In what could be a looming problem for digital camera vendors, JB Hi Fi has moved to offer consumers the choice of buying direct from an overseas supplier via the JB Hi Fi web site, as opposed to a product sourced direct from a digital camera vendor in Australia.
The new direct import strategy has already rattled two of the big camera suppliers with Olympus CEO Mark Radatt claiming that JB Hi Fi will miss out on Co-Op marketing support: “we were aware of the situation and it is not good. The issue for JB Hi Fi is the value of the marketing support dollars that vendors offer them”.
A Canon executive who did not want to be named said “this could be the start of a deteriorating relationship between JB Hi Fi and digital camera vendors.”
The move comes as overseas online retailers, who are not subject to GST tax under $1,000, sell identical products at a much cheaper price, effectively stealing retail customers.
In an exclusive interview with ChannelNews, Terry Smart, the CEO of JB HiFi said “This is the case of protecting our brand. We are now competing against operators online who are direct importing from overseas.”
“What we have for the consumer is not only good pricing, but the confidence that they are dealing with a known brand, a known retail entity,” he said.
The new direct import strategy adopted by JB HI Fi will see consumers benefitting by being able to save up to 25% on the price of a new digital camera which is sourced from a supplier in Hong Kong.
The grey marketing strategy is based on DSLR Cameras and DSLR Lenses, as well as camera accessories.
ChannelNews was first to identify the move by retailers to grey importing in February when we intercepted an email by Drop Shipping Limited offering some premium cameras 70% below their recommended retail price.
Read: Massive Online Discounts Of Branded Digital Cameras Set To Hurt OZ retailers
Among its range was Nikon’s Coolpix S8000 Digital Camera for A$186. The recommended retail price in Australia is $499. A Nikon D90 Kit AF-S 18-105mm VR Lens Digital SLR Camera is being offered for $929. The recommended retail price in Australia $1,549.
The move does see JB HiFi shoot itself in the leg with the grey-import pricing undercutting its own e-tail prices.
JB has acknowledged the price difference on their website and offer statements that explain why the products are cheaper. They also assure customers there is no compromise in quality, saying they believe “locally imported products still offer real consumer value”.
They also believe “supply chain mechanics are now efficient enough to provide a high probability of availability and supply,” which has lead the company to adopt the new sourcing model, which also appeals to the requests of its loyal customers.
In a proactive move, the statement continues to describe why the dominating retailer believes grey importing is good for the local economy.
“The local supply chain supports the Australian economy and jobs,” it said. “Australian taxation of goods under the GST supports critical infrastructure, economic stability, health and education at both a state and federal level.”
“Local distributors provide resources that maximise staff knowledge and support in meeting customers’ needs. Manufacturers usually provide manufacturer’s warranties for locally imported goods but may not do this for Direct Import products. In addition, manufacturer’s locally licensed importers usually provide local support in the event of faulty goods such as a network of licensed local repair agents.”
JB HiFi has chosen to put up warranties for the grey imported products.
