A thread about America, Australia, ARB and many other points

[chester ver2.0]

Pricing in its simplest terms is a mix of the cost of manufacture with the markup then based on demand

It is quite simple

You drop wages and yes there will be a year of pain

Then you will find demad for goods and services especially luxury or discretionary items such as airlockers will radically drop

Then guess what will happen yep you guessed it prices will drop to meet the new demand model

Our stupidly high wages in Oz kill us. products are marked up, housing is marked up and therefore it then does not become cost effective to manufacture here so jobs go down

[koshari]

Happy to keep the jobs in Australia as long as most Aussies take a reality pill and stop expecting to be paid insane wages for what is largley unskilled labour roles

of course this cuts both ways,

if costs were not so steep people wouldnt have to request high wages,

Some people in Asia get paid about $20 a week, here that wouldnt even cover the registration cost of the vehicle you need to get to work. Let alone the cost of putting fuel in it. not to mention the minumum price someone would have to pay in rent as opposed to other jurisdictions.

[bentnose]

Nailed it!

x 2

[Wrex]

And most of those middle men with their hand in the Australian consumers wallet add no value and provide no service. But complain when the consumer finds he can buy the exact same product significantly cheaper, with better service elsewhere.

Amen to that brother. Nailed it on the head.

[Squalo]

I'm no scholar by a long shot, and I certainly don't have the answers, but I do have a theory based on experience...unadulterated greed!

eg: 2(?) yrs ago, we went looking for a new baking dish.

Tried shop (A), being part of a 'chain' store - $5X
Tried shop (B), not part of a chain store - $16

EXACT same baking dish, exact same wrapping with exact same writing, exact same baking rack, exact same size!

A quick exercise in economics.

If you buy in bulk - like Shop A - the manufacturer offers you a discount. You can then sell at a price that undercuts retailers who don't buy in bulk - like Shop B.

If you are Shop A, you can also set employment conditions that allow you to pay the lowest possible rate to your employees, and you can negotiate cheaper rent terms due to your status as a 'chain' store.

If you are Shop B, you are probably paying the going rate to your employees, because you don't have a massive legal/financial company assisting you in finding loopholes to 'adjust' your conditions of employment for maximum gain, and you might also just pay the going rate because you care about your employees.

If you are Shop A, warranty returns are no big deal. Your buying power means that you negotiated special terms with your suppliers, who really really want the business you can offer, and so who offered to take on the hassle of managing warranty problems.

If you are Shop B, you need to manage the whole warranty issue from start to finish. Every minute you spend on a warranty issue is a minute spent not working on maximising profit.

If you are Shop A, advertising/tax issues/HR issues/training/compliance are all covered by the money you send back to the parent company (the only downside of being part of a chain), and you don't need to lift a finger.

If you are Shop B, all costs are yours and yours alone.

I grew up in an independent hardware store and saw all of this first-hand, including the first Bunnings and everything that went on from there.

My parents made it work with good old fashioned service, and they did well from their semi-rural town store despite the damage that the rise of chain stores was doing all over the country to small businesses. All credit to them (Tahmoor Hardware, if anyone is curious).

You don't manufacture in Asia for any other reason than to dramatically reduce production costs, particularly Labour at the cost of local jobs.
If you take jobs off shore and do it as covertly as possible to retain the public perception it's still an Australian made product....why should you be rewarded by getting away with australian made retail prices.

Agreed when it comes to the rationale of offshoring. They move production overseas simply because the production cost and the retail price simply don't make sense anymore from a profit perspective - the idea of business being to make money - so to preserve the retail price they need to cut the production cost.

The alternative is to put the retail price up. So would you rather continue to pay the same price, or a higher price? because that quite simply is the choice faced.

A business that chooses the latter is smashed by imports, and goes under - instead of 100 people from a 150-strong workforce losing their jobs, all 150 go, and so does the expertise.

Which is prefereable under such a system? and make no bones about it, this is the system we have now. There's no alternative. And the fact that there's no alternative is entirely due to people wanting to pay less.

Eventually there will be no alternative to the no alternative, if you get the drift - once everything is made o/s, it is o/s who will set the terms. Just like what will happen when Coles and Woolies force us into their own-brand for everything - with no competion, $1/litre milk will become $2/litre milk overnight. And the punters will only have themselves to blame.

(for the record, I buy Maleny Dairies milk, it helps keep me broke but I sleep well at night)

[dales133]

Yea i buy my fresh produce predominantly from small local businesses.
And you raised some good points and the best being use it or loose it when it comes to small business or you'll be stuck with monopolies like the way things are heading

[Nomad]

Apart from the supply of the product we also lose out on the supply chain. Australian boats generally don't bring in all that stuff from O/S. So we are actually paying to enlarge another industry because of our buying habits...........

[Bird]

A quick exercise in economics.

If you buy in bulk - like Shop A - the manufacturer offers you a discount. You can then sell at a price that undercuts retailers who don't buy in bulk - like Shop B.

If you are Shop A, you can also set employment conditions that allow you to pay the lowest possible rate to your employees, and you can negotiate cheaper rent terms due to your status as a 'chain' store.

If you are Shop B, you are probably paying the going rate to your employees, because you don't have a massive legal/financial company assisting you in finding loopholes to 'adjust' your conditions of employment for maximum gain, and you might also just pay the going rate because you care about your employees.

If you are Shop A, warranty returns are no big deal. Your buying power means that you negotiated special terms with your suppliers, who really really want the business you can offer, and so who offered to take on the hassle of managing warranty problems.

If you are Shop B, you need to manage the whole warranty issue from start to finish. Every minute you spend on a warranty issue is a minute spent not working on maximising profit.

If you are Shop A, advertising/tax issues/HR issues/training/compliance are all covered by the money you send back to the parent company (the only downside of being part of a chain), and you don't need to lift a finger.

If you are Shop B, all costs are yours and yours alone.

I grew up in an independent hardware store and saw all of this first-hand, including the first Bunnings and everything that went on from there.

My parents made it work with good old fashioned service, and they did well from their semi-rural town store despite the damage that the rise of chain stores was doing all over the country to small businesses. All credit to them (Tahmoor Hardware, if anyone is curious).


Agreed when it comes to the rationale of offshoring. They move production overseas simply because the production cost and the retail price simply don't make sense anymore from a profit perspective - the idea of business being to make money - so to preserve the retail price they need to cut the production cost.

The alternative is to put the retail price up. So would you rather continue to pay the same price, or a higher price? because that quite simply is the choice faced.

A business that chooses the latter is smashed by imports, and goes under - instead of 100 people from a 150-strong workforce losing their jobs, all 150 go, and so does the expertise.

Which is prefereable under such a system? and make no bones about it, this is the system we have now. There's no alternative. And the fact that there's no alternative is entirely due to people wanting to pay less.

Eventually there will be no alternative to the no alternative, if you get the drift - once everything is made o/s, it is o/s who will set the terms. Just like what will happen when Coles and Woolies force us into their own-brand for everything - with no competion, $1/litre milk will become $2/litre milk overnight. And the punters will only have themselves to blame.

(for the record, I buy Maleny Dairies milk, it helps keep me broke but I sleep well at night)

Post of the year...

[jr]

The "middle man" or distributor actually buys the goods upfront, stores them for in some cases years, carries USD changes, pays GST and import costs and duties, and in Australia is responsible for our VERY tough warranty rules. In most cases well beyond what manufacturer will cover.
They also have to store and freight it around in possibly the most expensive freight system in the world, the longest distances.
Its cheaper to bring a 20ft container from other side of USA to Sydney port than shift it 500km within Australia.

Predatory pricing is very much alive and well and often businesses which claim to be cheapest are ONLY the case if you complain.
Australia is a very difficult place to do business and we all pay.

[Bird]

Still haven't seen anyone explain anything but profiteering on lockers to me yet....

[Marschy]

Retail outlets are a convenience, nothing more, nothing less. You pay a premium for that convenience. The retailer is stocking goods that they have ordered in large quantities to ensure they have adequate stock, paid for shipping and import duties, waited for the goods to arrive, paid staff to stock those goods on the shelves and then paid staff to sell the goods etc etc. Retailers attach a name to their retail outlet. This is a marketing exercise designed to attract brand loyalty either to the outlet itself, or the products that the retailer is 'marketing', be it hardware, groceries, electronics etc.

If you opt to do the leg work yourself and go directly to a supplier, in most instances in Australia this means overseas, this also means the inconvenience of waiting for your goods to arrive from overseas, but the savings go straight in to the consumers pocket.

In Australia we are so conditioned to buying what we want from retail outlets, that when we opt to buy directly from suppliers/manufacturers ourselves, which has been made much easier with the internet, retailers then try to make us feel disloyal for not buying products from their branded retail outlet, and some retailers try to persuade the government that only they should be buying directly from overseas suppliers and the little guy should be penalized to entice them back into their retail store. What they are trying to do is get the government to sanction extortion.

I decided a long time ago to buy consumer electronics directly from overseas, stuff brand loyalty. None of it is made here in Australia anyway, particularly electronics.

Now I know people get upset about not supporting retail outlets and the jobs they create, but I'm about getting the most bang for my buck and looking after my family. I'm not a sucker for some marketing hype that is designed to get me inside a store to make profits for someone else.

[Bird]

Retail outlets are a convenience, nothing more, nothing less. You pay a premium for that convenience. The retailer is stocking goods that they have ordered in large quantities to ensure they have adequate stock, paid for shipping and import duties, waited for the goods to arrive, paid staff to stock those goods on the shelves and then paid staff to sell the goods etc etc. Retailers attach a name to their retail outlet. This is a marketing exercise designed to attract brand loyalty either to the outlet itself, or the products that the retailer is 'marketing', be it hardware, groceries, electronics etc.

If you opt to do the leg work yourself and go directly to a supplier, in most instances in Australia this means overseas, this also means the inconvenience of waiting for your goods to arrive from overseas, but the savings go straight in to the consumers pocket.

In Australia we are so conditioned to buying what we want from retail outlets, that when we opt to buy directly from suppliers/manufacturers ourselves, which has been made much easier with the internet, retailers then try to make us feel disloyal for not buying products from their branded retail outlet, and some retailers try to persuade the government that only they should be buying directly from overseas suppliers and the little guy should be penalized to entice them back into their retail store. What they are trying to do is get the government to sanction extortion.

I decided a long time ago to buy consumer electronics directly from overseas, stuff brand loyalty. None of it is made here in Australia anyway, particularly electronics.

Now I know people get upset about not supporting retail outlets and the jobs they create, but I'm about getting the most bang for my buck and looking after my family. I'm not a sucker for some marketing hype that is designed to get me inside a store to make profits for someone else.

While you are correct, there has to be some business left in Australia for our kids to work in.
If everyone buys all their goodies on the internet from How Fuk Wow in China, then there is no future in this country.

[Marschy]

There are jobs other than retail, you do realise that, don't you?

If I am willing to do the same leg work as a retailer and put the money in my pocket, what difference is there to me doing it and a retailer doing it and charging me a premium for it and putting the money in his pocket.

[Marschy]

I reckon the future for retailing will die in Australia eventually, lets face it, they overcharge because they have to pay retail rents which are killing the retail sector.

Big problem is the retailers, like the grocery duopoloy are using the internet to dupe people into thinking that online shopping is more expensive due to the 'convenience' factor (another marketing ploy), when it is in fact its a cheaper business model to run compared to retail shopping centres

[Bird]

There are jobs other than retail, you do realise that, don't you?

Yep, but Retail is where most kids get their foot in the door to the real world outside of the fiction they are shown at school.

I reckon the future for retailing will die in Australia eventually, lets face it, they overcharge because they have to pay retail rents which are killing the retail sector.

Agree...

Big problem is the retailers, like the grocery duopoloy are using the internet to dupe people into thinking that online shopping is more expensive due to the 'convenience' factor (another marketing ploy), when it is in fact its a cheaper business model to run compared to retail shopping centres/quote]
I dunno about that, I reckon everyone knows online is cheaper. you'd have to be a martian to not realise that.

I don't see them showing it as more expensive, both criminals are now offering online shopping and home delivery - dunno the cost of the delivery though - but if they can close doors and be only online, they will cream in their pants...


Personally I'd love to see the farmers federation get together and open a retail chain selling Aussie made fruit and veg (if there is much left), and Aussie Meat maybe 1 state at a time.. surely it would have to be a worth while gig... although as Squalo said, everyone demands cheaper over quality.. the quality of the meat at the local butcher is 50,000 times what the Shithole Coles right next door offers and I've never noticed the price difference as I always buy from McKays Butcher if they are open - only when I miss the butcher do I go to the Shithole, and then only buy something for that night.

[Swannie]

Still haven't seen anyone explain anything but profiteering on lockers to me yet....

Its simple, supply and demand.. They put a price up and if the consumer buys, they keep pricing up until the believe its at a point where its most profitable and most likely still achieve their forecasted volumes.  If the buyer keeps buying at a steep price, why would a business not try and capitalise on it as much as possible?

Swannie

[ozbogwam]

Still haven't seen anyone explain anything but profiteering on lockers to me yet....

You do realise that is what a business strives to achieve, a profit?

They sell their products at a price to a market segment that is willing to pay the price. No one is forcing you buy it. They now have low budget opposition that are catering to a different market segment. It just means now that there are more players selling and buying.

Also don't think for a minute the other sellers aren't also making good profits on their goods. It's just whether they want to sell 100 items to make X amount of profit or sell 250 items to make the same profit.

When you are making cheaper copies of things you don't have to bother with R&D costs etc

[Barry G]

There is a clear difference between profit and profiteering.

[xcvator]

Still no answer to the ARB question 

[Garfish]

We spent a month in the States recently. An amazing (if somewhat expensive) experience. In the States I could buy a 6 pack of any good Pale Ale for about $8.00 US. A ten pack was around $13.00  US. They don't sell 24 packs.
In Oz it is nearly impossible to buy  a six pack of any pale for under $15.00 AU. Some of the cheapest Pale Ales sold here are brewed overseas. 
Little Creatures make a reasonable/good Pale (approx. $18.00/six pack....$70.00?/carton in Brisbane) at Uncle Dan's. Stupidly I thought a possible explanation for the high price was the tyranny of distance (meaning it has to be transported from WA after brewing). Guess what it appears the Little Creatures we get in Qld is brewed in Vic. Why the ridiculous price then? I guess it must be the gold plated hops OR is it what business can get away
Rant over.

Minimum wage in Los Angeles ~$9 per hour or a six pack,
Minimum wage in Australia ~$17 per hour or a six pack

[Bird]

You do realise that is what a business strives to achieve, a profit?

They are still mking a profit on the item sending it 1/2 way round the world, going through 10 sets of hands, and shipping it back to AU going through 10 sets of hands AND STILL making a profit!!!!!!!!

[bobnrob]

I'm no scholar by a long shot, and I certainly don't have the answers, but I do have a theory based on experience...unadulterated greed!

eg: 2(?) yrs ago, we went looking for a new baking dish.

Tried shop (A), being part of a 'chain' store - $5X
Tried shop (B), not part of a chain store - $16

EXACT same baking dish, exact same wrapping with exact same writing, exact same baking rack, exact same size!

A quick exercise in economics.

If you buy in bulk - like Shop A - the manufacturer offers you a discount. You can then sell at a price that undercuts retailers who don't buy in bulk - like Shop B.

If you are Shop A, you can also set employment conditions that allow you to pay the lowest possible rate to your employees, and you can negotiate cheaper rent terms due to your status as a 'chain' store.

If you are Shop B, you are probably paying the going rate to your employees, because you don't have a massive legal/financial company assisting you in finding loopholes to 'adjust' your conditions of employment for maximum gain, and you might also just pay the going rate because you care about your employees.

If you are Shop A, warranty returns are no big deal. Your buying power means that you negotiated special terms with your suppliers, who really really want the business you can offer, and so who offered to take on the hassle of managing warranty problems.

If you are Shop B, you need to manage the whole warranty issue from start to finish. Every minute you spend on a warranty issue is a minute spent not working on maximising profit.

If you are Shop A, advertising/tax issues/HR issues/training/compliance are all covered by the money you send back to the parent company (the only downside of being part of a chain), and you don't need to lift a finger.

If you are Shop B, all costs are yours and yours alone.

The 'X' after the 5 represents an unknown/forgotten number, or another way $50 odd dollars.
So shop A's baking dish was min $34 dearer than shop B, when from what you wrote, it should be cheaper = "unadulterated greed"

[Marschy]

I think most of us who participate on this forum would remember the days before the Aussie dollar was floated, after which greed became the order of the day. Executives went from salaries in the low to middle 100k's and jumped to salaries and bonuses in the 1M's. I think from memory they used to earn 10-20 times more than the average wage, now they earn more than 100 times the average wage.

Prior to the float, Australia truly was the lucky country, now we truly are the greedy country.

[Bird]

I think most of us who participate on this forum would remember the days before the Aussie dollar was floated, after which greed became the order of the day. Executives went from salaries in the low to middle 100k's and jumped to salaries and bonuses in the 1M's. I think from memory they used to earn 10-20 times more than the average wage, now they earn more than 100 times the average wage.

Prior to the float, Australia truly was the lucky country, now we truly are the greedy country.

actually

[Swannie]

I think most of us who participate on this forum would remember the days before the Aussie dollar was floated, after which greed became the order of the day. Executives went from salaries in the low to middle 100k's and jumped to salaries and bonuses in the 1M's. I think from memory they used to earn 10-20 times more than the average wage, now they earn more than 100 times the average wage.

Prior to the float, Australia truly was the lucky country, now we truly are the greedy country.

Yep those bloody Execs 

swannie