Price cut: JB Hi-Fi's direct imports

Published on Mon, 21/11/2011, 04:00:26

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By Aimee Chanthadavong

Electrical retailer JB Hi-Fi has begun selling imported branded photography products from Asia through its online store.

Referred to as ‘direct imports’ on the websites, JB is selling online-only DSLR cameras, lenses, flashes and grips from camera brands like Canon and Nikon at a fraction of the price. The products are being imported from Asia, where the lower wholesale products exist.

Speaking to RetailBiz, JB Hi-Fi CEO Terry Smart pointed out that this direct import model has nothing to do with GST but rather it’s about protecting the JB brand, limiting the offer to camera products only, as well as giving full disclosure to customers about where their products are from.

“We have a situation where other retailers are making claims they can undercut us in the camera category and we can’t stand back and watch long-term customers think that JB is adding the premium and then them questioning the authenticity of 99 per cent of everything else we sell.

“Currently consumers cannot make an ‘apples for apples’ price comparison as many of these sites do not give the consumer the full story of how they can achieve this. That is, they are importing the stock from China directly to customer, where they are accessing lower wholesale pricing on cameras compared to what Australian retailers can achieve. Also, they are therefore by-passing the GST and the customer is forgoing the local distributors warranty support and are relying on the retailer to support the product.

“We have always enthusiastically competed with both local and international retailers and delivered a huge range and best value pricing. We absolutely support the customer’s right to choose whatever channel it takes to achieve the lowest price.

“However we also believe they have the right to know the origin, the process and the pros and cons in achieving this price and they need this to make an informed price comparison.

“As a result we will offer cameras to our customers via this direct import model. But unlike some other retailers, we will be genuinely explained the process and the pros and cons in purchasing this way. By doing this, we will empower the customers to make an informed price comparison and let them decide what is important to them.”
 
As part of the strategy for instance, a Canon 550D twin lens kit with 18-55is & 55-250IS lenses is listed as $795 plus $22 delivery on the direct import page, while the same model is sold on its regular online store for $1,177.

While it undercuts its own prices, Smart, said that there is a lack of disclosure of how many other retailers are able to achieve such low prices.

“Our customers are very internet savvy; very connected via social media so they already know these offers are available from other retailers. However as I have pointed out there is a lack of clear disclosure on these retailers sites and we need to educate the customer on how these prices are being achieved and then let them made an informed decision. Also if we don’t offer this we will potential lose out on the rest of the business as the perception of best value pricing can be quickly eroded,” he said.

At the same time, Smart said it’s a necessary move for the company to be globally competitive, particularly now that being online eliminates borders.

“We support cheaper prices for Australian consumers on these branded products and are constantly looking for ways to drive better value. We do operate in a global market place with price transparency and therefore we need to work with suppliers to ensure we maintain sales within Australia and within Australian retailer,” he said.

“While the distributors have made some significant process in this particular category we still have a price differential that is beyond just GST. The Productivity Commission report told retailers if they were going to survive they had to adapt and innovate. This is what JB will always do to remain globally competitive in what is now a market without borders.”

And asked whether there’s potential to add further categories as part of the new structure, Smart said: “I don’t see the need to add other products and with most other categories we have global competitive pricing especially once freight is added.”


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