Thread: Why are parts so overpriced in Australia?

I was gobsmacked yesterday.

Am investigating water intercoolers for my 6X6 project and was looking on an Australian site. The kits were $2500 but none would fit a 4BD1 so looked at the generic intercooler only $1,850. Wow I thought and started considering how I could make one cheaper myself.

As I was doing that I did a general web search and find I can buy water intercoolers of the same size for less than $US200. Even with shipping we're looking at better than 900% mark-up to buy the thing in Australia.

I love supporting Aussie jobs, but how can you justify that?

Originally Posted by homa1

i buy quite a bit from the US and UK and they complain about their postal service but compared to ours, lets say that its quicker to get a parcel from the UK and delivered by a private company(cheaper too) than to send something interstate by our national postal service

Postage rate in the Uk have gone up alot in recent years, and I thought Roymail to be a bit expensive, and Australia Post Cheaper, not the case, just sent my Mum a pacakge and based upon the same size etc coming from the Uk, 40% more expensive here.

If the retailers here were not so greedy then maybe more people would shop on home soil instead of going direct to the UK.

Over the last few days I have (in my business role) been investigating some products that have been requested by local companies. These are not LR, or even vehicle related, by the way.

Having now signed up as a supplier of these items, I am entitled to buy them at wholesale price. Imagine my surprise when I discovered that the mark-up from wholesale to recommended retail on these goods is 66%. Even the typical "discounted" retail price gives a 57% profit - that includes delivery to the retailer, by the way, so no hidden costs to recoup. Also of importance is that these are not stock items, I will not have my money tied up for long periods, nor will I have to pay for warehousing. These are items that I will order for delivery straight to the customer. There are no handling issues, so all the normal arguments about high wages, interest, warehousing costs etc. are moot. This is a simple buy/sell deal, with a 66% profit.

Most of our business is done with a target GP of 30%, though we don't always hit the target. These items are selling at twice that! To be honest I am embarrassed, and will probably include some consultancy or installation (plus a discount) because I think that such a level of mark-up is simply rude!

Interestingly the wholesaler commented to me that they did not want to wholesale to people in areas where they already had a dealer, because "their dealers were doing it tough". Personally I can't see how making a 57% markup could ever be described as "doing it tough" - if they knocked their markup down to a more realistic level perhaps they'd sell a few more units? The attitude of pricing so you can live from a single sale a month, then justifying the price on a low turnover is a Catch-22 that will never improve.

Originally Posted by PhilipA

what's a "comrehension"?

I needed to take a p at the time so I did.
Regards Philip A

hahaha

I too have bought many parts from the UK and USA for all the same reasons.

What I have noted though is that the cheap and *really* cheap parts are utter junk so it's not a good comparison. I've been bitten a few times with parts that needed to be replaced after a month, when the original had lasted 10 years or more (and I've had to put the old part back on).

My local LR specialist isn't cheap by any stretch of the imagination but I have found that ensuring they're quoting me for an Original Part (with the green oval) and then comparing that with the UK green oval price, as often as not the markup isn't too different and I'll just buy it here. I know they'll provide excellent support if the part fails early and they'll check that I've actually asked for the right bit, often knowing the numbers off the top of their head - impressive and I'm happy to pay for that. They usually have the commonly required bits on the shelf and it's never more than overnight if they have to bring it in.

While I prefer genuine parts, they sometimes also advise on quality substitutes they sell - components they've found over the years that work just as well as LR branded for substantially less. This advice is gold as I won't buy non-LR from the UK any more - way too much junk.

And their invoices show that they often don't charge full retail, so they appear to be trying to address the issue at hand.

Having said all that, half the time I can get the genuine part for about half (td5 Fuel Pressure Regulator - about $190 delivered from UK, local $400'ish), so there are definitely some cash cows there.

Originally Posted by Lotz-A-Landies

I was gobsmacked yesterday.

Am investigating water intercoolers for my 6X6 project and was looking on an Australian site. The kits were $2500 but none would fit a 4BD1 so looked at the generic intercooler only $1,850. Wow I thought and started considering how I could make one cheaper myself.

As I was doing that I did a general web search and find I can buy water intercoolers of the same size for less than $US200. Even with shipping we're looking at better than 900% mark-up to buy the thing in Australia.

I love supporting Aussie jobs, but how can you justify that?

In that situation you are possibly comparing an Australian designed/made system with a potentially Chinese made system.

Chinese air/air cores are dirt cheap, (ebay is flooded with them) and often not as well designed or near as strong as a western made I/C and it's possible to use an air/air core for water, but no where near as efficient as a dedicated air/water core too.

Companies such as Adrad and PWR make the heat exchangers (and tanks) here, so you pay for R&D, etc, etc ,etc.

It seems to me in this country that the cost of things start from the top and filter down.
Business owners may mark up a fair bit, but rents are high or calculated on high base rates plus % of weekly turn over. Go check out Westfield rents. The cost of staff, and that's the Government side of employing staff, i.e super, work cover, WH&S, conditions, loading, public holidays, sick days, accounting fees to comply with Government's paperwork.
Insurances are expansive regardless whether it's public liability, sickness and accident, or plant. Compulsory industry registration, in my line of work I pay $275 to a useless industry watch dog which is meant to keep the hacks out. Small amount I know but still another cost. Electricity, maintenance, import duties, damage, theft go on the bill. And if you can get 6.5 or 7 hours work from the staff by paying them for 8 you are doing well.

I don't agree with a lot of it but that's how it is. Importing anything from China at present is good as it cost virtually nothing to make. But add the head works of business in Australia and it costs.

I could eat rice bubbles and get work on $55 an hour, but I want my family to
have bacon and eggs so I charge $70. We are all similar when selling ourselves, just paying for ourselves is different.

While not directly related to the original point, it is interesting to consider - a friend of ours recently started an online based business importing items and reselling. I'm not too sure what they import, I think it is a bit of everything, but business is booming. So much so that the wife has just quit her $120K a year job to work with the husband running the business. I did pose the question as to whether it would be a good financial decision and apparently she will be able to earn more than 3 times that in wages compared to paid employment. Obviously what they are selling must be competitively priced in order to be turning over so much. I guess the point is that some things can be brought in and sold for 300% markup and still be cheap in comparison to a product privately imported, by the time you account for postage and waiting time.

I do tend to buy a lot of bits from the UK now only because even with freight, the prices are so much less, particularly from some of the Aus based new parts suppliers on ebay (not mentioning any but I'm sure you will know the ones) selling a part for $15.00 with $5 post when the same can be had from the UK for less than $1.00 with a couple of $ post.