another side to this may be where the products are manufactured and how local companies suddenly went global. My wife is in retail, the company was based in NZ and had stores only in NZ and OZ. They listed on the stock exchange two years ago, began opening stores all over the world and outsourced the manufacturing to an Asian country. Lots of surf labels did the same, and now they have closed seven of the stores, cut back staff and are looking shaky. Many other factors are linked to this but they were going gangbusters before they decided to expand and outsource, prices went up despite the ideology that cheaper manufacturing costs were on offer, profits declined, has this happened to the surf labels? Do the Americans know something we don't?

bakesy said...

Do the Americans know something we don't?

I bloody hope not

If you're selling the same product as the imports, the price should be similar. If you want to name your own price, differentiate somehow. E.g. Seventhwave wetsuits, or Japanese custom wetsuits, or Patagucci wetsuits, or Matuse, or Hotline, or Buell. Or e.g. with the newest board I've got, the guy sells at a (very) premium price but his product is very far removed from the average popout, and he's got so many orders he barely has time to surf any more. CMC would know him by (online) reputation. Differentiate and survive. Provide nothing more than a higher price, and sink.

6 ounce just shut down apparently

doggie said...

Legion said...

6 ounce just shut down apparently

Bloody hell it just reopened!!

Yep a friend of mine helped re-open it in Feb. Looks like they chose to not go forwards with the renewal on the 6 month lease.

As I said above stores are closing, people are doing it tough.

There is merit in what has been said here, if things are so expensive here and cheaper o/s online people will buy from o/s. I bought a set of head phones last night online, I don't think however that a retailer here selling them at twice as much here is ripping me off, it's a different economy of scale. The exchange rate is what making it tough right now. My $30 headphones in USA at .75USD for 1AUD exchange rate before would have made the purchase inc freight to get it here not worth while.

I had a meeting with a guy yesterday and we were discussing the US market, there are as many people in California as Australia. If you have a 5% market share you are a millionaire. Wages are lower, rent is cheaper and the cost of living is much lower. Shops in the US operate on a volume basis, not margin. They have the population to support this high turnover low margin approach.

In Australia things are much different. A niche store like 6 ounce that has now closed twice kind of proves that renting in Manly paying staff enough to live on the Northern Beaches of Sydney and finding enough people in todays economy willing to pay $1500 for a beautiful surfboard is not viable.

My point is it's great to make assumptions about 'surf' stores but reality is many are now owned by the large surf companies. The independant surf retailer is a dying breed. If you can find one support them however you practically can.

The question, if the companies dropped all of their prices and the retailers dropped their margins and volume remained the same most of these businesses would not be viable any longer. It is interesting times indeed and shows how the collapse of the USD is affecting the world. Great thread by the way in the end.

doggie said...

When you sign on with ripquikbong do you sign a contract to sell their gear?

It's all in the account application.

At the end of the day, the industry giants are in it for the money...The product being sold here for $600 or $300 in the US, costs them the same and all come from the same factory...A 20ft container sailed to Oz or US from Thailand doesn't cost that much, when you break it up into the unit cost of each suit being transported...They're having a lend nothing else to it...

They need to revise their RRP formula for Oz. With today's stronger AU$, they need to revise the pricing and encourage sales in Oz as oppose to encouraging international purchases.

If they're not having a lend, then can someone please explain why I can purchase a wetsuit from the US, after it was manufactured and shipped from Thailand to the US, handled/stored/transported until it reaches it's destination, a surf shop; whether it's on consignment or purchased by the retailer. I then access the shops internet store and buy it, the guy packages it and is picked up by a courrier. It is then airfreighted and arrives in 5 days to Australia. After all that, the suit still ends up around 43% cheaper than a suit shipped from Thailand to Australia, handled/stored/transported until it arrives at trendy surf shop and it stays there, hanging on a rack and will most likely end up selling at the end of season for half price. And they are still making profit even on the sale price. If that's not a rip off then I please enlighten me.

300-500% profit margins (based on unit costs ex works) on some retail items aren't abnormal...

True True...It's really ironic, that as a result or our economy/population/market positioning, most retail prices compared to the rest of the world are driven up. However, because of our economy we are able to purchase products over seas for a lot less. But at the end of the day we're pissing in a pond which is our retail industry, and eventually were going to stink it out, which again reflects on our economy. A vicious cycle.

In the whole scheme of things, whinging about wetsuit prices or what ever it may be is still nothing compared to some of the daily struggle of others!

If this is all we have to worry about, we're doing pretty bloody good...

I hear houses are going cheap in the US too? I wonder how much freight will be???