Why Can't We Get Better Prices On Goods From The US?

Dear Lifehacker, I'm looking at buying an ASUS U43 Bamboo laptop and found it on an Australian web site on special for $1,549.00. But the very same laptop on Best Buy in the US is $US829.99. Given that we are on parity with the US dollar, are there any valid reasons why Australians are paying double ? Cheers, Brendan

Dear Brendan,

There's a bunch of reasons why we've ended up with this price disparity, but the fundamental answer boils down to two simple facts: prices for goods that you buy don't necessarily reflect the current exchange rate, and retailers will charge whatever they think they can get away with. You can't do much about the first problem, but you can shop online in some cases to dodge the second. "Black Friday" sales in the US this week are going to make that especially tempting.

Price disparity between Australia and other markets isn't a new issue. Even when we haven't had near-parity, people have complained that the converted rate doesn't reflect what they'd pay if they bought something overseas. That seems especially offensive in the case of digital goods (like music), where there aren't any physical shipping costs involved.

But in most cases, the price for goods in a given market doesn't reflect simply the cost of creating the goods plus a profit margin. They reflect the initial cost of production; shipping to different aprts of the world; deals done to offer "exclusive rights" in a given market; advance orders placed by overseas suppliers which assume a given exchange rate that turned out to be wide of the mark (arguably the biggest issue here); tax laws in different markets; and possibly other factors we're not economically geeky enough to list.

Many of those assumptions might seem nonsensical in a world where you can order goods from anywhere in the world (assuming the supplier is willing). But change takes time, even in the rapidly changing Internet shopping dmarket. Differences in warranty support, power supplies and deviced configuration mean that notebook manufacturers can be somewhat confident that most bargain hunters will be scared off buying goods from overseas if they're (a) pricey, (b) need plugging in or (c) seem likely to need warranty support. So they're not going to change until they have to.

Parity has certainly made Australians more enthusiastic about shopping online, and we've offered tips on how to make that situation work for you. If shipping costs are non-existent or low, you can absolutely get many goods cheaper than in the Australian market, and in many cases there's no reason not to do so.

Australian retailers aren't happy with the current scenario, of course. Harvey Norman head Gerry Harvey is one of the most vocal voices in a campaign that argues that the current GST exemption for goods under $1,000 should be reduced to $400. But even knocking the GST component off your ASUS example wouldn't make the local product even remotely competitive, so Gerry might have to try a bit harder if he wants to come up with a persuasive argument.

We're not defending the current system, but the notion that prices should instantly reflect changes in the exchange rate is also a little naive, even in a world of just-in-time manufacture. If market economics prevail, eventually prices will make sense. But economists do often get it wrong: they're producing hypotheses, and like any scientific hypotheses, their concepts can be disproved with sufficient contrary data. At least the Internet makes it easy to shop around while they squabble.

Cheers Lifehacker

Lifehacker's weekly Loaded column looks at better ways to manage (and stop worrying about) your money.

WATCH MORE: Tech & Finance News

Comments

    Yes, there's a disparity, but when you take into account GST (most US states add tax on top of the advertised price) and shipping costs, the disparity isn't quite so big.

    There's definitely something to be said about the Aussie retailers having the market stitched up, too. The Boxee Box being only available from three retailers is a prime example. I can bet there's all sorts of clauses in their contracts that prevent the retailers from being 'too' competitive, which is sneaky but probably legal. (Examples are restrictions on advertised prices and distribution channels.)

    I'd have no problem paying gst on imported goods. What I do have a problem with is out absolutely atrocious customs system. I bought a laptop last year and once it reached customs it took the best part of a month for them to approve my paperwork with no way for me to accelerate the process. I had to get documents certified by a gp and then scanned... which makes no sense since the minute you scan such documents the certification is meaningless. A total pain in the arse which keeps me under the $1000 limit simply to avoid the headache (or at least split orders into multiple parts if I can).

      It's ludicrous that you have to have medical reasons to obtain a laptop nowadays!

    If you want to cry check out car prices, especially euro cars, for a bit of fun check out how much an M3 is drive away from a US dealer Vs and AU or a porsche from the UK vs locally.

    There are some reasons that this variances exists, cost of service to a small market, shipping, crazy taxs, but not enough to justify the difference beyond the fact its a close protected market.

    I buy over $10K of goods and services online each year and situations like this are the main reason why...

    Bose Quite Comfort 15 Noise Canceling headphones.

    USA RRP price US$299
    AUS RRP price AUD$499 !!!

    http://www.bose.com/controller?url=/shop_online/headphones/noise_cancelling_headphones/quietcomfort_15/index.jsp

    http://worldwide.bose.com/axa/en_au/web/quietcomfort_15/page.html?src=OMDAUSrch&_$ja=kw:bose+qc15|cgn:Headphones+-+Quiet+Comfort+15|cgid:1726666075|tsid:21385|cn:Branded+Products+-+AU|cid:60738355|lid:19433997955|mt:Broad|nw:search|crid:7023689995

    I just purchased mine for AUD$338 landed from USA. Saving to me AUD$160. And not having to leave my home.

    Why would ANYONE purchase from Australian retailers ??? Go online and save. And get better service. And get it delivered to your door.

    Gerry Harvey... are you listening ??? your complaint is with your SUPPLIERS, not your CUSTOMERS !!!

    Lifehacker. Can you intestigate why when buying things from Microsoft like their online version of TechNet is almost double when compared to US dollar please? There is no cost for shipping the programmes as they are downloaded, no tax invloved, no cars, no this or that. I don't see why the difference for things like this and why Australia must be continued to be hurt with stuff like this.

      David I emailed that very question to the Australian Technet support email address two weeks ago as I am up for renewal. They can not even be bothered to reply. I am currently considering whether I really need the Technet subscription any more, this kind of gouging is offensive.

        I am looking at Technet and I am in Australia. WTF is going on with the pricing. They are charging me extra coz of where I live.!

    But will it last....I've recently purchased a few CDs from Amazon UK. I thought about buying an AK47 water pistol but found it was a restricted import. Fair enough, I thought, we do have fairly strict gun control laws (although you can buy it from an Australian online retailer for about double what Amazon UK charge). Then I noticed that just about everything on the Amazon UK site with the exception of CDs and DVDs was restricted for export to Australia, can't work out why. I just hope this doesn't happen to the BookDepository or I'm stuffed.

      The bookdepository already has some restrictions. I wanted to by some manga, but it said they were sold out, so I asked to be notified when it became available. When I got the notification I went to the web site and it said it was still unavailable.

      When I asked them what was going on, the answer I got was that the content wasn't available to me because I was in Australia. Kind of sucks.

      NB. I just checked again on both the .co.uk and .com sites and they both say out of stock. I'm guessing the people who make the manga don't want to step on the toes of local distributors or something like that, but I can't find a local distributor so who knows.

    I can understand maybe 15% difference (being GST, shipping to a smaller market, import taxes, etc), but buying a lot of photography gear lately, often the price is half (or close to). There is no reason at all for it to be that different.

    It's usually a 40% difference and I call it the Australia tax.

    Earlier, people dismissed it as the exchange rate but now it's more noticible.

    Basically local importers charge what they like and justify it as they went to the trouble of importing the product.

    If the profit margin was less then they wouldn't bother.

    Another beef I have is that many US companies refuse to export to overseas.

    Not sure why but possibly, it's a major hassle to get an export permit or some other legality and only the larger companies will export.
    A solution is to buy the item and send it to a US address provided by a forwarding agent who will send it to Oz for a fee.

    I remember reading about Adobe having to explain why PS5 costs Australians around $1100 and it's available in the US for something like $500. And this is the price to download it so there's no actual material cost like a disk in a box with manuals.

      I liked Yahtzee's (of zeropunctuation fame) definition of it being "the best beaches tax"

    For low volume shoppers i recommend www.priceusa.com.au, i have used them several times and they are legit. The fee is reasonable and they tend to pass on the bulk postage rates they get to you. It is best for items from stores that will not ship to AUS or are not allowed too as a result of the company, eg. Burton Snowboards. They will also consolidate orders to save you postage and obtain your rebates for a fee. Can be a PITA if something breaks but they do offer a returns service, but best too look into international warranties if the item is not throw away like a phone or digital camera. No, i do not work for them, but they have served me well several times and saved me a lot.

    For higher volumes look at mail forwarding companies, one is bongous or something,but there is lots, they basically offer the same service as priceusa but have a warehouse at a airport somewhere and are more official (as well as more expensive from memory).

    For cameras and stuff, just search www.shopbot.com.au, there is lots of grey market importers selling at really competitive rates such that parity is basically preserved when compared to the US stores

    if you really want a heap of stuff and have expensive tastes, just go there when flights are cheap and buy it, if you were going to buy it anyway the savings will cover your $1k return flight if you go when there are specials (this won't be at least till when the A380's are back up in though). I recommend going to Vegas, they have outlet malls which sell the full range of clothes, etc, they are just on cheap real estate in the nevada desert compared to our factory outlets that are on good real estate and full of crap.

    I know it's not tech-y stuff but it's even worse in some areas like books - today had the new Nora Ephron book on Amazon at USD11.49 (plus say USD6 postage) and Borders has EXACTLY the same edition at AUD41.95!

    Where's the fairness in that - I know everyone has to make a profit but jeez that sort of gouging has me running to the internet for my shopping. Their delivery can actually be quicker than Borders locally anyway (who tend to ship from Europe - their fulfilment must be based there?!)

    Prices here are higher because people pay them.

    Traditionally consumers in Australia have been pretty dense and consumer activism pretty much non-existent.

    Its only now that these things are starting to change.

    Loved Gerry's comments about plasma and LCD's being sold to low to make any money out of them. Aren't these these things still double the price of overseas?

    I am somewhat offended at the author's implications about the scientific nature of Economics. If it's one thing that economists have next to no understanding of it's the scientific method.

      In their defence it's hard to do reproducible experiments with proper controls when your field covers national and global economies.

    What I find especially annoying (and worrying) is the increasingly common trend of game publishers charging Australians (substantially) higher prices for their games on Steam. More US$90 titles are appearing in the catalogue, and as a result it is becoming an increasingly undesirable means of buying games. The only thing that annoys me more is that next to no action is being taken about it (to my knowledge, at least).

      I haven't bought a game on Steam that wasn't discounted at least 33% in over a year. I still have good Steam games purchased that I haven't had time to play yet. Unless your focus is multiplayer games are just as good after the release price is a distant memory.

        ah good, someone mentioned the Steam pricing rort.

        Fallout New Vegas had about a $30 difference (can't recall exact figures, just the mild outrage) between the US and Australian, despite being both digitally delivered.

        I initially thought there'd be a provision in the AU-USA FTA on this - there is, but it only applies to government actions, not price setting by private companies.

    Actually what they don't tell you is that GST is only part of the tax you pay. Australia never really abolished all other taxes as little Johnny promised to we are still left it many customs/sales taxes.

    So for anything you are ordering from the US above AU1000, add 10% GST, add another 10% sales/customs/import tax. Then add the local profit margin of 5 - 10% you'll get the closer value to what the item retails locally.

    I found this to be true for a lot of photography equipment.

      Azizi, Little Johnnie didin't lie, we only pay the GST tax, the others are 'Duties' on top of which they charge GST, so a customs duty of $50 becomes $55 after 10% GST is added.

      Also I think the problem is that the retailers have been pushing this 'higher cost' excuse for decades instead of saying 'we charge you more because we can, end of story'

        Actually Little Johnny was the biggest lier of all times. First he said "Never GST" and he did. Then he said "GST will be all" and he didn't. This is why you have various federal and state taxes still available to sting us at every corner like payroll taxes, custom taxes and every other type of taxes AND the GST.

        The problem is most people aren't aware of these duties. Besides GST and import duties are quite different as they serve different purposes.

        The point being, this is one of the factors that make up for the large price difference between overseas products and local products.

        Oh if you want to buy photographic equipment, go to Singapore (who doesn't tax them) take them out of their boxes. (Mail the empty boxes) Then bring in the camera equipment through the flight. Because it is not in a purchased box, they can't tax you. :)

        AK

          At least Little Johnny went to the polls with his tax, unlike Ju-liar (and Wayne Duck), who went to the polls with an outright lie. And we all voted for Howard back then (before it was implemented), so most people must have thought they would be better off with the GST (I know I was with the concurrent changes in income tax). Ju-liar, on the other hand, is unlikely to remain in office after this carbon tax dishonesty.

          Never mind that every other developed country in the world already had a GST or VAT by that stage, and we still had 10 other taxes to accomplish the same thing...

    Have a look at Hop.Shop.Go - it's done on your behalf, you can still save at least 30-40%

      As a transplanted Canadian who is used to relatively normal North American prices, I cannot stand the price-gouging in Australia. I've just placed an order with HopShopGo for clothes, cosmetics, luggage, and books. I spent $600 AUD. When I calculated what I would have spent here in Australia (from actual price-checking here for the same brands), I would have spent exactly DOUBLE that amount. It is insane. How can Australians afford it?!?

        As another transplanted Canadian and businessperson, I find that prices in Australia are determined by a very different method. In Canada we would at the cost of all inputs, add an acceptable markup and that's your price. In Australia, you'd do the same and that's your minimum price...then you look at what other are charging, how unique your product is and work out just how much you can get someone to pay and that's your price.
        Garage sales in Canada are full of bargains, and worth going to....in Australia, garage sales (and ebay) are full of used stuff that people expect to get retail prices for. Used cars, used old furniture...almost all of it is super expensive compared to Canada. It's a vicous circle though, retail gets away with a 100% markup and then the shopping centres see them making good profits so they up the rent extortionately so retails have to then continue to increase prices to make profits. The only loser is the consumer.

    HP50g Calculator:
    OfficeWorks Australia = $320AUD "online only"
    From the US (door to door) = $126AUD

    Casio G Shock Gulfman watch:
    My local discount watch retailer - Australia = $269
    Singapore = $79

    Separate to this I've done all my Xmas shopping from overseas.

    Why not support Australian companies? Simple, my Australian company does not support me. I am unwillingly forced (by poor processes and management) to "donate" 11 hours of unpaid overtime every single week. My last pay increase? lets just say the Pre-Tax increase was less than the government reported figure for inflation.

    I work in the retail sector and would be glad to see companies forced to improve themselves and become relevant by international standards or perish, even if it meant I was temporarily unemployed for a while. I'd rather have a genuine free market open economy than some interventionist abstraction.

    With globalisation comes increased competition, that's what we've all signed up for.

    Australians will always be ripped off by retailers, just came back from the U.S and the prices there are unbelievably cheap. BEST BUYS is the best place to shop for electronics, although they don't ship outside the U.S you could always get a friend/make a friend who lives and has a valid house address > have it shipped to their house > have your U.S friend ship it to Australia. What's funny it's that with the shipping prices and all, I still end up paying cheaper than lets say, JB HIFI, Harvey Norman and etc!

    For what it's worth, I really don't get retail pricing, no matter where you shop.

    For example, I love Anime. At home (Australia) I pay (All prices AUD, conversions at current rates of ~ 80 yen/AUD) $15-$30 for an Anime movie, or 4-5 episode DVD. At the moment I'm in Japan, arguably the home of the genre. Anime DVD's here are more like (AUD) $40-$60 for the same discs. I recently saw a box-set marked at (AUD) $120 which at first seemed at least comparable to the $100 average back home, but closer inspection revealed it to actually be a single DVD, with a box to keep the rest of the series in when you bought them separately!

    The Japanese distributors and retailers get points for having everything on DVD also available on Blu-Ray, for ~$10-$15 more than the DVD price, however thats no comfort when the DVD prices are overinflated in the first place.

    Likewise, game software (at least for PSP and Playstation, again hello home ground) is more expensive (~$60 for a platinum game vs. <$50 back home), however in contrast hardware (controllers and accessories) seem to be only 2/3rds of the price in Australia. As an example I looked at buying a Playstation Move and Navigational controller today (I already have the camera, so didn't want the starter packs): $72 for the pair vs. ~$120 from retailers such as JB-HiFi and Wow Sight and Sound.

    In the end, I think we just have to shop smarter, we're used to going from retailer to retailer to find the best deal at home already. Unfortunately buying from overseas stores is still very daunting for most people, there's currently no common medium that makes it easy to search and compare overseas stores and then import at the best price.

Join the discussion!

Trending Stories Right Now