Price Fixing Tools

jizmo on 18/07/2023 - 17:08

Doesn't matter where you go, Sydney tools, Bunnings, Trade tools, Total tools Etc. You want to buy Milwalkee Makita Hikoki Buckaroo Dwalt Plaslode Etc they're all within $1 price difference of each other. Any specials or promos, they're all doing the same thing.

I know they're trying to protect and price fix the market, But I'm sure if a retailer tried to sell at a more competitive price, the wholesaler will stop supplying them as part of a condition.
If retailers can't be competitive then what's the point of looking around, you may as well just go to Bunnings and then return it 2 weeks latter if you don't like it and get your money back. Try doing that at Total tools, it would never happen, so why shop there.
Could the ACCC look at this as unfair competition?
https://en.wikipedia.org/wiki/Techtronic_Industries

General Discussion Power Tool

Comments

  • Jimothy Wongingtons on 18/07/2023 - 17:15
    +1

    Hikoki

    Sometimes cheaper on Sydney tools eBay or Amazon

    • jizmo on 18/07/2023 - 17:27

      Yeah I don't know how that works or where they get it from. Pretty sure if they're doing redemption offers, Hikoki and or other brands won't honor the receipt from AZ or Ebay and mail out the extra free tool. It has to come from only certain retailers.
      Think I've seen this on PC parts or LG Tv's too.

      If you don't care about the promo or bricks and mortar store, hey why not

      • Richardc on 18/07/2023 - 21:24
        +1

        not only that, they may reject the warranty claim.

  • Protractor on 18/07/2023 - 17:27
    +5

    Sure , the ACCC could. Right after they finish sleeping through shirt-fronting petrol cartels. So if it was bought cheaper & you didn't like it, you would keep it?
    Sooner or later this crap behaviour will result in Bunnings etc changing their returns policy.

    • shxhshzhz on 18/07/2023 - 18:46
      +1

      then you see behaviour like this

  • bargainy on 18/07/2023 - 17:29
    -2

    Retailers are indeed tools.

  • Hugh G Rection on 18/07/2023 - 17:29
    +1

    you can get blackmarket cheaper, but they won't warranty your tool.

  • Nutrino on 18/07/2023 - 18:13
    +1

    Do u have evidence of collusion?

  • bobswinkle on 18/07/2023 - 18:15
    +1

    If a market is super competitive, you expect pricing to all be roughly at the same level. The effect of competition is that it meets a price equilibrium.

    Now in this case, it's also just as possible that they set the wholesale price at a level that the profit margin for selling it cheaper is too low. So all the retailers just price match the cheapest place going, but refuse to go below it because it's not sustainable.

    But think this through logically: why would a wholesaler want a retailer to sell less goods? You're insinuating they're forcing resale price maintenance, but they make more money the more goods retailers sell. They sell more if the goods are cheaper. What incentive do they have to enforce a higher price?

    • dtc on 18/07/2023 - 19:27
      +1

      Wow, someone who understands economics. What are you doing on the internet?

      • altomic on 18/07/2023 - 19:38

        Exactly, where is the irratic and irrational conspiracy theory that links powertool "price fixing" to 5G-chemtrail-covid paranoia?!?!.

    • Look Up on 18/07/2023 - 20:44
      +1

      …why would a wholesaler want a retailer to sell less goods?

      Because in the current era of hyperinflation, volume discounts in the supply chain are either zero or negative

      If there is one container ship coming from China to Australia every month, a wholesaler/retailer buying more stock from the manufacturer does not mean an extra ship with cheaper container rates suddenly becomes available

      …What incentive do they have to enforce a higher price?

      Margin protection

      Manufacturers and wholesalers make more money by charging higher prices on a smaller amount of stock

      I know they're trying to protect and price fix the market, But I'm sure if a retailer tried to sell at a more competitive price, the wholesaler will stop supplying them as part of a condition.

      @jizmo your issue is not with the manufacturer or wholesaler

      Your issue is with Woolworths who because of their spectacular failure with Masters, ultimately led to Bunnings having a monopoly on the DIY and increasingly the trade tools market

      If Masters still existed, there would be at least double the number of tool brands available and genuinely competing

      • bobswinkle on 18/07/2023 - 21:54

        I don't understand your first point at all. If the ship is on its way from China the goods are either sold or waiting to be sold. If it's the latter you price according to what the market will accept. If they're already sold what the next person sells it as doesn't affect you at all…

        Volume discounts don't factor into it. If you don't want to offer volume discounts because of supply chain constraints, you don't offer volume discounts. You're still trying to sell the most amount of goods you can at the highest price the market will tolerate.

        Margin protection like what is only possible if you have some sort of competitive advantage. Power tools are a saturated market with heaps of competitors. If you don't like one brand, go to another.

        Your final point suggests you fundamentally agree with me though… If there's a competition issue here, it's at the retail level and not the brand level.

    • outlander on 18/07/2023 - 23:08

      They sell more if the goods are cheaper

      Business exists to make a profit. Not to sell the most. It is often preferable to have one sale with profit margin of $5, than 5 sales with a profit margin of $1 each.

      • bobswinkle on 19/07/2023 - 07:31

        Correct. And the wholesaler's margin is built into their price to the retailer. What the retailer then sells it for has no affect on their own profits. They would almost always prefer the retailer sells it for less, because then the retailer sells more, and has to buy more from the wholesaler again.

  • Protractor on 18/07/2023 - 18:43
    +1

    Maybe it's the manufacturers MO

  • CurlCurl on 18/07/2023 - 18:56

    Like Apple.

    • AustriaBargain on 18/07/2023 - 19:34

      People are free to resell Apple products at any price they want, at a loss if they want to. JB Hifi could give iPhones and Macs away and Apple would be thrilled.

      • Look Up on 18/07/2023 - 20:07
        +2

        … and Apple would be thrilled.

        No they would not

        Apple sets premium pricing and then runs marketing to sustain that pricing

        If a retailer were to consistently discount Apple product - regardless of whether they are making a financial loss - Apple would deem that to be devaluing the products and the brand

        That retailer would then experience all number of highly legal practices that in a market as small as Australia, would mean instant business death

        • AustriaBargain on 18/07/2023 - 20:12

          Doubt it. Apple gets paid the same no matter what JB charge, just how many Macs and iPhones could JB give away before becoming insolvent?

          • Look Up on 18/07/2023 - 20:21

            @AustriaBargain:

            Doubt it. Apple gets paid the same no matter what JB charge,

            That is wrong

            • AustriaBargain on 18/07/2023 - 20:44

              @CurlCurl: The top result says Apple's main method is to keep margins slim, which everybody already knows about resold Apple products. The second method is not offering incentives to some resellers who sell below the recommended minimum price. Neither of these things back up ChatGPTs claims. Like the real ChatGPT, ChatGPT seems to have just made this up this theory on the spot.

              • CurlCurl on 18/07/2023 - 21:27

                @AustriaBargain:

                The top result says Apple's main method is to keep margins slim, which everybody already knows about resold Apple products. The second method is not offering incentives to some resellers who sell below the recommended minimum price. Neither of these things back up ChatGPTs claims. Like the real ChatGPT, ChatGPT seems to have just made this up this theory on the spot.

                Maybe you should have read other links on the Google page.

                Apple’s pricing strategy relies on product differentiation, which focuses on making products unique and attractive to its consumer base. Apple has been successful at differentiation and thus creating demand for its products. This combined with their brand loyalty, allows the company to have power over their pricing. By establishing the loyal customer base and keeping their prices high, Apple has set up an artificial barrier to entry for their competitors.

                Apple utilizes a minimum advertised price, or MAP, retail strategy. This strategy prevents retailers from pricing their Apple products below the MAP. By ensuring the price for Apple products never drop below a specific price, Apple can maintain their product popularity. This enables Apple to keep its distribution channels clear while ensuring their profits don’t see a decrease. This all lends hand to keeping Steve Job’s original strategy in place, which was creating premier products that sell for premium prices.

                • bobswinkle on 18/07/2023 - 21:58

                  @CurlCurl: The second method does not occur in Australia. It's illegal and Apple is not stupid or badly advised enough to engage in it here.

                  They are not allowed to even hint at a minimum price. They can have an RRP but even the slightest hint of retaliation for selling below it would be illegal and they're not that stupid. They know it's not worth the headlines.

                  • CurlCurl on 19/07/2023 - 08:47

                    @bobswinkle:

                    The second method does not occur in Australia. It's illegal and Apple is not stupid or badly advised enough to engage in it here.

                    They are not allowed to even hint at a minimum price. They can have an RRP but even the slightest hint of retaliation for selling below it would be illegal and they're not that stupid. They know it's not worth the headlines.

                    Do you ever see Apple products 25%, 40% or 50% off in any Aussie store?

                    The price is controlled by Apple. There are ways.

                    • bobswinkle on 19/07/2023 - 09:04

                      @CurlCurl: Yes. The "way" is that the margin on Apple products is about 3%. So if you sell at 20% off you're taking a 17% loss on every product sold, and you'll sell everything you have. It's extremely hard to leverage Apple products into other more profitable sales as well.

        • bobswinkle on 18/07/2023 - 21:57

          No. The fact they're selling a product at below their cost for it is the thing that would spell instant death. I absolutely completely guarantee that Apple would not take action against some company selling their products at below margin. They would let their own stupidity take care of them.

  • JIMB0 on 18/07/2023 - 20:37
    +2

    I've only got the poor man's version of Milwaukee, Ozito. All bought on sale from Bunnings when they price matched Aldi.

    • jizmo on 18/07/2023 - 22:39

      This ^
      It's not rocket science.

  • KaTst3R on 18/07/2023 - 20:46

    Because of customers like you that keeps demand high, there is no need to corrode their own pricing strategy.

  • Free Fall on 19/07/2023 - 00:03

    Try buying sets on sale and reselling bits you don't need - I've ended up with free tools + profit doing this.

  • MisterNobody on 19/07/2023 - 05:54

    My gut feel is that its all about high wholesale prices and small margins for retailers. I've no solid evidence to back this up but all thinga point to it.

    Similarly, I don't think even the buying power of Bunnings can get the wholesale deal to undercut smaller retailers. At a global scale, even Bunnings are a small player.

    In some cases Ryobi, AEG and Milwaukee are all the same company. So it makes no sense in them dropping the price because it effects sales in their cheaper brand.

    Also, I think the lifeblood of the industry is tradies not the handyman. They don't just buy a drill and driver with two batteries. They have a ute full of tools that they will turn over far more frequently too and write them off on tax.

    I actually think what's missing are manufacturers who build compatible tools. Thia gives you more options on the same platform and that might influemce their pricing model. You can buy some no brand stuff from china, but its a lucky dip. Aldi could habe done better if they adopted other brand batteries… this week its a makita compatible … next week dewalt… anyway they dont have non existant problems to care about.

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