Is Grey Really Grey?

Last night over the year end company dinner, the topic of ‘grey’ import products came up for discussion which prompted me to raise a few points here for your comments or queries as this topic has regularly featured in South Africa’s photographic and I.T. industry for some time. Lets be honest, we all look at prices overseas and most often the difference in price really makes you think twice about the local deal we’re getting here at home.

Many people in South Africa don’t seem to understand why it is that buying a camera locally can cost more than buying abroad. As an example a Canon EOS 1D Mk III will cost R38, 900.00 according to the site of a local dealer in Johannesburg. The same camera will arrive in SA for just under R32, 000.00 from a large dealer in the USA. Another example, is the Nikon 200-400mm f/4 VR a fantastic wildlife lens. It’s local price from an online retailer is R63, 700.00. The same lens from perhaps the largest photographic store in New York has two prices. The one carries the Nikon USA warranty (which as far as I know is meant to cover it internationally) the other lower price is for the same lens with a warranty supplied by the actual store. Even going on the higher price and over compensating the import duties, you can still expect this lens to land at around R50, 000.00 that’s a big saving.

Why are our products here in South Africa so much more than overseas? A few reasons can and have been given by local dealers, one of the main ones being volumes of sales. The market in Africa for photographic goods is a fraction of what it is in the US or other parts of the world and in some cases examples of have been given of one store in New York selling more stock of a particular brand than the local agents of that same brand do throughout our country. That certainly plays a role in negotiating better prices from a factory level.

The second biggest issue is the rate of exchange on our currency. Now before you shout that the Rand is at some of its strongest levels against the Dollar we have ever seen, you must realize that nearly all of the products distributed in South Africa are supplied through the European distribution networks, hence the Dollar’s weakness does not mean we have Rand strength, in fact there is little gain of the Rand against the Euro lately which is the currency with which our products are bought.

There are other issues that I must raise, perhaps the biggest of which is that many of the agents who import photographic equipment locally as the appointed agents are separate companies from the brand which they import and even those who have closer ties to their European brand distribution channels need to pay for the offices, staffing needs and service centers operating locally. To do this they must make their mark up on the products they sell to your friendly retailer who in turn adds a tiny 10% mark up at most in order to pay their sales team. It is then that you can see why local dealers don’t like you buying abroad.

Now the question to ask is whether the price difference makes sense? I personally don’t mind paying a little extra for the local product when I am getting fast, efficient service particularly on repairs, and I certainly don’t mind paying my local camera store for the help and knowledge they offer, but does this really justify a 20% or more price difference? I should think not. But if the retailers are only making 10% then where are all those extra costs coming from? Is there a local wholesaler who would like to volunteer a break down of their costs for us?

If you were to ask me is it worth it to buy ‘grey’ good then, what would be my reply? There are some risks that you must take into consideration.

1. Service. Many of the local agents refuse to service grey products under warranty. If you think that the loss of your sale locally meant that they lost money to pay the same staff who you now expect to service you gear you can see why, but there is more to this problem than that. Take the focusing/sub-mirror assembly problem on the Canon EOS 1D Mk III that is just being rectified now. Canon’s general policy on fixing such faults is to repair at no cost, however the new parts due to be replaced are sent out according to serial number, hence if you bought from the States your parts are now in the States and often – if you bought from a dodgy dealer – its up to you to get the camera there for repair.
2. Not everything is in the box. There have been people in the past who ordered their camera for a bargain price online who didn’t realize that not all dealers honestly sell the full box with charger, cables, software etc. Instead the camera arrives on its own and you quickly realize why at the bottom of your online order there was that section of “Other items bought by people buying this product” included what you thought was a ’spare’ charger, cable etc.
3. Compatibility. There are always issues that plugs or voltages are not the same as we have here at home and in some cases even instruction manuals are not in English upon the products arrival.
4. Serial Numbers. So you think you have made a good buy, everything is in the box and the camera has no known major defects, but the 6 months later there is a problem and you take it in for a service locally hoping that they won’t know any better. Many local agents don’t track serial numbers of products, but manufacturers in their wisdom have regionalized many serial numbers, for example all products beginning 1xx-xxx-xxx are USA and 3xx-xxx-xxx East Asia etc. Meaning that without an African/European region code the service centre will still refuse to service it, or at best take their time and charge you labour.

Despite all the points made above, I know some people who have had excellent service from retailers they bought from overseas who – when a problem was encountered – had a courier collect the camera, lens etc the next day and within the week it was returned repaired or replaced, but they made sure to buy from the really big retailers.

In the end it becomes a debate of ethics. One of the things that gets to me the most is people who will use an hour of a knowledgeable salesman’s time – who in many cases is providing for his family on his 1-2% commission – just so that they can suck the info out of him and try out the camera before they place their order online. I have even heard of cases where people come straight out and say that that is their plan and they can’t understand why the sales person will not assist them further or does so half heartedly and when something goes wrong or their camera arrives incomplete who do they call first? The poor guy who’s time they waisted at their local camera shop because they don’t want to spend thier savings from buying overseas on international calls.

If you want to buy grey, then have the guts to check it out online, get your facts from the place where you shop and take the leap of faith without touching or trying it out in a local store. But is there an answer to the price differences? Well that will be a topic we hope to bring you further response on in the New Year. One thing is for sure though, if we want to increase local volumes we need to start supporting the local agents and perhaps then we will see their confidence in the local buyers increase meaning a gradual decrease in their mark ups and in time volume discounts.