By Claire Reilly
In what could be a sign of a new world order in consumer electronics and online retailing, JB Hi-Fi has launched a Direct Import sales strategy through its online store. The online-only sales model is described by the company as “grey market” on its website, and is currently only available on DSLR Cameras, DSLR Lenses, and Flashes and Grips.
However the company is effectively undercutting its own prices, with prices on these grey products significantly less than those found on the products in the regular e-tailing section of the site.
The company has offered an explanation of the model on its website, with a statement outlining how the products will be sourced and what the orders will involve. The statement insists that “‘Direct Import’ is not illegal, not factory seconds, not demo merchandise, or inferior product”.
Paradoxically, this statement also includes an extensive section outlining the reasons why JB Hi-Fi “recommend[s] and support[s] locally imported products”, saying that the company “firmly believes that locally imported products still offer real consumer value”.
“The local supply chain supports the Australian economy and jobs,” it said. “Australian taxation of goods under the GST supports critical infrastructure, economic stability, health and education at both a state and federal level."
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“Local distributors provide resources that maximise staff knowledge and support in meeting customers’ needs. Manufacturers usually provide manufacturer's warranties for locally imported goods but may not do this for Direct Import products. In addition, manufacturer's locally licensed importers usually provide local support in the event of faulty goods such as a network of licensed local repair agents.”
However, in justifying the decision to move to direct importing, JB said that “Supply chain mechanics are now efficient enough to provide a high probability of availability and supply” and that “JB Hi-Fi customers are requesting it”.
Products available on the Direct Import page of the site include single- and twin-lens kits and camera bodies from Canon and Nikon, with listed prices (plus shipping) significantly lower than elsewhere on the site.
For example, 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 for the “Hot Price” of $1,177 in the website’s regular DSLR product listing.
A similar product is found on Canon’s new direct-to-consumer online store. The Eos 550D Twin IS Kit (bundled with a memory card and carry bag) is available for $1,449 on the Canon Store site – almost double the price of JB’s grey market product.
A Canon 550D Twin Lens Kit sold under the "Digital Cameras" section of the JB Hi-Fi online store…
…The same camera, sold for $382 less, on the Direct Import page of the website.
UPDATE: JB Hi-Fi CEO Terry Smart spoke exclusively to Current.com.au about the new strategy, discussing the reasoning behind the move.
“We needed to do this to protect the JB Brand,” said Smart. “We’ve got other online retailers who are claiming they can undercut or can undercut us in this category. What we feel is the consumer’s not being given the full story of how other retailers can achieve this.
“They’re importing the stock from China directly to the customer, therefore bypassing the GST and the customer forgoes local distributors’ warranty support and relies on the retailers to support the product,” he said. “We just feel it’s important to actually educate the customer on what the process is and how it is all being achieved. And if that means us participating in it, so be it.”
According to Smart, JB Hi-Fi will hold up the warranty end of the deal (something that would not normally occur if consumers were to directly import products themselves).