To Parallel Import or not?

So today I attended a seminar about parallel importing. One of the most hottest topics at the moment. On most topics I have a strong stance, but this is a topic that divides me.

Why might you say?

Yes, I am human, and yes I like things when they are a bargain! I won’t hide the fact that I shop online regularly instead of supporting our local retailers. How can I not, when the savings are significant. Yes, there is GST, sales tax, etc to consider, but if the difference is still exceeded, I buy online. Now that’s on a personal level, now looking it from a business sense. If a retailer can bring in the same goods (parallel importing) at a cheaper rate, rather than purchasing from the authorised local distributor and sell to you at a cheaper price, why would you disagree?

However, on the other side, and having worked on that side, I can understand how and why many want laws tightening parallel importing. As a distributor you source licenses for attractive products, that your retailers are going to want and that are attractive to the consumer. You develop and implement marketing plans, investing in resources and budgets. Yet, someone comes in, parallel imports your product, and rides on your hard work and marketing investment. Not fair, but reality. However, consumers are still better ahead, as they are getting the products cheaper.

So why can’t the distributors offer the same price to retailers, as the parallel importer? Why can’t retailers charge the same for a good in Australia than in the US. This topic is complicated and we would take me all night to look closely into. On the surface:

A big contributor to Australia’s cost structure is housing. The more than a decade-long housing boom provided a ‘wealth’ boost for many. But the creation of this wealth depends on a constant and growing flow of credit into the sector to maintain high prices.

Each new marginal borrower and buyer of property has a much higher household ‘cost structure’ than someone who bought 10 years ago. To pay for ridiculously priced property, people demand higher wages. To pay for higher wages, businesses increase their prices.

The result? A higher cost of living.

In addition, retailers work different in Australia, than they do in the US. The catalogues you get in your letter-box weekly, these are funded by the suppliers. How do they afford these? They increase their prices to the retailer. When a retailer has a discount on a product, in most cases the supplier funds it. How do suppliers budget for these price promotions – in their price. The US system is different, the retailer absorbs these costs, not the supplier.

So where to from here? As indicated, I’m divided. I enjoy the cheaper prices, but can see the damage it’s doing to us on a local level.

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