Global pricing transparency finally forces the big retailers to tackle the big brands

DJs drop their prices as a result of their strategy to harmonise local and international pricing to compete with overseas internet sales.  Some people are asking if we have been ripped off in the past and why didn't they do this before.  

People are blaming DJs but it is not entirely their fault. Yes we have all known about international price discrepancies for as long as we have had international travel (since colonisation). But it was and is the brand owners who were using Australia as a profitable milk cow.

Pricing into a market has nothing to do with the cost of the item and everything to do with how much the market will bear. So if the general market pricing is high then why would you price your products significantly lower than other similar brands? What has forced the change is much greater price transparency coupled with the ability to purchase that the internet has given to everyone globally.

The market is now global and the brand owners local market price gouging strategy is crumbling. Well done DJs for fighting this much needed fight. This is part of the inevitable set of permanent changes to retail that is working its way through the economy. It feels like it's long overdue but the impact of internet sales is still relatively small (5-8%) and recent. Large companies, complex systems and long term business arrangements are slow to react, but at least we are seeing a move.  I am sure the other large retailers are doing the same thing and the mid-market and smaller retailers will get the flow on benefits.

I think another factor going on is the rise of the Australian dollar coupled with the maintenance of prices on some products to maintain local currency relativity.  If the prices on some luxury goods were suddenly dropped to global pricing then previous purchasers may be upset and brand credibility and prestige would be reduced.  The extreme example of this for me is the Porsche 911 which sells here for around AUD$300,000 compared to US pricing around USD$90,000.

I expect the next few years in retailing (and B2B) to be very interesting indeed.

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