May 13, 2011

Crikey readers respond: yep, we’re being gouged — a lot

Crikey readers have responded in force to our story on the difference between local and foreign prices for the same goods.

Bernard Keane — Politics editor

Bernard Keane

Politics editor

Gouged. Ripped off. Taken for a ride. Whatever your term of choice, it's clear that's what is happening to Australian consumers. Crikey had a massive response to its call for more examples of the huge differential between local and overseas pricing for the same goods. The range of products was extraordinary --from the $100,000-plus mark-up on the Tesla electric car reported by AutoblogGreen to the cans of Coke selling online from a New York outlet for a quarter of the price available from Coles. But there some brands and products recurred repeatedly... Shoes. These are by now the classic example of how it's far cheaper to buy online in Australia, with shoppers often able to buy shoes for a third of the price online that they can here. Because most footwear is manufactured in the same countries in Asia and South East Asia, the disparity is particularly hard to justify. Reader after reader sent through examples of how much cheaper runners are online. But the problem extends, predictably, to more specialist footwear. A nurse who relies on a certain brand of footwear to keep arthritis at bay gets them online for half the price she can from Rebel Sport. Stockport business shoes half the price even of local online outlets when purchased direct from the US. Hiking boots from Amazon UK or US stores again for half or less from local outlets like Kathmandu. Platform shoes for less than a third of the price. Cosmetics. "Savvy Aussie women have long been writing their lists and doing all their cosmetics shopping in the States and now ordering online," wrote one reader. Again, the price differences are huge. Clinique's Dramatically Different Moisturising Gel is under $25 in the US, up to three times that here. Christian Dior, Bobby Brown and YSL products half or two-thirds as expensive online. MAC products half the price online. Adobe software. Judging by our emails there are a lot of disgruntled Adobe users out there deeply unhappy about the mark-up Adobe imposes on Australian users to download products like CS5. Renai Le May at ZDNet has already written on this. Ski gear. Lots of emails on this, with the recurring theme that prices were half online what they were locally, prompting people to risk poor fit to get significantly cheaper boots and goggles. In terms of volume of emails, Apple is the biggest offender, and its pricing policy on iTunes has already attracted considerable media attention. A couple of people noted that iTunes prices in Australia are in the hands of the record companies, not Apple. But most of the responses pointed out big differences in Apple hardware prices, with the cost iPads -- $589 on the US Apple site, $689 here -- a recurring complaint. Reader Dave Lennon pointed out that, once you include the sales tax applied in some US states (the applicability of state sales taxes in the US to online retailing is a separate and interesting issue, given Amazon is engaged in a legal war with New York State over that very issue), the price differential shrinks significantly, though not fully. Other differences are less explicable. There's a $200 difference between base level iMacs on the US and Australian site, and one reader pointed out that locally Apple had recently increased the price of its base level Macbook Air by $200 at a time when the Australian dollar has been surging. Several calls and emails to Apple's local media contacts this morning all went unanswered. Another reader pointed out that the differential wasn't as simple as it looked, suggesting a range of factors like US state taxes, differences between US domestic and export prices, the need for local testing and certification processes for electrical goods and the lack of warranties. The other recurring theme from readers who had challenged local retailers on high prices is the refusal of manufacturers to allow competition with retail outlets, which local online retailers have persistently encountered. And Dave Lennon wondered about whether the gouge start here or overseas -- do local subsidiaries pay more to import products from parent companies, because the latter know Australians are used to paying over the odds, or do the local subsidiaries buy low and sell high? That's of more than academic interest, because it bears directly on how much taxes local subsidiaries pay. Finally, Booko's Blogo, run by Melbourne's Dan Milne, is another blog that has been reporting glaring price differentials across a range of products.

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10 thoughts on “Crikey readers respond: yep, we’re being gouged — a lot

  1. michael r james

    ” (the applicability of state sales taxes in the US to online retailing is a separate and interesting issue, given Amazon is engaged in a legal war with New York State over that very issue)”

    Actually Bernard, Amazon is in litigation with two other very big states with hundreds of million dollar claims for each: Texas and California:

    ….last fall, Texas officials sent Amazon a tax bill for $269 million….
    California, for instance, expects to be shortchanged $1.15 billion in 2010 (on all e-commerce).

    The new laws are intended to help fill state coffers as lawmakers are being forced to cut funding to education, Medicaid and public safety. The changes are also promoted as leveling the playing field between online retailers and brick-and-mortar stores, which must tack on an extra 8 percent in most states]

  2. Peter Evans

    Apple do a ton of gouging, but they have NOT increased any MacBook Air prices.

  3. nicolino

    Judging by the really bad deal Australian consumers get in just about every area of retailing you would think the authorities would be on to this. Oh hell, I forgot. I’m in Australia.
    We have the ACCC and the Australia New Zealand Food Authority to hold up as shining examples of vigilance, the white knights -not.

  4. GlenTurner1

    It’s not just price, but also range. This is particularly so in cycling parts. Some of us are happy to pay somewhat over the odds to ensure our preferred Local Bicycle Shop continues to exist. But for some items the price difference is just ridiculous; and worse, the hundreds of dollars goes to the distributor and not the retailer, so it’s adding no more to the survival of the LBS than if the part were reasonably priced.

    When the LBS can’t even source parts from the pitiful range kept by the Australian distributor, then of course your going to look at the Internet vendors (and cycling is blessed with some of the very best Internet retailers).

    I’m not just talking high-end parts here. But parts and clothing suitable for shorter or taller people. Or parts for older bikes, such as chains and cassettes for continuing the life of the 15 yo mountain bike you use for going to the shops.

  5. webetrust

    +1 Glenturner.

    Much to my surprise, I discovered I am spending around 4-5K per year on cycling spares. Where I can I ask my LBS to price match, or as close to is as possible. Where they can, they get the turnover. But it is not very often.

    The other interesting part of this phenomenen is the inability of Australian online retailers to compete worldwide – why? The ridiculous price gouging of the most basic of services from our own commercial government business – Australia Post!

  6. Dogs breakfast

    A few contributors have made reference to the ACCC having some responsiblity here, although it’s hard to imagine that they have power to set prices.

    For those who are calling for ACCC intervention, what do you suggest they do? Ross McOmish responds likewise in Friday’s Crikey.

    Apart from that issue there is no doubt we are being played for suckers. I use tot ry to buy locally made product from local stores, but now that most retail outlets are either Coles or Woolies, and products are always sourced by them from the cheapest seller, I’ve given up.

    I am in the process of buying wetsuits from America at half the price in Oz. Golf Equipment is equally bad. I would suggest that it would be widespread across sporting equipment.

    The vast majority of these sporting goods are made in China. It’s hard to reconicle how something made in China costs twice as much here as it does in the US.

    Fool me once …………..

  7. Peter Bayley

    Something fishy about one reported “reader”‘s comment on US price gouging in the “Tips and Rumours” section – the quoted web site – from which the writer claims to have benefitted so greatly – is not operational – it’s just a mock-up – ABN 88 888 888 888 etc. – so I think some skulduggery is afoot. The link actually points to – but that (probably a typo or they haven’t yet decided what to call it) goes nowhere.

  8. IRGroves

    Video games. Predominantly xbox and ps3 console games. Using one of the more anticipated titles coming out this year – LA Noire on the xbox – as a perfect example of what I’m talking about. Look first at a standard overseas price for this.

    On Amazon US: US$59.99

    Whereas in Australia the major online retailers are charging:

    JB Hifi: $89.00

    EB Games: $108 (!)

    Meanwhile, one of the few Australian sites I’ve found that sells games in this country for a reasonable price finds it actually cheaper to import games from asia and europe and sell them here than for it to sell domestic games. is selling the game for $64.95 – and that’s with free shipping!

    If an aussie website can only sell cheap games by actually going to the trouble of importing them from overseas, something has gone very, very wrong with retail pricing.

  9. Induna

    Overseas manufactures are probably culpable in this great rip-off. I used to purchase Merrell shoes from The last pair I purchased cost me $129 delivered – the only retailer stocking them in Adelaide was David Jones and they wanted $329.95! Anyhow a few months back I tried to get a new pair from only to be informed that due to an agreement with the manufacturer they were no longer able to ship that brand to Australia.

    By the way, we can look closer to home for cheaper prices. On Apples official Hong Kong web site a 64gb iPad 2 with wifi and 3G is only $783, here it’s $949. Explain that.

    It would seem that the big brands are dictating the terms of globalisation and Australians are getting shafted.

  10. Peter Bayley

    Yes, enough of this unfair pricing – so let’s get together and collude on pushing up the price of our iron ore so the rest of the world will have to pay over the odds – Woops! that’s right – we already have.

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