Sunday, December 6, 2009

Buying overseas

Five years ago when I wanted a game I would walk to the local shop and buy it. Some research might have gone in it to find the cheapest shop in the neighborhood but I'd always get my game in a ten kilometer radius from my home. With the discovery of the internet and finding out about online shopping things have changed quite drastically. It's suddenly possible to buy items from your neighboring countries without leaving your home. We can buy some items cheapler in other countries and some items are priced cheaper here.

The UK seems to have much cheaper prices for books, dvds and PC games. There are tons of book shops in the UK which causes a lot of competition and therefore cheap prices. And of course the English book market is a lot bigger than the Dutch one which allows for cheaper mass production. Translations of movies and games is often cited to defend the higher prices in the Benelux. Lots of movies that I buy from the UK come with Dutch subtitles however and not even the game guide is translated for our local versions. It seems clear to me that the reason why pay more is that we are willing to pay more. If enough people would stop buying locally the prices would lower. And with online shops rising we finally can stop buying locally. Consumers seem to be doing just that as an article in the news today mentioned that more and more Christmas gifts are being bought online.

Another reason for the cheaper prices is that shops like play.com are set up in the Channel Islands. There, items which cost less then £18 can be sold tax-free. Perfect to distribute cds and books as you can easily afford to offer these items a lot cheaper than your competition in the rest of Europe. And the ~20% you save on taxes will overcome the shipping costs.

I do wonder how those shops can ship so cheaply. When I take a look at amazon.co.uk the items are usually cheaper than in Belgium. However the prices to post outside of the UK are enormous. £6 to send a single cd or dvd? That's about the cost of the dvd itself. It's only worth it to buy from amazon in bulk or to buy more expensive items so the shipping costs only make up a small percentage of the total costs. On the other hand, play.com manages to sell me a dvd for €4.5 which includes shipping costs. I've seen even cheaper shops, thebookdepository.co.uk sells books for €2.06. This has to cover the costs of printing a book, packaging and posting it. And they're using Royal Mail which has been the fastest of any services I have used. Order an item and two days later I have it in my mailbox.

The average book seems to weigh about 340 grams so the cost to send such a package would cost £2.66. It makes me wonder just how it's possible that they can send me a book at those costs and still make a nice profit. A deal with Royal Mail to ship books in bulks seems like a reasonable option. Maybe they're selling some items at break-even or a small loss just to clear their inventory. Space costs money after all. Another way might be to create local distribution centra all over Europe. Seeing how they use royal mail that's obviously not the case but it would form a good solution. These are all just guesses of course, I would like to find out how they really do it.

But no matter how they do it, for us consumers we always win. More and more consumers seem to be finding their way to online shopping which should lower the prices in my own country after a while. Cds, dvds or books have never been so cheap to obtain! At least if you like to read in English...

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