 days are that Franco is referring to – Christmas Day and New Years Day are holidays in most western countries, so that's nothing more than standard."

In the states you don't get 20 days paid vacation. I get 15, my wife just started somewhere new and gets 5.

We both get the pretty standard 6 holdiday paid days off as well.

New Years
Independence Day
Memorial Day
Labor Day
Thanksgiving
Christmas

Banks and the federal gov't being the exception with lot of extras.

[Jerry Adams]

How is the economy in Australia? Unemployment? Real estate prices? …

I wonder if this has anything to do with that?

Economy is way too complicated to conclude anything, but it seems like things are pretty screwed up here, dispite low prices of some goods.

[EndoftheTrail]

I've posted similar from time to time…

Growing up in Taiwan, I could only salivate over "cool toys" advertised in US comic books and magazines. A few of them could be had locally at a stiff markup to reflect their "upscale import" status. Most were simply unavailable locally at any price!

So, for ye fellow hikers who wish to buy a particular gear piece or three, either you or I can order them using my US address, and I'll ship them over to you. All I charge is actual cost (purchase price + California sales tax + USPS postage). Most everyone pays me via Paypal — processing it so the net amount comes in US dollars and covers my actual outlay.

My two caveats:

1. Purchases must be for personal or family use only — onesie and twosies — and items must be "reasonable" in size and weight. No flipping or buying to put on Ebay, etc. No bicycles or kayaks either.

2. Once shipped, the items will be out of my control and I will not be responsible for any loss or damage. At your discretion, you can choose to buy USPS shipping insurance. Most people don't, and I've yet to lose a single shipment over the years, but one never knows…

Anyway, feel free to PM me if interested.

Ben.
The Gear Enabler.

[Rakesh Malik]

> How is the economy in Australia? Unemployment? Real estate prices? …

I'd wager better than the US economy… which at the moment isn't a particularly high bar to clear. :-/

[Author]

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