Indian and International Pricing

[Thad E Ginathom]

Agree, agree, agree... until you mention wal-mart! I'm not American, and have never been there, but do check out on the web about walmart's business model and ethics before you think of welcoming them to India!

This is a whole other topic, of course, but I am no more in favour of foreign domination of India's retail trade than I am of of such domination of any other sector. In so far as India needs the supermarket model, it is perfectly capable of growing its own.

I am very much in favour of competition, and even more in favour of strong and accessible/effective consumer protection. I am also in favour of a strong and locally-owned economy.

We have already talked about the possibility of buying in several different countries around the world: that should remain our freedom and our right. That is the positive in "the global economy". On the other hand, I usually cringe at the word "globalisation" as just being a euphemism for a different form of colonisation. My ancestors sucked the blood out of India a hundred years ago: I do believe that America and its corporations will make the East India Company look like amateurs. I fear that India awaits, with open arms.

Please forgive me if I stray too far into politics here...

 

[kapvin]

.

About forty years ago, when I was doing my student holiday job in a shop, and reading books from the book section at quiet times, I read my first and last book on management and sales. There were two thing in it that stuck in my mind for ever:

--- Looking after your boss is wrong; you should be looking after your staff. If your boss is a good manager he should be looking after you.

and, more pertinent to our present conversation,

--- a sale is made when the customer comes back for another one.

whichever book that was, i'm sure it's out of print now , since it is very rare to find people living up to that credo now!

nevertheless, it was a pleasure to read your post.

the second point that you made has a new age euphimism attached to it --it's now called "life time value" of the customer - maybe in a quest to make bottomline focussed managers look at customer relationships.

be that as it may, the underlying principle is sound.

thank you for taking the time to share your thoughts

 

[Thad E Ginathom]

Thanks, Kapvin, it's a pleasure to share and discuss

 

[mnhegde]

This is a whole other topic, of course, but I am no more in favour of foreign domination of India's retail trade than I am of of such domination of any other sector. In so far as India needs the supermarket model, it is perfectly capable of growing its own.

I am very much in favour of competition, and even more in favour of strong and accessible/effective consumer protection. I am also in favour of a strong and locally-owned economy.

I do believe that America and its corporations will make the East India Company look like amateurs. I fear that India awaits, with open arms.

Please forgive me if I stray too far into politics here...

Its a Pleasure to read Your posts, Thad. I join Kapvin here, in Thanking You.

 

[murali]

I think that, in any business, we give respect to those that have a personal enthusiasm, involvement, knowledge, ethics and pure pleasure in what they do. Ideally, purchasing should be a pleasure, and so should after-sales experience.

About forty years ago, when I was doing my student holiday job in a shop, and reading books from the book section at quiet times, I read my first and last book on management and sales. There were two thing in it that stuck in my mind for ever:

--- Looking after your boss is wrong; you should be looking after your staff. If your boss is a good manager he should be looking after you.

and, more pertinent to our present conversation,

--- a sale is made when the customer comes back for another one.

Have to say, that in my working life, I met very few bosses who would have thought number-one right, but I feel that, in the retail trade, number-two is coming to prominence. India, however, is yet to experience real growth of consumer power. For instance, how ridiculous is it, that if I buy a dvd drive that turns out to be dud, the shop is not interested, I have to spend my time taking it to the manufacturer's agent, who then repair it and, after some time return it to me. Un-ridiculous is that I take it back to the shop and get a new one there and then. The shop returns it to their distributor for credit. I happily go back to that shop next time I buy. It's not, as they say, rocket science, and it is not even a great work or financial exposure for the dealer.

We want to have friendliness and humanity in all our dealings, because that is what makes the world go round, but dealers (of whatever commodity) must recognise that the buck stops with them. The customer is not responsible for the up-line relationships and pricing, and, even if the dealer can't do anything about it, they are at the sharp end when it comes to facing the customer. Tough.

Now, in the UK, a customer will walk into the shop with an internet page, maybe 30% discount, and the shop must match that price if they want to sell it all. There's a downside to all this too, of course, which is that the customer spends an afternoon in a dealer's demo room, taking his time, drinking the guy's tea, and then buys off the net. We need to compromise and be responsible customers too: those demo facilities, property, stock and staff, as has been pointed out, do not come free.

As to international price differences, the dealer must listen and take it up with his suppliers. The one area that none of us can do anything about is import duty and sales tax, but, hey, India is not alone in those, even if rates differ. If I remember rightly, the current VAT rate in UK is 17.5% --- a quite considerable chunk going to the government. Yes, this is good for travellers, who can reclaim at least some of it at the airport on the way home.

Another "As to"... end-of-line, last-year's-model, ex-demo units... In my mother country, expect up to 30%, even 50% off. There is absolutely no way that a British shopper will pay full price for something that has sat on a shelf for a year gathering dust (excepting an up-to-date unit that may have been unboxed and displayed for a short time, on which a nominal discount might be negotiated).

Case: both my amplifier (Cyrus IIIi) and speakers (Castle) came from a specialist London hifi dealer, not a box-shifter. Both were ex-demo; the speakers had some barely noticeable cosmetic damage. I think there was 50% off the speakers, and almost that much off the amp.

The dealers may not welcome all this, and some may not survive it, but, like it or not, this is the culture that is lapping at India's shores. What's more it is tenable. Whilst Richer Sounds shifts vast quantities every day (but hey, guess what: many of their branches have demo rooms and knowledgeable staff too!), smaller specialist dealers selling much more exotic, high-end stuff, still exist there too. Some of the medium-size businesses manage to straddle both, with several branches and internet sales.

As in the Chinese saying, we live in interesting times. Perhaps some dealers might find them a bit too interesting!

Just quoting a real life example...
Here in the Middle East, the MRP of Philips 21:9 LCD TV (which looks pretty good) is about US$5,700 (Rs 2.5L?) and if you bargain a bit, off by 5-10%. Last January while in India I spoke to my local Philips dealer (I own 2 of their older TVs) and within minutes got a call from their Gurgaon office that the TV would cost Rs 4.5L. The same is now published in their Indian website. What is this? Import duty, profit margin? Or, they don't want to sell? Don't tell me Philips is not a consumer company with very little sales and huge overheads. Who are they kidding?

cheers.
murali

 

[Thad E Ginathom]

Wow! Appreciated very much.

But I think that that is my "wisdom" on the subject pretty much used up ... for now, at least

Wait... Let me say this about the supermarket thing... It is often claimed that this model gives us consumers more choice, but the reality is that it does nothing of the kind. Excepting certain of the specialist electrical retailers, what you see, if you go shopping for electricals in a British supermarket, is not an array of choice, but an array of whatever Korean manufacturer is giving the supermarket the best deal that month!

Getting back to the practical: I believe that faulty goods should always be accepted as returns, either for exchange or full refund. If it is accepted for repair, then we have not bought a brand new item, but a repaired one, and that is not the same thing at all.

To what extent a retailer accepts returns on any other basis is a different matter. Many large UK retailers will accept returns, no-questions-asked, within a limited time frame, usually on the basis that the item is complete with all packaging and still in a condition to be sold as brand new. Some retailers, such as John Lewis, will resell these items as special deals, although the discounts are fairly small. A lot of smaller retailers will not, and it is understandable that their economics may not allow it. I have returned a TV to John Lewis (an upmarket UK department store) for full refund --- reason was that, when I got it home, I found the sound to be poor quality.

I think that Marks and Spencer, primarily a clothes shop, were in the forefront on returns; at one time their policy was generous almost to absurdity, and it was taken advantage of too, with customers wearing clothes and then getting a refund! Whilst they may have paid a price for it, what they bought with that price was huge brand loyalty.

 

[stevieboy]

my experience with dealers in india across categories, not just audio is that they're just doing 'business' for whatever reason they got into it. the majority have simply no clue about what they're selling, forget sales skills, they don't even have people skills! in such a situation, almost every buyer looks for a place from where he can get the best monetary deal. after what else is there to make him loyal to any one particular dealer? zilch.

in sharp contrast, the many emails i have sent to sellers abroad have been answered promptly, knowledgeably and warmly. and the terms and conditions are very clearly set forth on websites so all customers know the terms under which they're buying something. the last website i've been checking is herbie's audio labs which has a 90 day money return policy, lifetime warranty!

any wonder given a chance, most of us prefer to buy from abroad?

 

[thevortex]

I do believe that America and its corporations will make the East India Company look like amateurs. I fear that India awaits, with open arms.

Please forgive me if I stray too far into politics here...

Its already happening, Thad. At various levels.

 

[Thad E Ginathom]

Yes, I know... thank goodness we have no excuse to discuss agriculture in a hifi forum!

 

[gobble]

India, however, is yet to experience real growth of consumer power. For instance, how ridiculous is it, that if I buy a dvd drive that turns out to be dud, the shop is not interested, I have to spend my time taking it to the manufacturer's agent, who then repair it and, after some time return it to me. Un-ridiculous is that I take it back to the shop and get a new one there and then. The shop returns it to their distributor for credit. I happily go back to that shop next time I buy. It's not, as they say, rocket science, and it is not even a great work or financial exposure for the dealer.

In bangalore SP road, they give a cheap printout with all manufacturers service center tel nos and address. I guess they saw many frustrated customers have angry conversations about this. Now they just shove the sheet into your hands with the bill and firmly ask you not to come back here again for warranty or repairs if the product turns a dud (Sic!)

The way sellers manage the debate of ethics or an upset customer is by returning irrational content in their verbal responses. The buyer gets more frustrated for a while until he realizes that the only option left is coming to blows with the seller at which point all the shopkeepers will gang up to thrash him. It is a widely practiced strategy at all levels in India by sellers.

Regards

 

[gobble]

my experience with dealers in india across categories, not just audio is that they're just doing 'business' for whatever reason they got into it. the majority have simply no clue about what they're selling, forget sales skills, they don't even have people skills! in such a situation, almost every buyer looks for a place from where he can get the best monetary deal. after what else is there to make him loyal to any one particular dealer? zilch.

in sharp contrast, the many emails i have sent to sellers abroad have been answered promptly, knowledgeably and warmly. and the terms and conditions are very clearly set forth on websites so all customers know the terms under which they're buying something. the last website i've been checking is herbie's audio labs which has a 90 day money return policy, lifetime warranty!

any wonder given a chance, most of us prefer to buy from abroad?

Right! I learnt this the hard way after educating many idiot shopkeepers about the hardware I wanted and why it was good etc. And the response after a 10 minute educational speech was always like a staccato machine gun fire - "you wont get it forget it! but if you want it pay double upfront, I will try and procure it for you in a few days/weeks".

Free product education for them, waste of breath, time, petrol and sunstroke for me. The PC market esp - they could be selling potatoes really ..



Regards

 

[kapvin]

my experience with dealers in india across categories, not just audio is that they're just doing 'business' for whatever reason they got into it. the majority have simply no clue about what they're selling, forget sales skills, they don't even have people skills!

never more true than when you go to Nehru place in delhi to buy computer hardware. but for the size of the transaction and the actual product purchased, i could as well be talking to my vegetable vendor (oh well, veggie prices are on the up as well, so there's even less distinction)

EDIT: 0ops - Gobble just said the same thing!!

 

[mridulgoel]

THANKS A LOT to all of you guyz...

You all have answered my questions all yourself and prooved me right...

So i dont need to give any more explanations...

Now rearding being arrogant, CaptRajesh... i always mind my words, and you dont have any rights to pin point me, so plz be away from this...

Now regarding the different brands, i clearly said earlier, that this is how our margins work, i dont know, how much discount other brands get...

Regarding the consumption for which i used Levis example, you guyz very well responded on that, and you have written exactly what i wanted to hear... Sorry at this moment i am running late, otherwise i would have copied the posts part, which prooves it...Understand the Idea...
In brief for this example, in exact figures, Levis may not be even twice priced in India, but you guyz forgot to keep a note on these points :
1). Manufacturing
2). Quantity
3). Requirement (Necessity)
My clear point earlier was same. I dont think all over India the sale of LEvis per day will be less than 10,000pcs...??? ONE BRAND Figures....
And when the things are locally manufactured they get a lot of rebates, they pay only Brand Value outside...

But, as you guyz accept that AV is a High End Industry, then why do you expect the same prices, and hefti discounts, when the quanities are almost nothin...
Everyone saw the price fall for Flat Panels, I am a Ex-RSM Hitachi, many people out here know that, i have sold a 42" Plasma for bloody Rs.1.82Lakhs, but today its 25% of the price... Earlier the quantities use to be 50-100 per month, but now its more than 500 per month...

Earlier Home Theatres use to be totally out of pocket, but after the competition increased and the quantities increased from 1 to 10 a month, see the fall, now there are more and more customers looking in for Home Theatres... Earlier there use to be countable members on Forum, now they are increasing like bugs...so things happens, but everythin takes time...

Thats why i said that People should get into it, to understand it...

Your ShopOwner doesnt tell me, that Sir, you are selling only 10pcs a month, so i will charge you only 10% of the shop cost, and as Levis is selling 100pcs per month i will Charge him 100%, no, but yes its the other way round...

I want all the Resellers out here to reply, on for this Thread...
Anil & Venkat please its a request from you guyz to send a PM to all the Resellers to Post out here...

And if all of them agrees to the same, and even after that the members think that we all are wrong... then its better we all become actually Rude, and start keeping high margins...
If we have to be blamed in any case its better we earn and then get blames instead. And those who think they shud get the stuff from Outside, they are welcome to do so...

And all the above i am talking about, there is nothing to do with me Personal...
I know, my pricings are very competitive and the products are quite good...
And hardly anyone is against me out here in forum...

But, here i m not fightin for my personal, its about the wrong tendency which is being followed...
As i mentioned above, there are many things that matters...
No one loves to do business in loss, but they get clipped from 2 sides :
1). Customer, who says, the prices are very high, so the conversion rate goes down to very low.
2). Company / Brand, which has same prices for Distributors all over World, which works on quantities slab. So the countries, which hardly charge any Taxes, etc.. gain the benefit, so do the customers...but in India, we are screwed because of all the bloody high taxes, and things are worse in Bangaladesh and Pakistan, but are good in Srilanka...so in short reseller suffers, because they work at rock bottom margins...

See, i am not saying that all the brands keep same margin as we do, but still its not good to blame the industry, and compare illogically...

Now after all this, if this convince you guyz its well nd good, otherwise, seriously we should not be the one to be blamed for nothing...

But, seriously till now, only me and Sridhar were speaking on this, but there are many Brands Distributors available on this Forum, i will request them all to please post in here...

 

[ajinkya]

"India, however, is yet to experience real growth of consumer power. For instance, how ridiculous is it, that if I buy a dvd drive that turns out to be dud, the shop is not interested, I have to spend my time taking it to the manufacturer's agent, who then repair it and, after some time return it to me. Un-ridiculous is that I take it back to the shop and get a new one there and then. The shop returns it to their distributor for credit. I happily go back to that shop next time I buy. It's not, as they say, rocket science, and it is not even a great work or financial exposure for the dealer."

Thad,
While I agree that your approach is the most rational and hassle-free for the consumer, it is not widely followed even in the US. I have seen many of my friends complain about buying from Costco, Amazon, or a similar internet-only store, with no option to ship back to them for repair. Instead they have to call the manufacturer's number and set up a time with them directly. This may not be true of all products that these stores sell, but many of their items do come with this caveat. In summary, it's not only India that suffers from this stupidity.

 

[iaudio]

Mridul, don't take it too personal boss! You go all guns blazing when you talk about the exorbitant govt taxes. Same way, we consumers are quite upset about the high prices here in India. Why do we ask you? Because you are in the business, been through the nitty gritty, so we hope you can give an educated answer.
So take a chill pill doc!
As you said, it would be nice to have inputs from other dealers too.

 

[mridulgoel]

Bro

I keep saying in my Post, about being personal..

I have been given a good weightage every time in this forum, and i have never been put under negative scanner...

I said in my last post as well, that wtever i am doing is just justifyin the actuals...
And yes, when we are getting container goods, we are well aware what we are paying... nd thts wt i post...

And i nvr tk tensions, or get aggressive, as i knw, thts hw the market is...But there are some realities, tht kicks our ass badly, and when you guyz put us into negative, tht time it feels bad...
And u need to agree tht, if we are talkin or fightin for something it is nt bcas we wnt to hide anything(as someone mentioned), if tht wud hv been the case i wudnt hv opened my accounts...and as we import, we knw wt problems we face...

Out here when people say tht they hv gt goods frm Overseas and still they have paid less, then y dont they count the following :
1). Freight, what they save bringing goods with them.
2). Rs.25K customs free allowance what they save. For eg : If someone brings goods worth 40K, they pay duty only on 15K...
3). Service and Warranty, in wtever case it is something imp.
4). VAT @ 13.5%
5). Stock Holding - No one have Crores of there own.
6). Running and Promotional Costs..

Bro, gettin one products, and getting a brand are both two completely different things...
I agree we get a special price, but y dont you even compare the Disounts consumer gets overseas and locally...
Then as said by a member tht the International VAT is claimed at Airport, but you dont pay VAT when u reach India...

Buddy, there is no hard feelings, for anyone, its just an effort to explain what we bear...thts it...

 

[Sujit]

No one loves to do business in loss, but they get clipped from 2 sides :
1). Customer, who says, the prices are very high, so the conversion rate goes down to very low.
2). Company / Brand, which has same prices for Distributors all over World, which works on quantities slab. So the countries, which hardly charge any Taxes, etc.. gain the benefit, so do the customers...but in India, we are screwed because of all the bloody high taxes, and things are worse in Bangaladesh and Pakistan, but are good in Srilanka...so in short reseller suffers, because they work at rock bottom margins...

See, i am not saying that all the brands keep same margin as we do, but still its not good to blame the industry, and compare illogically...

Now after all this, if this convince you guyz its well nd good, otherwise, seriously we should not be the one to be blamed for nothing...

But, seriously till now, only me and Sridhar were speaking on this, but there are many Brands Distributors available on this Forum, i will request them all to please post in here...

Out here when people say tht they hv gt goods frm Overseas and still they have paid less, then y dont they count the following :
1). Freight, what they save bringing goods with them.
2). Rs.25K customs free allowance what they save. For eg : If someone brings goods worth 40K, they pay duty only on 15K...
3). Service and Warranty, in wtever case it is something imp.
4). VAT @ 13.5%
5). Stock Holding - No one have Crores of there own.
6). Running and Promotional Costs..

Bro, gettin one products, and getting a brand are both two completely different things...
I agree we get a special price, but y dont you even compare the Disounts consumer gets overseas and locally...
Then as said by a member tht the International VAT is claimed at Airport, but you dont pay VAT when u reach India...

Buddy, there is no hard feelings, for anyone, its just an effort to explain what we bear...thts it...

Dear Mridul.

Firstly - as customers - we do not HAVE to listen to manufacturers/distributors/dealers.. on the contrary it is all of you who HAS TO LISTEN TO THE CUSTOMERS! As the saying goes - "THE CUSTOMER IS ALWAYS ALWAYS ALWAYS RIGHT!" - even when he isn't!

The businesses abroad have margins like you as well. But the levels of service they provide is entirely on another level - as highlighted in Thad's posts.

The people selling these things are in most part not trained/illiterate w.r.t their products, industry, trends, technology et all. So I don't get expert advice either.

I said I have a very low opinion of warranty service in India. The people who have had a positive experience is in very low single digit percentages - if I were the industry, I'd be VERY AFRAID!

I have only one small thing to highlight. All countries have duties and taxes - India is not an aberration. Admittedly the duties/rate etc vary. Most companies do an X amount of price matching - to ensure their products are comparatively priced around the world - I know (authoritatively) this happens. (maybe Indian importers need to insist on this too if they already aren't!) Where it gets interesting is - If I , in my individual capacity, can get anything imported into India thru Borderlink and the likes - all taxes paid - and yet get it far cheaper than Indian prices, I'd seriously ask you to consider leaving this business!

I can go on....

Let me make this simple. Please highlight - clearly - the advantages of buying from a local dealer. Then let US be the judge of whether the markup - if any - is justifiable or not.

Lets not all close our eyes and pretend its dark! The industry will have to find answers to all of this - for this is what will then dictate what shape, size, fashion or form it will have to take to survive!


I am yet to buy anything from Grey market - ALL my products are with B&W, purchased in India.. but as I get higher into the spectrum, I am questioning the intelligence in going down that path!

 

[murali]

Bro

I keep saying in my Post, about being personal..

I have been given a good weightage every time in this forum, and i have never been put under negative scanner...

I said in my last post as well, that wtever i am doing is just justifyin the actuals...
And yes, when we are getting container goods, we are well aware what we are paying... nd thts wt i post...

And i nvr tk tensions, or get aggressive, as i knw, thts hw the market is...But there are some realities, tht kicks our ass badly, and when you guyz put us into negative, tht time it feels bad...
And u need to agree tht, if we are talkin or fightin for something it is nt bcas we wnt to hide anything(as someone mentioned), if tht wud hv been the case i wudnt hv opened my accounts...and as we import, we knw wt problems we face...

Out here when people say tht they hv gt goods frm Overseas and still they have paid less, then y dont they count the following :
1). Freight, what they save bringing goods with them.
2). Rs.25K customs free allowance what they save. For eg : If someone brings goods worth 40K, they pay duty only on 15K...
3). Service and Warranty, in wtever case it is something imp.
4). VAT @ 13.5%
5). Stock Holding - No one have Crores of there own.
6). Running and Promotional Costs..

Bro, gettin one products, and getting a brand are both two completely different things...
I agree we get a special price, but y dont you even compare the Disounts consumer gets overseas and locally...
Then as said by a member tht the International VAT is claimed at Airport, but you dont pay VAT when u reach India...

Buddy, there is no hard feelings, for anyone, its just an effort to explain what we bear...thts it...

Bravo, well said. Though I don't know you or your background as distributor/dealer, from some other distributors with whom I had contacted, there are some other facts not mentioned above. May I?

A few distributors I know of are mainly in export business and that gives them enough export credit which can be utilised in duty exemptions. For them, audio equipment import is a side business and it is difficult to believe their stories about paying the same duty as I pay if I import directly.
Freight nowadays has become quite competitive and even normal freight charges all the way from USA, for example, does not cost > $2 per kg. If you are an exporter using containers, well, you hardly pay anything in return.
In several circles, several people have more or less accepted the truth concerning margins. I believe they are somewhere from 33% to 50% once it leaves the manufacturer, shared between distributor and dealer. How many distributors carry a huge stock of equipment they sell? Especially in high end equipment, the answer is pay advance and wait for a few weeks.
Summing up, there is every possibility that Indian prices can be competitive if needed but something has to change. I leave it to esteemed members of this forum to ponder over this.

cheers.
murali

 

[gobble]

Thanks Mridul for taking so much pain here on this thread.
Ofcourse we do not expect that dealers should reveal all his internal secrets and pricing structure etc.

But the overheads you mention like stocking/inventory charges, rent, electricity, wages exist for foreign dealers too yet their MRP is *always* less without fail - there are no exceptions I know of ... guess it will always remain a mystery to me

Cheers

 

[murali]

Thanks Mridul for taking so much pain here on this thread.
Ofcourse we do not expect that dealers should reveal all his internal secrets and pricing structure etc.

But the overheads you mention like stocking/inventory charges, rent, electricity, wages exist for foreign dealers too yet their MRP is *always* less without fail - there are no exceptions I know of ... guess it will always remain a mystery to me

Cheers

There was another post in this forum from one of the most respected members - an equipment (TV, I think) which sells for around RS 1.2L now available with a particular person or agency for around Rs 60K! What is the rationale behind this? Is the guy selling to make a loss? Or, a charity? What is the economic sense? This example gives a fairly good idea about what are the hidden margins behind the prices. Another illustration is Audioquest cables (which I use extensively) which are available for 50% of their published MRP outside when you buy from some specific dealers who tend to be more reasonable with their prices. The point I am trying to highlight is the lies and excuses in many forums to justify high prices.
At the same time, there are several companies making good audio equipment and price in a sane way and most important, there are hardly any disparities from one dealer to another. A classical case is Vandersteen speakers which I bought from their international dealer in USA directly (who sell only to countries where they don't have distributors). They offer a straight 25% discount on the MRP, nothing more, nothing less, presumably the dealer commission. If we assume the distributor takes around 10%, the simple arithmetic tells us that the 65% of the MRP goes to the manufacturer which includes their cost and profit. Fair enough.

This business and arguments I have so far seen are almost similar to some of those guys I had seen in some public sector companies I used to work in the past. They had a glorified retirement after 40+ years of service with medals, certificates, front page photos etc etc. Note, the retirement age used to be 55 and you don't have to be Sherlock Holmes to deduct that they presumably came out of their mothers' wombs waving SSLC papers.

Happy listening and bye.
murali