Another sector where there is a clear online price discrepancy is in the online sale of books.
The popular sites for Australians to buy books at include Amazon and Book Depository, which was bought by Amazon last year.
Prices may be cheaper at these international sites than in-store, but a Whirlpool internet forum called “Book Depository Ripping Off Aussies?” has garnered over 40 posts.
The forum was started by the disgruntled user “Clogmouse” who looked up a book on the Book Depository for $36 and then looked up the site using an automatic proxy, which said the book was $30.
“It seems to me that the site is automatically charging Australians more for items (remember they have no shipping). It’s still a really good deal, but I’m quite annoyed to find this out,” Clogmouse posted.
Another user replied: “Have a look at bookdepository.com and bookdepository.co.uk and you will quite often find different prices for the same book.”
SmartCompany contacted Book Depository but did not receive a response prior to publication.
Hartwich says he is “not surprised” that the pricing differs as “this is the typical price discrimination policy that a lot of companies employ.”
“It’s called segmenting the market,” Hartwich says.
“But consumers have a choice; they can go to price comparison sites or they can use proxies.
“For books, if you go to Addall.com you can type in ISBN and author’s name and it searches online and gives you the cheapest price.
“For smart shoppers who are internet savvy, you can find good deals.”
Hartwich says the main reason for Australia’s high book prices is the Copyright Act requirement that if an Australian publisher procures a book’s copyright within 30 days of its overseas release, Australian book retailers cannot import foreign published, probably cheaper versions of the book.
“It’s a protectionist measure which dates back to the late 60’s,” he says.
“It is creating an artificial monopoly and, in the end, Australian consumers are paying more because of it and anyone who has ever lived or travelled overseas knows that.”
However, Hartwich says the Copyright Act requirement should not impact on the cost of books from overseas websites.
Swedish brand Dr Denim has built up a cult reputation worldwide, but its online pricing differs significantly from website to website.
Dr Denim Snap Skinny Jeans are $81.60 on website Asos, where prices for the brand range from $76.50 to $110.50.
In contrast, on local men’s fashion website Kaeho, Dr Denim Snap Navy Tight Jeans are $129 and prices from the brand range from $79 to $149.
Daniel Clark, co-founder of Kaeho, told SmartCompany retailers were not ripping off Australian companies.
“We operate three online stores – Kaeho, Squeakytee and Rushfaster – and our policy is to get as close as possible to an overseas competitor and we will take a loss on the margin,” Clark says.
“That is an effort for us to keep the business in Australia; it hurts us quite a lot.
“We can’t match the price because sometimes the price we have to buy it at in Australia wholesale is more than the retail price overseas.
“With less population than the US and the UK, it can be hard to get a better price upfront from the brand itself to make the price more reasonable.
“We have found consumers are generally happy if it is within 10% or 20% of overseas because there are advantages to buying local like warranty, sizing and speed of delivery.”
Clark says Australian retailers, even those online, have higher costs than international businesses.
“It’s the supply chain,” he says.
“There are a lot of costs involved in operating a store, even an online store, which is staff, rent and marketing – for online, freight is a huge component.”
However, Clark does not think suppliers are to blame as he says they have to charge GST, include their own margin and add in charges of up to 30% in duties.
“These are outdated duties protecting industries that don’t really exist anymore, like manufacturing of clothes; it is time to give up on that,” says Clark.
“When a supplier is buying product they need to buy that eight or 12 months before it hits the stores and the currency could be at a totally different price at that point by the time it arrives … so they have to lock in their currency rates up to 12 months in advance.
“As currency changes, they can’t change the price of a pair of jeans every month, customers expect a standard price.”
Clark says it is hard to compete with companies like Asos, which is making “mega bucks” by shipping to Australia as it can sell clothing for almost half the price of Australian retailers.
“With things as they are, it’d be more beneficial for us to move to the US or UK to run our business and focus on Australia,” says Clark.
“If I was buying my product in the UK I would have a lower buy price, so I could sell it at their recommended retail, which could be half the price.”
Earlier this month SmartCompany reported that some fashion importers had reached agreement with fashion brands to stop cheaper online sales from international sites.
Cara Waters is the editor of SmartCompany. Cara was previously a senior reporter at the Financial Times website FT Adviser in London and has also worked for The Sunday Times.
