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01-09-2015, 09:41 PM   #1
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How can some places sell so cheaply?

Quicndone was selling the K3 body for $599.
B&H Photo wants $896.95 (with grip).
Adorama wants $896.95 (with grip and SD card).

How can a place like Quickndone sell them so cheaply? Is it because they may not have a brick and mortar store while the others do?
Did Quickndone get a lot, like from someone going out of business or something? They sold 50 of them and are not offering any more,
so I am assuming it is something like that.

Why cant B&H and Adorama sell them for that price when Quickndone can?

Just curious.

01-09-2015, 09:52 PM   #2
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Because most of them buy grey market products and resell them.
01-09-2015, 09:54 PM   #3
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QuoteOriginally posted by alamo5000 Quote
Because most of them buy grey market products and resell them.
Unless you consider Canadian version of k-3 grey market product...
01-09-2015, 09:57 PM   #4
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They don't have contracts with the OEM that say "Sell this at price X unless we say otherwise or you don't get any more units." Pentax has no recourse against smaller merchants. B&H and Adorama stand a lot to lose if they lose their authorized dealer status.

01-09-2015, 10:04 PM   #5
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Here is a little lesson in corporate America... I have done this professionally but I am going to break this down... corporations use country and regional pricing on their products... so lets take some innocuous product as an example.

Lets say you own the Pepto Bismol company. To manufacture a bottle of Pepto Bismol in the US it costs a $1.50 but the company can sell it for $2 wholesale...and after that the retailer tacks on another .25 cents... so you buy it at $2.25.... But as a company you are making .50 cents gross per bottle.

Now lets say you expand and make Pepto Bismol in India... and there it only costs 75 cents to manufacture a bottle but you can only sell it for $1...and then the retailer only adds 10 cents... so you can buy a bottle for $1.10...

Of those two, which one has the higher cost to produce? Which one has the higher profit margin?

What some people do is go to India and buy a case load of Pepto Bismol and ship it back to the US and sell it under the market price of $2.25.

---------- Post added 01-09-15 at 11:06 PM ----------

QuoteOriginally posted by aleonx3 Quote
Unless you consider Canadian version of k-3 grey market product...
Technically it might be. It depends on how the company in question sets their pricing... and what kind of international pricing model they use.

Tamron for example will not honor any warranty or repairs in the US on products purchased from Canadian sellers.
01-09-2015, 10:52 PM   #6
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QuoteOriginally posted by jeryst Quote
Why cant B&H and Adorama sell them for that price when Quickndone can?
As authorized dealers, those stores have to abide by the US distributor's minimum pricing policy. Many ebay sellers sell imported items for less, but usually without warranty coverage or any guarantees, etc.

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01-09-2015, 11:14 PM - 1 Like   #7
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QuoteOriginally posted by alamo5000 Quote
Lets say you own the Pepto Bismol company. To manufacture a bottle of Pepto Bismol in the US it costs a $1.50 but the company can sell it for $2 wholesale...and after that the retailer tacks on another .25 cents... so you buy it at $2.25.... But as a company you are making .50 cents gross per bottle.

Now lets say you expand and make Pepto Bismol in India... and there it only costs 75 cents to manufacture a bottle but you can only sell it for $1...and then the retailer only adds 10 cents... so you can buy a bottle for $1.10...

Of those two, which one has the higher cost to produce? Which one has the higher profit margin?

What some people do is go to India and buy a case load of Pepto Bismol and ship it back to the US and sell it under the market price of $2.25.

Erroneous analogy. Grey market products are manufactured in the same plants as those legally imported.

U.S. & Grey Market Products | B&H Photo Video
01-09-2015, 11:22 PM   #8
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As an example, certain third party lenses sold via authorized dealers in the USA carry a six year manufacturer's warranty.

I found a lens for less at a non-B&H, non-Adorama NE USA dealer -- nearly $200 less. But no mention about any warranty anywhere on their webpage. So I called and asked if the lens was new or a demo or why the price was so low and if it came with paperwork and six- year mfr warranty.

I was told, "These lenses are new in the box, but only carry a one year warranty through us."

So there's your difference in one case. They were selling gray market lenses.

01-09-2015, 11:24 PM   #9
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Another trick that is used, Resellers ship from overseas directly to the user. This can avoid import duties on certain items. And limit actual warehouse inventory, or the need for a warehouse entirely.
01-10-2015, 06:42 AM   #10
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QuoteOriginally posted by Steve.Ledger Quote
Erroneous analogy. Grey market products are manufactured in the same plants as those legally imported.

U.S. & Grey Market Products | B&H Photo Video
I know that. In the case of cameras it's true. With other products it's not. I recently bought a product I use regularly but I got it through Amazon because the price was just 'too good'... when it showed up I flipped it over and it was 'manufactured in India'...anything from batteries to medicines, to cameras, to you name it, all are unique... grey market is more defined by exploiting price differences in an un-authorized way.

I was trying to not get overly technical. I could write a 10 page essay on it but I intentionally didn't get that deep into it.

The case an point without going into a long boring 'explanation' is about the pricing models corporations use.

Many companies use a singular point of manufacture... (for example's sake let's say China).... and charge $100 for that item in the US and $90 in other countries...and maybe $80 in others all for the same product, same plant, different prices in different countries. Other companies have regional manufacturing facilities where they manufacture stuff to regional tastes or needs. And when they go on sale it might not be a 'black friday sale'...it might be a 'moon festival sale'... but it's just one more tool...

Corporations reserve the right (or try to reserve it) for distribution of their products. Saudi Arabia recently raised prices of oil to all East Asian buyers but they refused to raise production and cut prices to American buyers...all from the same oil wells...Why couldn't a US buyer buy a tanker load and then re-direct the ship to Japan or China and pocket the difference? (because if they ever got caught by the Saudis it would be the last time it happened because they would blackball that company and or persons from buying again)...

That's the end 'major' point...people exploit those differences in pricing however they come about.... hence grey market. I was going for a more 'generic' answer....

Last edited by alamo5000; 01-10-2015 at 06:58 AM.
01-10-2015, 07:07 AM   #11
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One word: Greed...
01-10-2015, 10:07 AM   #12
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QuoteOriginally posted by alamo5000 Quote
Many companies use a singular point of manufacture... (for example's sake let's say China).... and charge $100 for that item in the US and $90 in other countries...and maybe $80 in others all for the same product, same plant, different prices in different countries. Other companies have regional manufacturing facilities where they manufacture stuff to regional tastes or needs. And when they go on sale it might not be a 'black friday sale'...it might be a 'moon festival sale'... but it's just one more tool...
This has started to change. If you go to China and look for brand name electronics, you'll see that the price is pretty much what it is here after currency conversions. I went into multiple shops looking for an FA77 and was told Y6500 or so. That's the $1000 you can buy it here for. My expert negotiator mother-in-law managed to talk one down to Y2800 for a new DA70 but they absolutely would not go lower; the shop said it was a rock bottom break-even price. And this is not the case of them trying to gouge a "rich foreigner" (but that happens a lot); if you look at online prices at stores in China, you'll see that the prices they gave me were very much in line with the market. Now, in US dollars, the average Chinese person makes about 1/6 what someone in the US makes. Cost of living is lower in general, but those lenses are really expensive at those prices for most Chinese.

The reason for this is that it's really easy for people to redistribute products themselves. If that FA77 were $300 in China, someone could buy it, put it on eBay for $500, make a cool profit of $200 and no one would ever buy a lens from US stores. This has been a huge problem for the textbook industry, who makes these "international editions" of popular textbooks for developing countries like China and India. The books say "Not for sale outside the PRC," but they can be found on Amazon from time to time until they get shut down. Heck, there was a student from Thailand running a business reselling these books; a publisher went after him for copyright violation. This is exactly what electronics makers are afraid of.

I actually expect reverse importation to become a bigger issue. In China, for instance, lots of brands have been repositioned as premium brands or just sell at absurdly high prices. I wandered into a Lexus dealership and found that an RX450H costs over Y1.2M there--or more than $180,000. When my parents-in-law came to visit, my father-in-law bought like 10 shirts from Calvin Klein because the price there for quality foreign products is like triple what he paid here. An American could run a pretty good business buying luxury and semi-luxury products at retail prices and shipping them over there. Other than ignorance of the possibility, I suspect no one actually does this because quality of life here is good enough that most people don't need to go through such hassle to earn a few hundred extra dollars--and it would be a lot of hassle, trust me.

Your other example of perscription drugs is a better one because drugs are highly controlled and regulated. The average person cannot resell drugs--getting caught is a huge offense (death in some Asian countries) and people are reluctant to buy something so important from random people overseas. As a result of regulation, big pharma can sell them at wildly different prices in different countries.
01-10-2015, 10:24 AM   #13
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QuoteOriginally posted by MadMathMind Quote
This has started to change. If you go to China and look for brand name electronics, you'll see that the price is pretty much what it is here after currency conversions. I went into multiple shops looking for an FA77 and was told Y6500 or so. That's the $1000 you can buy it here for. My expert negotiator mother-in-law managed to talk one down to Y2800 for a new DA70 but they absolutely would not go lower; the shop said it was a rock bottom break-even price. And this is not the case of them trying to gouge a "rich foreigner" (but that happens a lot); if you look at online prices at stores in China, you'll see that the prices they gave me were very much in line with the market. Now, in US dollars, the average Chinese person makes about 1/6 what someone in the US makes. Cost of living is lower in general, but those lenses are really expensive at those prices for most Chinese.

The reason for this is that it's really easy for people to redistribute products themselves. If that FA77 were $300 in China, someone could buy it, put it on eBay for $500, make a cool profit of $200 and no one would ever buy a lens from US stores. This has been a huge problem for the textbook industry, who makes these "international editions" of popular textbooks for developing countries like China and India. The books say "Not for sale outside the PRC," but they can be found on Amazon from time to time until they get shut down. Heck, there was a student from Thailand running a business reselling these books; a publisher went after him for copyright violation. This is exactly what electronics makers are afraid of.

I actually expect reverse importation to become a bigger issue. In China, for instance, lots of brands have been repositioned as premium brands or just sell at absurdly high prices. I wandered into a Lexus dealership and found that an RX450H costs over Y1.2M there--or more than $180,000. When my parents-in-law came to visit, my father-in-law bought like 10 shirts from Calvin Klein because the price there for quality foreign products is like triple what he paid here. An American could run a pretty good business buying luxury and semi-luxury products at retail prices and shipping them over there. Other than ignorance of the possibility, I suspect no one actually does this because quality of life here is good enough that most people don't need to go through such hassle to earn a few hundred extra dollars--and it would be a lot of hassle, trust me.

Your other example of perscription drugs is a better one because drugs are highly controlled and regulated. The average person cannot resell drugs--getting caught is a huge offense (death in some Asian countries) and people are reluctant to buy something so important from random people overseas. As a result of regulation, big pharma can sell them at wildly different prices in different countries.
But, this doesn't explain the different prices inside the same country... Greed however...
It's like the Fuji users, who bought a sale priced camera + lens and they were offered another lens for free, after selling them for 100 bucks less the RRSP... Same word applies.
01-10-2015, 10:32 AM   #14
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QuoteOriginally posted by Flugelbinder Quote
But, this doesn't explain the different prices inside the same country... Greed however...
It's like the Fuji users, who bought a sale priced camera + lens and they were offered another lens for free, after selling them for 100 bucks less the RRSP... Same word applies.
That's far simpler. A store charges as much as they think people will pay--that's not greed, that's running a business smartly. Some stores don't need high profit margins on single items because they can make it up on volume. For smaller stores, cutting their price may not lead to increased sales. They might sell 5 a month at $1000 (say, profit $200/unit) while everyone else sells it for $900 ($100 profit/unit). If they sell at $900, they may only increase to 8 units for whatever reason, meaning they only make $800 profit instead of the $1000 they had before. Hence, it's better to sell at $1000 even though the sales are less. A store doesn't really determine the price; the buyers do.

The "bonus item" promo is one way stores can get around MSRP restrictions. Adorama offers a lot of lenses bundled with filters, a cleaning kit, etc. for the exact same price as the bare lens. If they could drop the price $25, they would. Since they can't, they offer some little extras to give buyers an incentive to purchase there. As a high volume store, they can afford to give away $10-20 worth of stuff on a lens sale.
01-10-2015, 11:24 AM   #15
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QuoteOriginally posted by MadMathMind Quote
...A store doesn't really determine the price; the buyers do...

The "bonus item" promo is one way stores can get around MSRP restrictions. Adorama offers a lot of lenses bundled with filters, a cleaning kit, etc. for the exact same price as the bare lens. If they could drop the price $25, they would. Since they can't, they offer some little extras to give buyers an incentive to purchase there. As a high volume store, they can afford to give away $10-20 worth of stuff on a lens sale.
No, the store does. If the buyers would have that possibility, everything would be A LOT cheaper! You make that clear on the second paragraph, which kind of contradicts this first statement...
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