You can save hundreds of dollars buying phones and other gadgets from import sites, but is it safe? Here is a guide to the important issues like warranty and repairs.
Despite a name that contrives connotations of dubious legality, grey importing is in fact perfectly legal (unless you’re trying to import an illegal product, naturally).
What is the grey market?
Simply put, it involves the purchase of goods from a source outside the normal distribution channels for your country, generally from an international source and often at a largely discounted price.
The fact that international purchases valued under $1,000 aren’t subject to GST also helps the appeal, and is a much-bemoaned fact from the traditional retail segment.
The most obvious reason for buying grey imports is cost. Buying goods online from an overseas source is almost always significantly cheaper than buying from an Australian retailer, especially if you’re paying full RRP.
Whether it’s because of shipping, economies of scale, cheaper cost of business or stiffer competition, products are often found to be less expensive in different places around the world.
But there’s also the issue of convenience. Often, an international company will launch a product in one region but not another.
While that could come down to a large number of reasons, including local regulations, shipping, manufacturing times and economies of scale, connected consumers are quite often unprepared to wait for an arbitrary local release date when sourcing products online is so easy.
With the digital connection between countries being instant now, thanks to services like Twitter and the 24-hour news cycle, many companies have failed to adapt to the global marketplace.
In Australia, where the cost of goods and services are generally fairly high compared to the rest of the western world, the appeal of the grey market has grown so high that it has created a new type of business.
These new companies import goods from international wholesalers themselves, and then undercut the traditional retailers by selling the product at a price well below the RRP.
It’s become such a competitive marketplace that even big name retailers like JB Hi-Fi and Harvey Norman have tried grey importing certain product categories at times [though the direct import area appears to have gone from the JB H-Fi site since this article was written].
Buying from a local vs overseas retailer
For the buyer, there are a few important differences worth noting when it comes to buying grey imports.
For starters, Australian retailers – even those who source their goods from overseas – are required by law to guarantee the product will work as described. If it doesn’t, the consumer is entitled to a repair, refund or exchange, depending on the severity of the defect.
If a retailer doesn’t comply, the ACCC can unleash its almighty wrath upon them to support the consumer.
What constitutes “working as described” varies by product category. If you purchase a mobile phone, you expect it to work on Australian networks, with menus in English.
You also expect the product to last between 18 months and two years before you need to get it replaced.
Some products could be expected to last for years, and if it fails the ACCC will offer support, regardless of whether it was purchased through traditional brick and mortar retail or an Australian grey importer.
If you buy from an international retailer, though, the ACCC becomes as powerless as a newborn puppy, as the offending retailer falls outside its jurisdiction.
That’s not to say that there are no options available when it comes to getting products bought from overseas repaired or replaced, but there’s no government agency waiting to protect your rights.
Click below for the next page ... the advantages of buying from a local importer
The advantage of buying from a local importer
What this means is that there is often an advantage to buying from Australian companies that do the grey importing for you.
While buying a product direct from an international online retailer might be a bit cheaper, getting the product from a local company that has sourced the product from overseas will offer you peace of mind when it comes to any product issues you may have.
It’s important to note, though, that online auctions are exempt from the ACCC’s mandated warranty, regardless of whether the seller is based in Australia or overseas.
“Buy it now” options on online auction sites like eBay are included, so consider using the purchase mechanic if you’re worried about a product working properly.
The other advantage of buying from a local company, especially when it comes to buying technical products, is that you are a lot less likely to buy something that isn’t compatible with local infrastructure.
Smartphones are the obvious example, given the complexity of different radio frequencies used by different networks around the world.
So where a popular smartphone released in Australia is guaranteed to work on an Australian network, the same handset may have a slightly different chipset on overseas models that mean it won’t work in Australia.
Obviously, this means that there is a danger of buying from international sellers, especially for consumers not savvy with the technical workings of their phones.
Some gadgets also face the risk of only coming with an international power plug, or worse, a lack of compatibility with Australia’s 240V power supply.
Given the potential for disaster when plugging in a 110 volt appliance into a 240 volt socket, there’s a real need for proper technical research into the purchase before pressing that Pay Now button.
On the other hand, companies like MobiCity and Kogan, which source products from overseas but sell from Australia, understand the compatibility issues and should only sell products that are guaranteed to work on Australian networks.
This makes the purchase a much safer option; especially given you get the added safety net of being entitled to a replacement or refund thanks to Australian consumer law if something doesn’t work.
How much can I expect to pay?
The table above [first published in October] shows the difference in pricing you can expect to pay for some of this year’s gadgets from a variety of sources, both local and international.
The first thing you’ll notice is that across the board, recommended retail prices appear higher in Australia than they are in the US.
Whether it’s an iPhone or a copy of Creative Suite from Adobe, Australians are paying more than our American cousins, with a price increase of anywhere between three per cent and 42 per cent.
But it’s never as simple as a simple mathematical formula. As mentioned previously, Australian RRPs include GST in the quoted price, whereas US pricing all has sales tax added on at the checkout.
This means that, depending on where you buy some of these gadgets from, it might actually end up cheaper buying from Australia over the States, if you were going to pay full recommended retail price.
In many cases, the Australian RRP still comes out as slightly more expensive, but the difference is now at an acceptable level, and can be justified by things like a higher cost of doing business here in Australia.
However, that doesn’t account for the fact that the web is an international marketplace. While some gadgets may end up cheaper in Australia when compared to the US, grey importers aren’t exclusively looking to the States for their products.
They are looking to Asia, the UK and Europe to source products at the best possible price, and the savings available when purchasing from around the world can be huge.
As the table shows, if you simply target the cheapest price online, the savings over both the Australian and the American RRPs can be massive.
It’s not all rosy though. Do a quick search for Creative Suite 6 from Adobe, and you are inundated with bargain prices for the software. But many of the sites offering to sell the imaging software don’t offer simple security measures like HTTPS or secure payments via services like PayPal.
While some may be legitimate, some feel like the digital version of buying products from the back of a truck in a dark alley, and as with real life, there is a real risk of being robbed or attacked when buying from shady characters.
As with any online purchase, it’s important to stay vigilant to protect yourself from being defrauded. The notion of saving $3,000 on CS6 sounds good now, but will it sound just as good after criminals have stolen your credit card details and robbed you blind?
If you were to walk into a Best Buy in the US and try and pick up a copy of Adobe CS6 Photoshop, you would be expected to drop $US700 for the software.
If you tried to buy the exact same piece of software in Australia, you can expect to part with $1,168 of your hard earned dollars.
That price difference remains, whether the software is purchased from a retail store or online in a digital-only format, so it’s not really surprising people are shopping overseas.
This disparity between local and international prices is not uncommon, and it’s not exclusive to technology purchases either. Across categories like cosmetics, apparel, snow gear and power tools, Australians are almost universally charged more.
It’s dubbed the Australia tax, and it is one of the prime reasons that Aussie shoppers are looking to the grey market to buy goods in increasing numbers.
Click below for the next page ... sales tax and getting your money back
Don't forget sales tax
Of course, there is always going to be some difference in prices quoted for goods. In America, for example, quoted prices don’t include sales tax, which is set by the states and varies around the country.
Depending on which state you buy your products from, you can expect to add up to 20 per cent to the quoted price.
In Australia though, all goods and services are quoted with the 10 per cent GST included in the price. This automatically means that the difference between US and Australian prices are never quite as big as they appear at first glance.
There are other factors at play in the price between Australian and international products. Australia has a higher cost of living than places like the US, which makes rent, wages and marketing all a bit more expensive down under. These costs need to be absorbed into the RRP, which explains a small part of the pricing difference.
But it doesn’t explain the majority of it. When it comes to digital products especially, where there is no packaging, pressing or distribution costs, there is quite simply no justification for companies like Adobe to increase the price of an identical product by over 50 per cent for Australian consumers over other parts of the world.
The “Australia tax” situation reached an apex earlier this year when the government acted on complaints from the public to hold an inquiry into why technology companies felt they could charge Australians more than other places in the world for identical products.
Without regulation – which was almost unanimously advised against – there’s no way for the government to force companies to offer fairer prices for Australian consumers.
But what the inquiry did do is bring awareness to the public about the potential benefits of the grey market, and the savings that can be had.
What are your rights?
If the grey market item is purchased locally from an Australian-based seller, then Australian consumer guarantees apply (see "Australian Consumer Guarantees" below).
If it’s purchased from a seller based outside of the country, then you aren’t covered by local laws for refunds or repairs if something goes wrong.
Local sellers and grey market products
If a local business, including a website, sells grey market products, then they are acting as the importer or supplier. As such, they are responsible for providing the consumer guarantees that include repair, replacement or refund, even if the manufacturer doesn’t have an office in Australia.
A number of locally-based websites selling cameras and tech products have started to include grey market products in their line-up, while some have set up secondary websites to sell grey market devices in Australia.
You should know that any seller or business operating in Australia must provide consumer protection for grey market products the same as products sold through official channels.
It’s used as a selling point by a few websites that they’ll cover import items with a warranty, but they’re only providing consumer guarantees that they are obliged to offer according to Australian consumer law.
The Australian Competition and Consumer Commission (ACCC) says that consumers can turn to the supplier or the manufacturer for a remedy if something goes wrong with their product.
An ACCC spokesperson advised that suppliers may send the goods to the manufacturer for diagnosis or repair, but they cannot require consumers to deal with the manufacturer directly.
“Suppliers must remember that they should provide a remedy to the consumer within a reasonable time so they should have procedures in place to follow up on goods that are sent away for diagnosis or repair.”
Also, if suppliers find that there is a major problem with am item, can’t repair the product, or can’t repair it within a reasonable time, they should advise the consumer of this and allow them to choose their preferred remedy.
However, many manufacturers will outright refuse to deal with grey market products and will direct inquiries for updates or warranty claims back to the grey market seller.
Many manufacturers don’t like grey markets because they claim they undermine their official distribution channels and the pricing arrangements in place for different markets.
Manufacturers say that they factor warranty support into their prices for products sold through authorised channels and grey market importers that try to dodge their warranty responsibilities by directing consumers to the manufacturer are saving themselves money and imposing the cost on the manufacturer.
Most manufacturers will offer service and support agreements only through the authorised importer, which could leave non-authorised importers not equipped to provide software updates and service.
Some tech manufacturers offer an international warranty, but this won’t replace the Australian consumer guarantees for products bought locally.
The ACCC says that sellers and manufacturers can make extra promises about their products, but consumers should know that these provisions are in addition to the consumer guarantees and an international warranty cannot be used to avoid their liability to provide a remedy according to Australian law if something does go wrong.
You may be entitled to ask the seller to fix their problem even if a voluntary or extended warranty has expired.
Both retailers and manufacturers must ensure that their voluntary and/or extended warranty or international warranty doesn’t mislead consumers into thinking that this is the extent of their rights, and once this warranty period is over, they no longer have a right to a remedy.
Some grey market sellers are safer than others when it comes to warranty protection. It’s usually easier for consumers to gain a remedy from a local online site than it is to get a result from a seller on a site like eBay, so it’s up to you to make a judgment call on where to shop and if the cheapest price is the only consideration.
Click below for the next page.... overseas markets and Australian guarantees
Overseas grey markets and warranty
The situation with consumer protection is different if you’re buying from grey markets outside of Australia, such as purchasing from an overseas website.
Essentially there isn’t any definite warranty protection and it’s potluck if the manufacturer will be willing to repair one of these products, usually at the cost to you. It can be hard to press for a refund or replacement with a seller that isn’t local.
A look through the fine print on many tech companies’ websites shows a range of conditions and provisions for grey market products.
Some manufactures won’t provide support or service for products that haven’t been sold through the official outlets. Other manufacturers won’t allow downloads or updates for grey market products.
Many warn that the warranty registration card is usually printed in the local language, but if a product is onsold into another country this can make it difficult to register it and cause problems if service or replacement is required at a future date.
Some manufacturers refuse to provide power adaptors, cables or batteries that may be needed for some grey market products to operate if they’re manufactured for regions with different settings or networks.
If you run into problems with a product and find yourself with a non-responsive seller or a seller that’s gone out of business, there’s nothing preventing you from contacting the consumer rights agency in the country from which the product was purchased, if it has one.
Lodge a complain online and see if you can get a result (just don’t expect to get the attention you’d get dealing with the local authorities).
If a remedy isn’t available with a local seller or one of these consumer complaints agencies, then we’d suggest as a last resort to turn to eConsumer
The eConsumer site is a cross-border consumer site that will investigate complaints about online overseas sellers and websites, and may be able to help you out.
Australian Consumer Guarantees
Your consumer rights are not limited to a set period. The consumer guarantees last for the length of time that is reasonable to expect given the cost and quality of the item and any promises and/or claims about the item.
The one-year manufacturer’s warranty is provided by the manufacturer and doesn’t limit or cancel your consumer guarantees, which are protected by the law.
Proof of purchase can include a credit card statement, lay-by agreement or warranty card that is signed and stamped as well as the purchase receipt as long as it shows where the item was purchased.
The consumer guarantees entitle you to a remedy that can be a repair to the faulty product, a direct replacement with the same thing, a refund for the amount paid or, in some cases, compensation for a drop in value of the product.
If an item was paid for in cash, the refund should be given in cash. Likewise if an item was paid for by credit card, the refund should be paid to the credit card.
These consumer guarantees are the same for goods purchased in a store or online.
If you buy overseas, however, these Australian consumer guarantees don’t automatically apply. There can be many difficulties in getting a refund or a replacement and you’ll probably have to pay to return the item, which can be expensive if it’s large or bulky and has to travel some distance.
If you buy at auction through an online marketplace, the seller is responsible for providing a remedy if something goes wrong and it’s not the responsibility of the website when it’s not acting as an agent.
There are usually no refunds or returns if something goes wrong with a product bought through a private auction, but the product must be as described.
[This is an edited extract from an article first published in the November 2012 issue of PC & Tech Authority]