'Grey imports': hundreds of dollars to be saved

Apr 5, 2012

The Samsung Galaxy Note.

The Samsung Galaxy Note.

The recently-released Samsung Galaxy Note smartphone has a recommended retail price of $899, but it can be purchased for as little as $519 from Kogan, an Australian-based online retailer.

Similarly, the Nikon J1 interchangeable lens camera with a 10mm kit lens is sold for $800 at Ted's Cameras and only $499 at D D Photographics, a grey import reseller with a shop-front in North Sydney.

Grey import resellers are so named because they import and sell products outside of the traditional supply chains, sourcing products that are up to 60 per cent cheaper than the products available locally.

Business, it appears, is booming. Kogan's revenue for 2012 is projected to be in excess of $150 million, and the company now sells more in a day that it did in its entire first year of operations.

"Aussies are tired of paying more than the rest of the world," says Ruslan Kogan, founder and CEO of Kogan. "An iPad is an iPad, whether you buy it online or in store, in Australia or Hong Kong – there is no difference."

The savings available depend on the type of product. "On Canon and Nikon cameras, the savings can be up to 40 per cent. On Apple products, the savings are around 15 per cent. On phones, the saving is around 20-25 per cent," says Kogan.

But finding a good deal isn't always as simple as doing a price comparison online. Going without local support and warranty is a well-known drawback of buying through a grey reseller, and there are other, less-obvious risks.

James Murray, general manager of sales and marketing for Nikon Australia, cites the danger of counterfeit products. "When you see a lower price, you don't know whether the camera is still a genuine Nikon. We have fake products now that have the Nikon packaging, Nikon warranty and Nikon instruction book," he says. "We also have examples of a lot of Nikon products where the batteries or chargers are no longer genuine."

Murray also mentions the risk of electrocution with the chargers and travel adapters that are bundled with grey products. "One thing we're consistently finding with grey products is the charger doesn't comply to Australian standards," he says.

Some of the best deals can be found through resellers that are based overseas, but if you don't get the product you paid for, or you have trouble getting the provided warranty honoured, finding remedies through Australian consumer protection legislation can be difficult.

"Because the grey market is not locally regulated, the restrictions that authorised retailers abide by do not apply," says Jason McClean, director of consumer imaging at Canon Australia, in relation to grey resellers that operate outside of Australia. "There is no consumer recourse under Australian Consumer Law".

If you're shopping for a smartphone, buying local can mean the difference between a device that lasts all day and a device that needs to be recharged halfway through.

"Each Australian network has its own set of requirements for a handset to operate correctly," says Tyler McGee, vice president of telecommunications at Samsung Electronics Australia. "Meeting these requirements optimises the compatibility between our handset and the networks."

Some of the benefits that Samsung claims for locally-sourced smartphones are better call quality and reception, faster upload and download speeds, and longer battery life.

Kogan argues that saving money is the overriding concern. "People just want the best prices. The products themselves are nearly always identical," he says.

Mitchell Oke, a Sydney-based freelance videographer, says that low prices have driven him to purchase cameras and related accessories from grey import resellers on a regular basis. "When I decide to buy something, I always look for the best price. It's cheaper to buy online, and even cheaper again to purchase a grey import," he says.

As it turns out, getting an inferior warranty when purchasing products through a grey reseller isn't always the case. Kogan offers a 'new for old' warranty, where faulty products are replaced for a new model, leaving Kogan to deal with the faulty item itself.

"This warranty is superior to what is provided by Samsung, Nikon and Canon Australia distributors – these services often require the customer to wait for the product to be assessed and repaired, which can take a lot of time," he says.

MobiCity, a grey reseller for smartphones and tablets, also offers a higher level of service than what's available through the manufacturers directly. "If a repair is scheduled to take longer than an acceptable time frame, customers receive a brand new phone replacement," says Alistair Eldred, spokesperson for MobiCity.

But assuming all grey resellers are trustworthy would be costly mistake. Kogan advises consumers to research grey import resellers thoroughly before handing over credit card details. "There are disreputable retailers out there, so customers should ensure they choose a brand they know and trust. Otherwise, a customer could end up with non-compliant adapters, poor warranty service, slow delivery, or other negative experiences."

Clarification: The author sent through a clarification in relation to Jason McClean's comments about consumers not being protected under Australian Consumer Law. He was referring to consumers who purchased products from overseas grey import companies, not from local ones.

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