I am not supporting any distributor or dealer, but I will try to answer some of questions raised by Hemanth. There is something called Economics that includes supply and demand. If you take an amp, for example, when it is released it will, let us say, be sold at 1000 a piece. After about 2 or 3 years, the same product will be sold at 600 to 700 a piece. You can see this happening very much in TVs. Is the manufacturer cheating us when he sells at 1000 a piece? There are a number of factors that control the price:
1. Estimated demand in the market
2. Investment made on the design and development of the technology
3. Investment made on distribution, marketing, advertisements and a lot of other steps taken by the manufacturer to get the product to the market.
4. Profit percentage that the manufacturer is expecting.
As the product matures in the market, the manufacturer gets back a major portion of the investment. At the same time, the product becomes less competitive as better products would have arrived. Thus the manufacturer will reduce the prices to keep the product moving till the date he feels it is not worthwhile any more.
When a product is sold in places such as Dubai, Singapore or other free markets, the pricing of the products are based mostly on supply and demand.
In India, for the products we are looking at, the market environment is completely different. Most manufactures have no idea how many pieces will sell. For example, for companies like Bridgestone, Indian's full annual off take is just 7 days production in one of their factories in Japan or the US. What happens in an environment like this is that the economies of scale are turned completely topsy turvy. Why would Bridgestone, for example, every bother about a production centre in India when they can divert just 7 days production from one of their factories?
In India, demand is just not enough for any product for economies of scale to set in. This is even more relevant for products such as amplifiers, speakers, and AVR that we are all looking at. So the products have to be sold through a set of national distributors, who in turn appoint regional or city wise dealers. Again the number of products moving through this whole system is so small that it just does not justify any major investment. For example, if a distributor goes to Onkyo, for example and say I will take 10,000 pieces, he will get a much better price than when he picks up, say, 500 pieces. But what does the Indian distributor do? He only picks up against orders as he is never sure how many pieces will move. And then when you place an order with a dealer, you want the product yesterday. So air freight, transportation insurance, and customs duties and other expenses come in. Just place an order with your dealer and tell him you are ready to wait for 4 to 6 weeks for delivery. You will get a different price. To satisfy a prospective customer, distributors and dealers take the risk of stocking items that may never be sold. This is also an investment.
All these add to the landed cost of products in India. You can ask me the question why should I bother about all this when I can get in from Dubai at half the price. You are correct that you can do that, and that is because the government of India is allowing you to do that. You cannot do that with all products such as cars, for example. Since we do not have major investments in India on Audio / Video products, the Government does not think that the industry needs protection against what is called dumping. The day the government changes it's mind, you will not be able to get any of these products through any means whatsoever.
The only way this will change is when the demand in the country goes up and manufacturers start investing in production/assembly centres in India. This has happened in small audio products, TVs and such items. Unless demand for AVRs and amp goes by 500 times or so, none of the major manufacturers will show any interest in our market. This is simple Economics.
-but then greedy indian distributors are main culprit. The markup is high really high....And in international markets discounts can go lower and lower -especially in electronics and in fashion industry ,when replacement arrives1 How come you explain the ver high price of OPPO DVD palyers???
Do you know how many pieces the National distributor has sold of the Oppo 981? Less than 100 in one full year. Yes we all discussed the Oppo to death. We are about 3000 members in HVF. How may members purchased the Oppo? Ten? Twenty? I doubt it will be more than that. I am aware that the distributor has imported over 500 pieces. What do you expect him to do with the unsold 400 pieces when the product is getting out of date? If he finds a market in Philippines or Singapore, he will just ship it out.
I've seen discounts of the tune of 60-70 % on watches & fashion items in Dubai in 2003-04. At that time when avarage tissot chronograh was costin 15+ k in India I bought one @ RS 5600 In Dubai! If you check international hi-fi mags you see a lot of stuff available at lower price.
Large discount are given for only one reason. And that is to empty shelf space and remove stocks from warehouses. The cost of maintaining non moving stock for a shop is more expensive as compared to losing on the volumes, margins and demand for a current product.
A example I can give is in India a semi premium whisky wll cost around Rs 3500-4000 a litre ( Chivas Regal) Same you can procure in Duty free around INR 1100-1300!
Liquor is a different matter altogether. The central and state governments have different rules, duties and other taxes on liquor. In most states, the minimum duty and taxes usually upto 100% or more. In Dubai and duty free shops, these duties and taxes do not apply. That is why each traveller is allowed to bring in 2 bottles into the country.
Funnily our customs treats 1 item for personnel consumption and multiple for commercial us ---so there is a point that these sites may be involved in some illegal sales...
That is how it is done around the world. Will you go to a shop and buy 5 wrist watches or 10 TVs for yourself, and that too in one purchase? If anyone brings in more that one item when coming into the country, the customs officers will naturally be suspicious.
Cheers