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Parallel importing

Discussion in 'Logistics' started by Snow, Sep 2, 2010.

  1. Snow

    Snow New Member

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    Hi there,
    first time poster so thanks in advance for any feedback. Ive been asking around in relation to the Parallel Importing of Ski / Snow sports / Surf / Skate gear from the USA.
    My story is, i run a pretty flexible small business from home and have a bit of spare time on my hands. I have a friend in the USA who would like to send some gear to me. We have been through the costings and the gear would be landed here below the wholesale price i could get it if sourced through a local distributor.
    I understand this is a grey area and i would be stepping on the feet of the local distributor but to keep prices down the business model would not work effectively if i operated at Australian rrp.
    I have the opportunity to rent some space as my office and would offer my gear at low prices from my shop front / office.
    Basically i figure if im sitting here all day working i may as well have some items for sale that i know a fair bit about.
    I suppose my first question is if i purchased for instance 50 brand name snowboards from a markdown store in the USA that retailed here for $800.00 could i be stopped knowing there is a distributor licensed in Australia.
    cheers
  2. Tim Davies

    Tim Davies Member

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    Hi Snow,

    'Stopped', probably not. I mean, there's not much the distributor can do about people going about bring in the product like you suggest. Annoyed, yes they would be.

    Before you go too crazy, i'd just start with a really small voume which gives you the chance to test the water a bit. A few less than 50 units I mean. If you dont cop any greif, start to open it up a bit.

    To me, it sounds like at the end of the day there's not much the local distributor could do, other than complain about it to their supplier in the USA.

    You'd probably want to start small and slow, just in case you hit any snags. You wouldnt want to be stuck with 48 boards you cant get rid of.

    Good luck.
  3. mexham

    mexham Member

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    Hi Snow,

    I don't see how they could stop you. You just have to have a look on Ebay and see how many brand name items are obviously not being sold by authorised distributors.

    If you are just selling small quantities you may slip under the eyes of the competitors but if you start taking some of their market share they might start to take a bit more notice.

    Just ensure your costings take into account your import fees, GST, duties and taxes etc as these can quickly add a lot to your initial cost price.
  4. FS Concierge

    FS Concierge Administrator Staff Member

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    G'day Snow,

    Thanks for joining the gang.

    Here's hoping you can get your new business going. Sounds like it could be a nice little earner for you.

    Good luck!
    Jayne
    1 person likes this.
  5. PaulyT

    PaulyT Member

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    Hi Snowy,
    I am doing a similar thing except buying from US distributors and cutting out the Aussie distributor/wholesaler.

    Just a few thoughts...

    Do you want to tie yourself to opening hours in a office/shop?
    You need to be cheaper than other stores and maybe Ebay.
    Are there warranty issues to consider?
    The opposite seasons will work well for you buying from there and selling here.
    I know in my area large OE companies have tried to stop international trade, reported copyright violations and asked the ATO to check out importers in a effort to stop so called parallel imports.

    All the best, just thought some of the above may be useful.
  6. Snow

    Snow New Member

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    First of all thanks for the reply s :)
    I realize theres a few bridges to cross. I have tested my business idea in a small way importing these products on a small scale and re selling.
    Its a new ball game if i intend to import a commercial quantity of goods with customs dutys, freight ect.
    I have spoke with a few companies in the US and they are happy to negotiate on prices to accommodate the customs duty if i buy a commercial quantity.
    For instance one supplier will give me 15% off the already discounted gear if i spend $10,000 us. This would put me in a reasonable position after paying customs dutys.
    I spoke with a distributor in brief here in Australia who is the friend of a friend and he was quite adamant he would make a call to report counterfeit gear and customs would go through me.
    My reply was if my paperwork was in order and purchases were of original gear i have nothing to worry about.
    He then said they would go about cutting my supplier off in the USA.
    Plenty of scare tactics to protect an inflated market.
    His last words were by the time you pay import duty and freight you will end up been above wholesale price anyway and when you call me i will hang up on you.
    Ive got news for him as some product i have sourced are landing here up to 50% lower than wholesale.
    Keeping in mind this would only work while the Aussie dollar is strong.
  7. AussieFreight

    AussieFreight New Member

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    Hi Snow,

    if you need any help on the importing side of things, send us an email and I'll get some costings etc for you if that would help you out at all.

    caterina.zaini@aussiefreight.com
  8. King

    King Well-Known Member

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    As part of your costings, sounds like you had better include a fair chunk for legal fees.
    Personally I think both you and the US supplier need to think hard about ther ethics of it all. If the current AU distributor has the legal distribution rights, then that is something he will defend, and sightly so, esp if it is a branded product.
    Read up on the Trade Practices Act - might be some worthwhile reading in there that will help shape your thoughts.
    Basically, there are plenty of products you can import, of new brands, but good quality, with good margins, without creating ongoing angst.

    Think Karma!!
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  9. Snow

    Snow New Member

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    what would the legal fees be for ?
    does karma work in business ?
    without been smart some importers rub their hands when the exchange rate changes. i know for a fact a guy thats running a nice profit when the dollars hovering around 60c US and doing back flips when its up round the 90c.
    These big companies simply dont adjust their wholesale to Australia in relation to the $
    They have Karma on toast.
    Are these the ethics i should be worried about. ?
  10. Ray J

    Ray J New Member

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    I can probably add a little to this as I started a business early this year doing the same. I did get a phone call from the Australian distributor after a couple of months politely asking that I remove the imported products from sale. I followed their request and am now sourcing product from them which is no where near the price I was previously paying. I understand that they pay for the rights but when I can have a product shipped to my door from the US for $37 and I now pay $70 with a 25% discount from the Australian distributor this just does not seem fair. I want to run a legit business but things like this make it really hard for small business.
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  11. King

    King Well-Known Member

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    You missed my point entirely

    The legal $ have nothing to do with exchange rates, it is what you are going to be paying when the guy with the distribution RIGHTS takes you to court. You could lose everything, including your house, car....paying off the legal fees of defending what you are doing.

    Does karma work in business, yes probably more than anywhere else.

    As for exchange rates, that is something different again.

    There are many other manufacturers who will be able to supply you with equivalent products. The safest path is to bring in someone else's product. If you parrallel, and if you are successful, then this only increases the resolve of the guy who has bought the rights to import to take you to the cleaners.
  12. Tim Davies

    Tim Davies Member

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    Hi King,

    I see where you're coming from on this, I've been following this thread since the start.

    I take a slightly different view though. I think if an Australian Distributor has an agreement with the supplier/manufacturer in the USA then this an agreement between them, any breach would need to be settled between them. Its not exactly like a patent which protects the product in a particular market. Its an exclusivity agreement between a supplier and their distributor.

    At the end of the day, if someone can purchase the goods in the USA from a bonafide source, import them and then sell them at a competitve if not better price than the lcoal distributor is selling them at, thats a supply chain issue for the supplier to deal with, who's effectively allowing the situation to happen.

    I agree with you in the sense that a) the risk is worth keeping very measured in very small volumes only, or b) seeking further councel on the plan, if Snow is looking to do any sort of volume with the idea.

    Very interesting topic.
  13. King

    King Well-Known Member

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    Of course what Snow has not disclosed yet, is if the current distributor has a exclusive distribution arrangement. If not, he may be home clear.

    If they do...well....they may have invested thousands in establishing the brand here etc.

    So yes there is a degree of suposition in this thread far

  14. jasonm

    jasonm Member

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    Hmmm, plenty of people willing to throw ethics out the window.

    How would you feel about it snow if you built up your brand and sales and someone else started bringing it in and selling it even cheaper than you?
  15. Snow

    Snow New Member

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    I would probably feel hard done by, the same as the corner store owner feels when woolworths builds in their town and the same as the local surf store feels when one of the Billabong or Jetty Surf stores sets up.
    Before i go further thanks for your replys as i joined here hoping to ruffle a few feathers and generate some interest in a market that baffles and intrigue,s me.
    King,
    You missed my point entirely

    The legal $ have nothing to do with exchange rates, it is what you are going to be paying when the guy with the distribution RIGHTS takes you to court. You could lose everything, including your house, car....paying off the legal fees of defending what you are doing.

    I got your point and was hoping you would answer my question. When someone buys the distribution rights for a particular brand does that give them the legal right to be the sole distributor of that brand in Australia ?
    I think not, i think that is an agreement with the company that they will not supply anyone in Au.
    Ive had plenty of advice along the lines of you cant do that or the big boys will get you. But im looking for. Hey Snow if you import a commercial quantity of brand name snowboards from the states off a legitimate store at sale price and offer them for sale in Australia you are breaking this particular law.
    I would love to set up my store and offer brand name products purchased through my Australian distributor at rrp and live happily ever after. Problem is when 17yo snowboarder joe looks at his $750.00 snowboard in my store he walks outside and the apple i phone tells him he can get the same board in the states for $400.00 delivered to his door in 5 days. This problem isnt going away with the increase in the use of the internet.
  16. Snow

    Snow New Member

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    As an example lets look at the leading snowboarding brand in the world. Burton
    Burton has an Australian distributor.
    Burton will not let their stores in the US sell direct to Australia.
    If i buy 50 Burton boards in the US and offer them for sale here in Australia what will happen ?

    If i can get some sort of solid answers ill be stoked.
  17. victorng

    victorng Well-Known Member

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    In my opinion, not a lot probably. It's the classic example of a gray market. Some people will be happy buying from 'non-authorised' distributors, others will want to buy from authorised sources only.

    If it gets on the authorised distributor's radar they may try to affect your supply / buy price via the overseas manufacturer / supplier.

    A potentially big issue is how you propose dealing with warranty claims. As an Australian seller, you'll have warranty obligations under the Trade Practices Act (as someone mentioned above). These can't be avoided (i.e. you can't just refer people to the manufacturer) and unless you have an arrangement with your supplier, you may have to fend for yourself (which probably means giving a refund and making a loss).

    Cheers
    Victor

    ^ This isn't legal advice - I'm just shooting the breeze
    Last edited: Sep 14, 2010
  18. Snow

    Snow New Member

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    thanks victorng,
    yes i am factoring in warranty issues with my supply stores in the US.
    You can research this topic as much as you like its very hard to get solid answers, mainly unsubstantiated threats.
    Keep them coming please.
  19. mcboom

    mcboom Member

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    setup a limited liability company (this will protect your house, car etc.) and go for it. There is not much the distributor can do as you are not importing couterfiet products and are purchasing from a bonda fide source in the US.
  20. PaulyT

    PaulyT Member

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    Exactly, the local distributor wholesaler has the problem as his agreement with the manufacturer / supplier may not be exclusive.

    We are in a global market now and there will always be someone cheaper, better, faster.

    Just my opinion.

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