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  • #1040375
    Urchin
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    Wikipedia has a good section on grey market goods.

    http://en.wikipedia.org/wiki/Grey_market

    #1040376
    jasonm
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    trakka, post: 49378 wrote:
    As someone else pointed out – it is competition. It is what happens to small retailers when a big company like Woolworths move into an area.

    Sorry, but its nothing like when Woolworths moves in. I’m no fan of the proliferation of the large chain supermarkets and their ever expanding interests so dont think I’m pro big-guy.

    The company you are looking to steal market share from has invested time and money in building the brand locally and purchasing containler loads of stock that I would expect have to be carried for some time before it is sold. They have spent money on advertising, signage, promotional material, warehousing space, and it has probably cost them a bit for people that break the equipment through carelessness but are still given a replacement under warranty.

    All these things carry a cost which is recouped through the margin on the products they are importing. The reason you can do it cheaper is because you are not putting in the effort, you are just capitalising on the dollars they have already spent.

    #1040377
    trakka
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    Power Protect, post: 49763 wrote:
    Sorry, but its nothing like when Woolworths moves in. I’m no fan of the proliferation of the large chain supermarkets and their ever expanding interests so dont think I’m pro big-guy.

    The company you are looking to steal market share from has invested time and money in building the brand locally and purchasing containler loads of stock that I would expect have to be carried for some time before it is sold. They have spent money on advertising, signage, promotional material, warehousing space, and it has probably cost them a bit for people that break the equipment through carelessness but are still given a replacement under warranty.

    All these things carry a cost which is recouped through the margin on the products they are importing. The reason you can do it cheaper is because you are not putting in the effort, you are just capitalising on the dollars they have already spent.

    How is it not like when Woolworths moves in?

    I invested time and money and purpose built a retail store. I purchased stock, signed supplier agreements, spent money on advertising,signage, promo materials and equipment. I worked night and day. I lost money to damaged stock and shoplifters. And then Woolworths moved in, and with their substantial buying power undercut my prices. They could sell prices cheaper than I could buy them wholesale.

    Did they “steal” my marketshare? No. They won the business through price.

    So, how is that different?

    I have a business that imports products from overseas – mainly from the USA. My business stands to be severely impacted if someone decides to parallel import. However, I understand that is part of the business and I went into the venture knowing that it could happen (I know people who parallel import- but different products). If a competitor is able to sell at a lower price and create value than I need to adapt my business practices to compete or at the least review my supplier agreements.

    If Snow goes ahead with his venture he will be taking the same risks and making the same kind of investments of time and money, as those selling the same product already.

    There are some new products and services introduced every year, but the majority of businesses are started as someone thinks they can do it better or introduce a product or service that is not yet available in an area.

    Does that mean the majority of start up businesses are “stealing” from existing ones?

    Tracy

    #1040378
    King
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    Bravo Power Products and others on my line of thinking.

    Trakka, I think you have missed the point on the mosdt part .

    Lets turn things around a bit and say snow is going up in competition to you….especially if you have an agreement with the supplier, possibly for sole rights to import.

    How will Snow handle warranty issues, probably send em off to the otherr guy…he sounds like he is not willing to do the same investment, but poach and ride oin the coat-tails of of someone else.

    I raise the point of Karma again (AKA ethics in business)

    trakka, post: 49783 wrote:
    How is it not like when Woolworths moves in?

    I invested time and money and purpose built a retail store. I purchased stock, signed supplier agreements, spent money on advertising,signage, promo materials and equipment. I worked night and day. I lost money to damaged stock and shoplifters. And then Woolworths moved in, and with their substantial buying power undercut my prices. They could sell prices cheaper than I could buy them wholesale.

    Did they “steal” my marketshare? No. They won the business through price.

    So, how is that different?

    I have a business that imports products from overseas – mainly from the USA. My business stands to be severely impacted if someone decides to parallel import. However, I understand that is part of the business and I went into the venture knowing that it could happen (I know people who parallel import- but different products). If a competitor is able to sell at a lower price and create value than I need to adapt my business practices to compete or at the least review my supplier agreements.

    If Snow goes ahead with his venture he will be taking the same risks and making the same kind of investments of time and money, as those selling the same product already.

    There are some new products and services introduced every year, but the majority of businesses are started as someone thinks they can do it better or introduce a product or service that is not yet available in an area.

    Does that mean the majority of start up businesses are “stealing” from existing ones?

    Tracy

    #1040379
    jasonm
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    trakka, post: 49783 wrote:
    I invested time and money and purpose built a retail store. I purchased stock, signed supplier agreements, spent money on advertising,signage, promo materials and equipment. I worked night and day. I lost money to damaged stock and shoplifters. And then Woolworths moved in, and with their substantial buying power undercut my prices. They could sell prices cheaper than I could buy them wholesale.

    For arguments sake, lets call your store Trakka’s Groceries.

    The products sold by both parties are offered openly to anyone in business with minimum buys and discounts based on quantity purchases. *Not the same.

    Woolworths have not gained advantage from the time and money you have spent advertising Trakka’s Groceries, because they have never claimed to be selling Trakka’s Groceries products. *Not the same.

    Woolworths have their own established brand. *Not the same.

    You’re comparing an international company using their ability to invest large sums of money expanding their market presence with a one-man band circumventing established supply channels to sell someone else’s brand. Its so far from the same you really cant compare, except to say that in both cases the businesses are competing with each other.

    As a smaller operator in an open market Tracy, your higher purchase pricing would have been offset by lower operating costs and most importanty the better service you are able to offer. I have found for the most part that Woolworths are only significantly cheaper than independants on their weekly specials and regular groceries (not home-brands) are usually about the same, and sometimes more expensive at Woolies. My preferred milk is $1 more expensive at Woolies than the local store for example. I’m not saying its not tough to go up against large companies like Woolworths who use their size to squash small competitors, and most people don’t know that they also send their suppliers broke by screwing them down on prices.

    Now if Snow was importing the products from the same manufacturer that were privately branded I don’t think it would be a problem, because Snow would need to invest the money in building that brand and any warranty/recall issues would be directly attributed to him, and no gains would be made by trading off the brands built up by another company.

    #1040380
    King
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    To take power products point further…lets take those crocs clog shoe.

    You cannot go out and buy them and sell them openly (iven the fakes) but you could sell vgery similar ones branded on your own. Big difference.

    I have just been to the big market at Yiwu in China, and time and time again, bypassed offers to be sold brand name goods. Even at factories the offer was there. But do it?

    No way. Instead arrange for some modifications and put my own branding onto it.

    Easy

    #1040381
    Snow
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    King, post: 49806 wrote:
    To take power products point further…lets take those crocs clog shoe.

    You cannot go out and buy them and sell them openly (iven the fakes) but you could sell vgery similar ones branded on your own. Big difference.

    I have just been to the big market at Yiwu in China, and time and time again, bypassed offers to be sold brand name goods. Even at factories the offer was there. But do it?

    No way. Instead arrange for some modifications and put my own branding onto it.

    Easy

    Really King, your talking about ethics and karma in one breath then slightly modifying someone else’s idea, putting your name to it and cashing in.
    Is that ethical ?
    Section B of the Karma rulebook excludes anyone who rides on the back of someone elses idea.
    We all have our own rules and ethics that we live by, your interpretation of what im proposing is unethical and after reading your last post i have the same opinion of you.
    But good luck if your playing by the law thats the way the world works. Whether something is ethical or not is really irrelevant as ethics are commonly just a varying opinion. As proved in the above post post.
    Im enjoying the feedback and want to thank you for your input as all posts are relevant to my research.
    The woolies grey marketing subject is very relevant to this topic.

    An Australian distributor has the licence to distribute certain beer in Australia, they have payed for the licence and put in the hard yards to gain a market then Wollies decided to bypass them and buy direct.
    This is more than relevant to this case. IMO

    #1040382
    jasonm
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    Mazda 626 / Ford Telstar
    Mazda 323 / Ford Meteor
    Ford Falcon Utility / Nissan UTE
    Toyota Camry / Holden Apollo
    Holden Commodore / Toyota Lexcen

    The list goes on and on, and it isn’t just cars but everyone should recognise these re-brandings.

    It is very common for a manufacturer who develops a product to offer slight variations on that product to various (usually competing) companies, its normally referred to as badge engineering.

    That is of course vastly different to a company that performs all the development work then provides the diagrams/plans over to a factory for production. If that factory then offers modified versions of the product (without notifying the developer/paying licence fees) to other business then its a problem.

    That of course has nothing to do with parallel imports but everything to do with why King’s comments are ethical.

    Your beer story does not relate to Woolies moving into the local suburb, but I would be interested to hear more. I suspect the arrangement would be one of a small percentage going the way of the Aus distributor rather than all products going through the distributor, but lets hear your side of the story.

    #1040383
    King
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    Sorry Snow but I have not pinched someone elses idea – if you read back through the thread you will see this.

    The simple point I am trying to make and have done waay back in thisd thread is why not find an alternative but equivalent product and market that?

    You only have to change the buckle to a different style and put some custom stitching and logo on say a backpack and you are in business. All it takes is an original approach.

    But why should I worry, the current importer will probably and justifiably hound you and likely send you broke responding to legal challenges anyway.

    #1040384
    Snow
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    theres no need for you to worry King, thats my job.
    Still no solid answers here on this topic just maybees and scare tactics.

    Power the woolies storys not mine you can read it here.
    Interested in your thoughts.

    http://www.theage.com.au/business/re…0114-ma5h.html

    cheers snow

    #1040385
    jasonm
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    “In such cases the licensee pays the owner of the brand a royalty to make the product locally or distribute it. Additional money is spent marketing and advertising the product. Retailers and independent liquor stores then ride on the back of this and source the product at a cheaper price in markets such as Malaysia, Singapore, Brazil, China and wherever else it is produced and sold.”

    I’d like to clarify, my point was that Snow starting up his grey import business was not comparable to a major supermarket moving into a region previously serviced by a smaller retailer.

    The issue highlighted in the article however is certainly comparable, does that make it right? No. Does that make it ethical? No.

    Has anyone ever though that companies such as those identified would place ethics before a dollar? Maybe people do, but I bet the spend on promotions by these stores showing how much they have provided to the community far outweighs the actual amounts donated.

    The fact that large companies parallel import does not make it ethical, and shouldn’t be seen by some as licence for them to behave the same way. As far as the legal aspect goes, the majors could afford to battle it out in court whereas snow could not.

    I’m not sure what solid answers you are after snow….after all it is called a grey market, Its never going to be black and white.

    #1040386
    Snow
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    Thanks power im laughing whilst typing. good post.
    Like ive said all along i really do appreciate all the input on this topic, by the views and response it seems many others also take an interest.
    With the internet savvy and globalization this topic will be widely discussed and debated in the future.
    My crystal ball tells me in the not to distant future ( within 5 years ) grey marketing will control a sizable retail market share in Australia.
    I would like to know the figures, in the snow industry im guessing 5% of the market is grey. I would say last season it was 1% and next it will be 10%+
    Big estimates i know.
    Where headed for grey.

    #1040387
    sixx
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    Snow, post: 50112 wrote:
    Thanks power im laughing whilst typing. good post.
    Like ive said all along i really do appreciate all the input on this topic, by the views and response it seems many others also take an interest.
    With the internet savvy and globalization this topic will be widely discussed and debated in the future.
    My crystal ball tells me in the not to distant future ( within 5 years ) grey marketing will control a sizable retail market share in Australia.
    I would like to know the figures, in the snow industry im guessing 5% of the market is grey. I would say last season it was 1% and next it will be 10%+
    Big estimates i know.
    Where headed for grey.

    Hi Snow,

    I stumbled on this the other day – http://athene.csu.edu.au/~hskoko/parallel%20imports/pimptheory.pdf (sorry don’t know how to shorten link)
    Page 13 discusses the future of parallel imports. (2.3 The Future of Parallel Imports)

    The study concludes that parallel imports may become obsolete.

    #1040388
    victorng
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    sixx, post: 50116 wrote:
    Hi Snow,

    I stumbled on this the other day – http://athene.csu.edu.au/~hskoko/parallel%20imports/pimptheory.pdf (sorry don’t know how to shorten link)
    Page 13 discusses the future of parallel imports. (2.3 The Future of Parallel Imports)

    The study concludes that parallel imports may become obsolete.

    Wow, this thread has really kicked on.

    Interesting article Sixx. I understand the argument about globalization reducing price discrimination across markets (which is a very good point), but I suspect part of the appeal of the grey market is due to retail markup.

    I’ll stay out of the ethical discussion. I’m a lawyer, I don’t have any … j/k.

    Cheers
    Victor

    #1040389
    jasonm
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    victorng, post: 50133 wrote:
    I’m a lawyer, I don’t have any

    I’m sure you’ve heard them all…whats the best lawyer/ethics joke out there.

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