In Praise of Lee Valley/Veritas

[bitingmidge]

Will the increasing numbers of direct purchasers put serious pressure on our local suppliers?

I too have imported numbers of things via the web, but I also have this quaint "buy local" thing which means that I sometimes pay a little more for the satisfaction of knowing:

1)I am keeping a local family in bread and Vegemite

2) When I absolutely have to have something NOW, the local supplier will still be in business and stays that way because people buy things other than what they can't get by mail.

3) That I have screwed the best deal possible (I only want the local family to eat, not have a car or any other luxury item at my expense )

Seriously, if there is a price difference I will mention it, because I figure if it comes to taking half a normal margin or none, the business shoiuld consider the option, but unless the difference is significant in percentage terms (or dolalrs), I usually buy anyway.

A good example is my local machinery supplier, who retails at around 5% less than the city distributer from whom he purchasers equipment, and delivers for free.

I would rather pay a premium over an imported product for the satisfaction of knowing I can get a bolt or a fuse or a filter for the stuff on a Sunday afternoon if I need it. If there was no patronage, the business would not survive.

I DON'T return if the service sucks! (and I am looking longingly at the Lee Valley catalogue right now.........)

Cheers,

P

[bitingmidge]

I'm sure she said it was only $145.

From memory, that's how much my drum sander was going to cost originally too......we are often victims of hyperinflation between the first utterance of those magic words ..."Sweetie, darling, petal, pet,; do you mind if I buy........." and actual delivery.



Cheers,

P

[davo453]

$450 for one golf stick I didn't pay that for my whole set which included a bag, trolley, balls an umbrella and 3 rounds at the local public course. Hope it halved her handicap..

You could buy a nice router for that or a whole collection of quality chisels or half a drum sander or …………

Cheers


Dave

[silentC]

Her handicap is 10 at the moment, it's down from 23 last year, so I suppose the stick may have contributed to halving it.

It all seems a bit over the top to me too but who am I to judge? She'd probably think $600 for a handplane was extravagent. Not that I'd paid that much for one either.

[Driver]

This whole issue of purchasing direct from overseas versus supporting the local supplers is full of traps.

Right now the relative strength of the Aussie $ makes some of the US and Canadian deals very attractive. I've taken advantage of the current exchange rate myself. However, I think bitingmidge makes some very good points when he talks about the local supplier.

I run quite a large business (nothing to do with woodwork, incidentally) and we face the threat of cheap imports from time to time. Right now, as a matter of fact, because of the strong Aussie $. The best way to combat the threat is to ensure that our service to customers is unmatchable. All the time, that is, not just when we are under threat. That approach works. Our loyal customers - even when they have had cheaper prices quoted - are prepared to give us an opportunity to compete because they value our service.

Col

[Vonrek]

Hi Hem,
I'd suggest contacting Lee Valley by email with your concerns. As i said, i found their customer service to be outstanding, even though i was only placing a relatively small order. I'd contact them to discuss delivery options.

Another possibility might be to open a PO box at your local post office for a little while (if this is possible??) if the cost isn't too prohibitive.

Cheers
Tim

[DarrylF]

I've posted before on the excellent service I had with my first Lee Valley order - but I have to say again I'm really impressed.

Firstly - great service, great range and decent prices, which is always more than enough reason to buy from any company anywhere.

But seriously high praise is due for Rob Lee for popping his head in here to fill us in and say thanks. A very rare event here for any Aussie vendor (except our host of course) - and the fact the head of a Canadian outfit (and not a small one by any stretch) takes time to drop by here again sets a standard I wish all those I deal with would come even close to.

Off to place my second Lee Valley order

[Rob Lee]

Hi -

I'll toss in a couple of other comments/observations here...

Firstly - in most countries, and for most foreign products ordered directly, a local retailer has a hard time matching prices. When importing, as many of you have discovered, there's usually a threshold below which duties/taxes aren't collected. This can sometimes vary by shipper (government run postal services tend to collect taxes). The retailer has no choice - they have to follow the law - paying duties, collecting taxes, and incurring brokerage expenses too.

Second - the consumer is always looking at spot exchange rates, while the retailer may have purchased their stock months ago, at a significantly different rate. This was certainly the case last year, as the USD tanked - making USD purchases now look much more attractive. Additionally - as the majority of US companies purchase in USD only (Americans don't "do" exchange) - many of the costs in the US market have been artificially low, as many manufacturers "held" USD pricing for the US market, hoping the USD devaluation was a temporary condition. The US should see fairly hefty increases this year, especially from Pacific Rim manufacturers.

Third - A good relationship with a local supplier should be worth some premium. There's a cost to carrying the stock, developing the knowledge base to support a product line, parts, service, etc.
As good as mail-order gets - it's hard to replace getting your questions answered personally, where you can look 'em right in the eye.

I have to admit - I don't know much about the ongoing costs of doing business in Australia, so am not in a good position to judge which prices are good, and which are too high. But I will say that I personally buy products (electronics, appliances) from a local dealer I've dealt with since I was 14 yrs old...I may have paid "more" for many of those items, but in the long run - I've never had a reason to regret it. (computers, is a different story!)

Cheers -

Rob

(PS - I do only pop in here once in awhile (about every week or so), but always answer my email, or can pop back to a board to answer a question if someone lets me know there's a post that needs it. After all, my 2 cents CDN is just about exactly 2 cents AUD!)

[bloggs1968]

Nice to see you back so soon Rob.

I appreciate your comments on the cost to Australian businesses and particularly trying to guess the exchange rate for pricing. I know one of our main retailers basically sets the catalogue price 12 months in advance and has to have a guess at what the dollar is doing.

However, I am sure that there has to be a better way. I would buy Lee Valley/Lie Nielsen etc from local suppliers if there was say an extra $50-100 on top of what I can get it for. You are right on about a relationship with your local supplier. But as we struggle to find competitive pricing, surely the reatailers know that their customers are going offshore and they musn't care too much.

One final example of a well known company, Blackwoods, left me absolutely astounded in this last week.

I was looking for a Starrett combination square with centre finder and protractor, forged heads and satin blade with mm/inches. Blackwoods quoted me initially $898.21!!!!!! When I advised that this price must be for a different product and there was a mistake, they put me on hold and then said look, we can offer you trade price of $638.51 - $260.00 off. I still advised that I thought that the price was way over the top. They then advised that if I created an account with Blackwoods, I may be entitled to a further discount depending on buy volume. I said thank you very much and hung up.

FWIW, after this, I have purchased the item from overseas at a more reasonable $320.00 (with freight) and with customs that will be $368.00 AUD. It was more expensive than originally expected because the company only uses DHL couriers and the cost was just under $70.00 in freight. (The actual product was only $173.00 US or$228.00 AUD)

With this type of attitude of some (but not all) of the suppliers in Australia what else can you do with a hard to find item?

regards,

ANdrew

[DarrylF]

Rob,

I think most of us here would buy from a local guy in a heartbeat IF:

1. The prices are reasonable/explainable in comparison to US/Can prices.
2. They stock what we want in the first place.
3. We have a 'local' guy.

Generally IME #1 is OK, but #2 is very often a problem. It can be a real issue with lower volume items.

For me it's a 3 hour round trip (at least) to go visit Carbatec on a Saturday morning - a trip I'll probably take again very soon. With such a big country and so few specialist woodworking outfits, I'm probably lucky to be that close. I guarantee if they were around the corner my wife would barely see me

The order I just placed with Lee Valley was for a bunch of smaller items I've found next to impossible or way too expensive to buy locally.

It's definitely improving here, but we still have a long way to go.

[Mik]

We don’t 'monitor' this forum but we drop in from time to time!

This is a longish post but some of you are interested so here are a few points about why prices are what they are at Mik, when comparing to overseas.

We will rarely have the same price as our overseas counterparts because our costs are higher or our volumes are lower, but we think we can and do offer good VALUE for many people.

-When the dollar goes down (it went down to US 48 cents in the last dive) we avoid increasing prices as much as possible, and we lose money.

-When it began to rise again we still had stock purchased at a lower $ so we still lost money.

-After some time and at a higher level the $ was adding to our margin which simply helped make up some of those losses.

-When we had exhausted old stock, made back some lost ground, and hoped the higher A$ was here to stay for a while, we reduced prices. We have to be careful not to react too quickly, in case the rise does not last. There are all sorts of hidden costs incurred when changing prices, including potential customer dissatisfaction and confusion. Printed price lists and catalogues get distributed widely and present huge challenges to manage.

-That currency cycle has been a few years, and in that time inflation has also INCREASED our costs which negates some of the currency gains.

Even with reduced prices due to the exchange rate, they will never be as low as in the country of origin, especially the USA, because;

-our market is small, and when sales volume is lower, prices are higher. We could do more volume and lower prices too if we had 260 million people to market to!

-freight, insurance, customs, GST and other hidden costs add to the price, and it's only getting worse. The latest one was a Security Levy imposed on all imports due to the extra security efforts needed since the terrorist threat dramatically increased.

-sometimes a supplier or manufacturer sets a retail price, and they sell direct to you at that price. And sometimes that supplier sells to us at a wholesale price not far enough below their retail price that leaves us insufficient margin to make a sufficient profit after all our costs are added in to the equation. So the product becomes more expensive from us, or we can't sell it. The original supplier of course gets TWO margins when they sell direct, so their profit is great.

Other factors that play a major part in our costs, and hence pricing, are;

-Our support of the products we source for you. If you need a replacement or repair you don't have to send something around the world. Freight and insurance costs often wipe out your saving from buying overseas right then and there. Not to mention you don't have a tool for the job for weeks while you wait. What about when they send the thing back and say there's no problem? Resolving a dispute from opposite sides of the globe can render a customer pretty powerless, and wishing they had paid more and bought locally (I am speaking from bitter experience). By the way we consider any Australian purchaser to be “local”.

-Not only are you closer to us, we often provide extra service like send a replacement BEFORE we get your faulty goods back, to minimise your inconvenience. And by the way we have costs associated with holding warranty replacement stock, and sending things around the world ourselves, back to our suppliers, plus costs from simply writing things off.

-If you have a question about how to use your purchase or need some advice we spend the time with you. We do this on the phone, email and in the shop. Our staff are carvers, turners, jig users, cabinet makers and many other experts, and they happily impart invaluable knowledge to our customers. In general we try to go the extra mile to keep our customers happy, which usually involves time or resource costs to us.

-We provide demonstrations of many products in our store and at wood shows around the country, so you can see the products in action before you buy.

The infrastructure to provide all this service costs money to provide, which of course adds to the price of a product compared to the price when sourced outside of that infrastructure.

Our niche is offering great VALUE. We know some people will prefer to shop only on price for whatever reasons, and wish them well doing it, we can’t be all things to all people.

We hope this helps to give an understanding of some of the issues we need to manage with costs and pricing. And thanks for the feed back on prices and service, we listen and do the best we can. Please keep helping us to help you, and we can all win.