Parallel imports or grey products

[Viagara]

By now I know Skinny's views on a certain corporation that sells amongst others Yamaha products at lower prices.

We all know that the prices of musical equipment are highly inflated in South Africa and I feel that the distributors should re-look their pricing strategy. A consumer cannot be blamed for buying from the place that give him/her the best price and lets be honest, if you can save between R1500 and R2000 on an AV receiver, aftersales service is not always considered.

For instance in January this year I was thinking of buying a Yamaha RX-V650 and the best price I was quoted was R 7200. At the same time the same amp was selling at the "other" place for R 5000! I did not buy it as I still wanted to audition other amps, but otherwise I would rather have saved R 2200 and worried about aftersales service later!

If my speakers or Kefs were sold by "that" store, I would have bought it from them as it would have enabled me to spend the money saved on some additional equipment.

I have done lots of pricing comparisons on equipment sold in US and UK and at some stage even considered importing the equipment I wanted as the savings would have been considerable even if import duties, VAT, transport, etc are considered.

In closing I feel that if the local distributors gave consumers better prices, their turnover will increase resulting in higher profits. There are off course the exceptions - one of them being Audio Imports who are selling CA and MS products for less than the comparable prices in the UK!

Okay, the soapbox is available again :-)

[kay]

I tend to agree with you, I was also looking at the RX-V650 for my first receiver and the difference in price was staggering.

My dad bought some stuff from them ages ago with a warranty not by the official manufacturer but by that certain corporation. When some of it broke about 4 years later (and it was rubbish to begin with!), they took it in for repairs several times and eventually swapped it for a new item.

My point is, even though it's not "official" manufacturer's warranty their service is quite decent. If you buy quality kit and not cheap knock-offs you could save a lot, and in all probability you'll never have to fall back onto their repairs dept. either.

What does put me off them however is their staff's total lack of knowledge and motivation to help, other than to make sure they get their commission.

[skinnyfat]

Agreed !

The same principle applies to pirate DVD's. I do not but pirated DVD's, not because I'm spun from such a high moral fibre but because I didnt spend the money I have on my HC to watch TERRIBLE copies. However one needs to consider the following:

Although prices are coming down, original DVD's are still overpriced. Lets take a blockbuster movie like Starwars as an example. Think of how much one of these movies takes at the box office world wide. nuff said. George Lucas does not need to sell DVD's at ludicrous prices to keep his bank balance in the black !!! the box office has taken care of that. Think of the cost of a blank DVD, minimal. Sure they dont use the same process as we do on the PC but pushing out a bulk run of DVD's from their studios should work out to less than the consumer blank, as production in bulk lowers individual cost, surely.

If I were to make a copy(which I wouldn't..lawyers lay off) of a movie these are my estimated costs (over estimated)

Blank DVD R7.00 (good quality)
DVD label R3.00 (professionally printed)
DVD case R 5.00
DVD cover R5.00(professionally printed)

Total cost R 20.00

I doubt it costs the movie giants R20.00 each to press a DVD

An original Starwars DVD retails at release for about R230.00 ??

Why, pray tell, do we the consumer pay R180+ in royalties. If the big movie production houses took note of this and priced their products more accurately, maybe the pirating/grey copies of DVD's will decrease.


Someone else can have the soapbox now

Skinny

[kay]

Skinny, that's an even bigger issue, I agree. And btw the price for pressed DVD's is even less - something like under 50c per disc when you're doing a run of several thousand. The price for a case is R5 at the shops - it's probably more like R1 when you're buying thousands.

But I think some of the blame for this situation lies with the local distribution chains. They should be the ones fighting the battle from the consumer's side. So I don't feel guilty one bit when buying CD/DVD's from Internet stores to cut cost.

It always irks me that for example a Britney Spears CD can cost R100, while a Sepultura (or some other rare band's) CD can cost upwards of R200 at the same shop.

[siphiwe]

I don't feel like disagreeing with you guys . So, I'll just pass the soapbox along.

[skinnyfat]

The only time I would even spend R1.00 on a Britney CD would be if it was the last cd of hers on planet earth. It would give me the satisfaction of of smashing it to pieces  :lol:

Skinny

[kay]

I love smashing CDs It's just too much fun the way they explode.

[skinnyfat]

I don't feel like disagreeing with you guys . So, I'll just pass the soapbox along.

Feel free to disagree, thats what forums are all about. I think we've all got thick skin

Skinny

[Viagara]

I agree. Give us your views on the subject.

I started the thread because I feel strongly about consumers being ripped off and being denied the pleasures of a decent system just because a distributor or dealer is too shortsighted to realise that turnover is what you aim at not profit based on over-inflated prices.

I work for a large retailler that makes its money on turnover not on markup and it has kept our profits up even when interest rates dropped substantially.

[Greg_M]

Agree 100%.....

If only they atarted to stock products like B&W :D
The question you have to ask... if you are buying a quality product, what are the chances of something going wrong? Sure you get to odd "Monday or Friday" box,  but even at "the store" if you take it back within 14 days,  in the orginal packing (I still have the orginal boxes for my 3 years old stuff).... they exchange...

It ends up being a win-win setup.

[siphiwe]

I should've just said I agree with what had been said before. That's what I meant then.

I've since thought about it a bit more. I'm wondering, do you think the authorised dealers are really just trying to rip us off? What would be very nice would be to know what sort of margins they get out of the sales. I strongly suspect like all things, the margins are much higher at the high-end(Krell, Mark Levinson, or e.g the top receiver of each of the so-called mid brands,etc). I suspect at the entry to mid-level of each brand, it's pretty much cut throat and they probably barely make money with an entry level Yamaha receiver.

Now, with that in mind and putting myself in the shoes of the dealer

- trying to make money in a slow moving business,
- aiming to provide a decent after-sales experience to my customers
- pay my staff
- the only way I could possibly compete with the mass marketers would be to use the parallel import market like them. Then the playing fields will be close to equal.

I'm not trying to say the mass marketers doesn't aim for the above, but I strongly suspect their economies are so much better. Just look at their shops, they cover hundreds of square metres and they're not as focused as a 'proper' gear shop(hell, they even sell fridges, microwaves and heaters too).

I think it's not as easy as just dropping prices.

On the subject of DVDs and CDs. I fully agree.

[skinnyfat]

I think that in order to avoid slander/libel cases against us we need to avoid using retailer names and refer to them as 'Relatively Inept Places Of Feeble Furnishings' or R.I.P.O.F.F. for short  :lol:

I believe that if upper market home cinema components were more competitively priced, they would find a larger section of the public buying them. The demand is certainly there, all you have to do is watch the amount of HTIB's being sold in supermarkets! Again this has been said earlier in this thread - Higher turnover with lower markup = higher profits. Its just that their beancounters dont see it that way :wink: .

That is precisely what this forum aims to do, and that is to have knoweldgable people like yourselves assist those who are new to this. As this forum grows
(and it will) more and more people will become aware of this situation. Greater demand and pressure on the industry might convince them to price their product more competitively.

Ok skinny, stop dreaming, wake up and smell the cold coffee.

[siphiwe]

I believe that if upper market home cinema components were more competitively priced, they would find a larger section of the public buying them. The demand is certainly there, all you have to do is watch the amount of HTIB's being sold in supermarkets! Again this has been said earlier in this thread - Higher turnover with lower markup = higher profits. Its just that their beancounters dont see it that way :wink: .
.

I think it's time we bandied together and opened a high turnover AV shop or two :wink:.Skinny, as said above...I lack some important facts to back up my argument but, I think we cannot compare the throngs of people buying R2999 HTIB sets with the a X.1 channel speaker box set from manufacturer A + Receiver box from manufacturer B, DVD player from C type of system. These are two completely different sections of the market. I don't believe the person who buys a HTIB set for a shade under 3k is going to be willing to spend R10k for a component system(that's just over 3 times).

I think what we should be comparing is a similarly specced component system from a parallel/grey importer and another one from ripoffs anonymous. That would be fair.

Greater demand and pressure on the industry might convince them to price their product more competitively.

I think the entry to mid-level is priced quite competitively already, maybe because of the favourable current  exchange rates. Perhaps what we need is more competition at the high-end of the market. There, I believe we're simply paying too much.

PS. I think you're being a tad too cautious with your litigation fears, however I'll edit my previous post accordingly.

[skinnyfat]

I think maybe my point is being missed. If you compare what AV gear costs to what it sells for you'll be horrified.

I know of a brand of (high quality) bookshelf speakers that was retailing for R3990-00 in a reputable dealer in Canal walk CT in first week of July.(I was in holiday in CT last week). That same pair COSTS incl VAT R 1196.00. Can you really justify an overall markup of R 2794 ?? :shock:

That is just one instance of one brand, when you consider all the components you need for a decent HC, the ripoff becomes more apparent.

Skinny

[siphiwe]

Aha! That's the facts I've been missing all along. Clearly, that's a ripoff. So, then it becomes a case of, do you want to shop at a dealer where you know you feel ripped off or you want to shop where you're comfortable with the price?

I shop where I'm comfortable with the price. As long as some of us are willing to go to the ripoff shops and buy stuff at unreasonable prices there will be no need for the dealers to drop prices. Using your example, that dealer will have no interest in a high turnover/low price model as he makes over 100% profits with the current model anyway. I certainly wouldn't mind if the mass marketers will stock more than just Yamaha receivers at their shops.