Tool Industry product mark-up

[rsser]

The oz distributor has to sink a deal of capital into inventory in order to serve a small market with a good range, and capital costs.

V. diff from Amazon who would have just been the shopfront for that router bit passing the order on to the actual supplier. And good luck getting tech advice from amazon; if it's defective they give you credit and you start over again.

[Waldo]

C'mon Waldo - let's be reasonable and honest here!

I am and do also run my own business. Damian has written all I would have so nothing more to add than to agree with his post.

Of course we all want to pay as little as we can, no argument there.

[Waldo]

You also have to remember that the distributor here would not have brought the item at the same AUD$ to US$ as its market rate is currently.

[damian]

I always get a little nervous when someone agrees with me

[Gwhat]

For a while now I have been more than a bit peeved at the price charged by Australian distributors on quality tools and equipment. I've been buying on-line from the US and even with freight saving about 1/3 ... sometimes more.

I recently looked at the Incra LS table saw system. I can buy from the US at $379 US from Woodpecker.com ... but the Australian price is $1125 inc GST. Even with exchange rate, freight and whatever the mark up is hefty to say the least. And remember at $379, the US guy is still making his PROFIT!

I would prefer to buy from the Australian guy but at these mark ups it's not on and one wonders if and when the ACCC might want to look at this scenario. Sadly the practice of excessive mark up seems widespread in the industry and the only ones being hurt are the local agents/distributors who are losing business, custom and credability.

Any others as frustrated as me dealing direct with the US?

Bob

There are many issues in play, none more important than; are you getting what you need? In our market most table saws are wider than the US versions, hence we always order custom panels and fences. The other issue is after sales service, yes it's available from the US but not as convenient as a local number.

Also, remember that by buying direct in single items you aren't paying GST, customs and other import charges including bank fees and your goods aren't insured!!

We are remote here in Australia hence high shipping costs. We also have a small population and a lot less leverage on buying price.

We don't want to be seen as being defensive of our pricing, more that we want to explain the components that make up our selling price. BTW the Aussie dollar is still stuck at 92 cents, Neils prediction of >$1.00 seems a long way off.

Regards

[bobcarter]

Graham - I certainly hear what you have to say and have no argument whatever about the sentiment and the fact that you well entitled to make a profit. What we differ on is the quantum of profit. My argument is that you sell at the price you are comfortable with and at your current price I'm comfortable with buying offshore, albeit with the additional cost to me of freight and perceived risk to me of remote customer support. Indeed I've already done so with other Incra products without any problems at all but with considerable cost savings. I contend that if you were to be more realistic about your price, you would no doubt win more business - it's a simple application of the laws of supply and demand for a given price.

[Mike Wingate]

I have just bought a Wixey as the Beall is not available in the U.K. and shipping plus tax, etc. £22 for the Wixey. I have plenty of setups for it, I may even enjoy cutting bevels on my Eumenia RASaw now. I have just cancelled an order to MLCS in the U.S., as postage was $47 U.S., plus taxes on delivery

[bobsreturn2003]

In a lot of cases it pays to buy offshore if you have the time and knowledge to do so . just dont expect much backup . fedx and ups are amazingly expensive to ship with , but quick ! the post is the way to go if it will fit . you get a premium product as thompson chisels ,cheaper than anything availble locally . it all depends on it meeting your needs . cheers Bob

[Charleville]

I am so used to paying over-the-top prices for imported goods that, these days, I just automatically assume that I will import most specialised items.

My attention was drawn to the need for such an approach when I was aghast at the pricing of certain specialised fishing equipment such as downriggers.

A few years ago, I imported a downrigger during a period when the Aussie dollar was not traveling as well against the US dollar as it is now and the cost of the exact same item delivered to my doorstep was $192 versus $499 if bought from an Aussie tackle store. That is just too much of a price difference to start to feel sorry for the plight of any Aussie distributor. The imported product would be even cheaper with the current exchange rate yet I still see that same downrigger at a $499 price tag in all of the local tackle stores, big and small.

So, it has followed that I have subsequently imported things like cycling clothing at a fraction of the Aussie prices, LED lamps and other electronics, computer/TV cords etc at such small prices compared to what I could buy them for at DSE or similar stores, , a Wixley angle guage at about half the Aussie price and other bits and pieces from Rockler and the like. Indeed, last week, I have just repaired my 21 year old Rover mower's Briggs & Stratton motor with a scarce part that I imported from a parts liquidator in upstate New York found simply by Googling the parts number. (Pig Iron Parts)


So it happens that I am currently making a router table but just about fell over backwards at what I see being charged locally for router plates.


Like, give us a break, you retailers! There ain't much rocket science to be seen in the production of a flat piece of material with a few plug in concentric rings in it that we might call a router plate. So, if you cannot source a reasonably priced product overseas why don't you just contract a local engineering works to make a short production run of such things? Aren't you blokes capable of adding any value in the delivery chain other than unpacking big boxes from overseas and repackaging the contents into small boxes to mail to people here?


So after all of that background, how delighted was I to find that a Jessem phenolic router plate from Northwood Tools near Brisbane was so well priced that it was not worth my while to actually import the item. I am actually not sure that I could have got it any cheaper by doing so because I searched extensively for USA and Canadian stores that would deliver such to Oz and none of the delivered prices were good enough to make me want to buy from them versus buying the same item from Northwood.

So, this morning, I have just enjoyed a 100 km round trip to Burpengary near Brisbane over the magnificently newly upgraded Gateway Arterial Road out of Brisbane to Northwood's showroom to buy such item. I could have had it posted out but what the heck, I drive a cheap-to-run LPG car and it was a nice drive in non-peak-hour traffic.


I am delighted with the pricing and the bloke who served me was a friendly enough cove as well. So, "well done!" to Northwood for such a reasonable price.

I would willingly buy more tools etc from Aussie retailers if the price made it not worth the wait to get them from overseas.


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[rsser]

FWIW, my experience has been that when you're starting out you need purchasing advice and use support.

A good local retailer will give you that; you build a relationship, and you can ring them to sort out a prob and be going within minutes.

When you're more knowledgeable you can order gear more cheaply from o/s, but bear in mind the threat that poses to loss of local employment and support.

[damian]

I will preface this by saying I have bought from PWS and was totally happy with the price and service.

Having said that I have a shop full of incra. PWS is 2k kms to the south, timbecon 4500 kms to the west. Incremental tools answer my emails in remarkably short time and with tremendous knowledge and curtesy.

It bothers me more than a little that so much of our workforce is now in retail.

We once had a strong agricultural business, yet we are moving towards being a net food importer. (those frozen peas that say made in aus/nz are actually grown in china and packaged here)

We once had a strong manufacturing business, before the "socialist" Hawke/Keeting government shut that down.

We have a become a one trick pony, and that pony is mining. It is the only real economic differentiator between us and NZ. If that pony drowns, we sink with it. See what happened to the UK.

Sorry this is somewhat off topic.

[Waldo]

A good local retailer will give you that; you build a relationship, and you can ring them to sort out a prob and be going within minutes... you can order gear more cheaply from o/s, but bear in mind the threat that poses to loss of local employment and support.

For the simple reason I chose to support the local blokes - in whatever category/industry that business might fall into.

It might cost more, but so be it.

[ToothFairy]

Yebbut - if we support the local people just on principle, we give them no incentive to improve (or even maintain) quality or service. The UK's industrial sector got to the stage where not much made in the UK was worth buying, so the sector as a whole went pretty much down the drain. The "Buy British" campaign either didn't help or - my guess - actively contributed to the problem.

That said, I'll echo the favourable comments about PWS. Yes, the prices can be a bit steep, but the service is top shelf.

- Michael

[Waldo]

I support local based on the principle of receiving customer satisfaction before customer purchase and after. Do that and you get my loyalty or fail to continue to provide that, well...

[Charleville]

For the simple reason I chose to support the local blokes - in whatever category/industry that business might fall into.

It might cost more, but so be it.

I reckon that we would all agree but the difference between all of us will be the marginal cost that we are each willing to bear to support the local blokes.

For instance, if the margin were just 10%, we would probably all support the local bloke; if the margin were 50%, many of us still would, but not all of us.


However, when the margin is 150%, as it often is, who in their right mind would support the local bloke?


The local bloke has to add some serious value to warrant that sort of a mark-up. I m not sure that when someone buys a fishing downrigger from a chain store like BCF at 150% more than I can import it for myself, that they are going to get any value-add from the kid who tries to answer questions about it.


I was equally unimpressed when I was shopping for a column drill press from Carba-tec 18 months ago. The can't-be-bothered attitude that I got from the kid there when I queried the lateral movement at the chucks in the machines on display made me go elsewhere. ("Well we are not talking about a CNC machine here.")

I subsequently bought a Jet machine at twice the price from elsewhere but the point of the story is that just because a retailer is local does not mean that they deserve a huge price premium on that reason alone.


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