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Where to cash in on the strong Aussie dollar

Matt Smith

by Matt Smith

18 Oct 05:45am

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Filed under: Dollar, Economy, Shopping, Technology

31 comments

If you looked at the value of the Aussie dollar as a sign of our economy strength, things have never been better: since the currency was floated in 1983, it’s never reached such a high value. Here we found ourselves 27 years later practically rolling in money, with a dollar nearing parity with a value in the high 90’s.

Not even Batman can keep you from the bargains.

Let’s ignore the negative for a moment, shall we? The good side of the value in our dollar obviously lies in how much our prices are going to drop – at least, that’s the way it’s supposed to go if we believe what we’re told. Sadly it seems the opposite is mostly the case.

As luck would have it though, the modern age has found a way around that, as it’s now much cheaper and easier than ever for you to go on the internet and purchase anything you’d like at cheaper prices overseas, thereby bypassing the expensive Australian retailers.

Much in the same way that tourists travelling to foreign lands benefit from our boosted currency value, you’ll find that your dollar will take you further when shopping online.

Sure, you’re potentially doing Australian retailers damage in the long run by sending your money overseas rather than paying their inflated prices… but when there’s such a lag with retailers passing on the benefit of the strong dollar, where’s the incentive to do otherwise?

Take, for example, the new 8GB iPod Nano, retailing for $199 from Apple Australia.

The same music player costs $149 in the US. According to CommSec’s latest iPod index, Australia is now the fifth most expensive country to pick up an iPod, and the second most expensive country in the world from which to buy a song from iTunes, when with a strong dollar, you would assume that the opposite prices would be the case.

True, you can’t get another country’s Apple to ship to Australia, but there are always ways around this.

Another bit of money saving is the books, DVDs, and Blu-Rays available, particularly through large sites Book Depository UK and Amazon (both US and UK, the latter with which we share the same blu-ray region).

Most of the time what you buy is cheaper than Australian retailers, even after charging postage. It’s true that Blu-Ray movies have been slowly coming down in price domestically, but even retailers like JB Hi-Fi won’t beat four Batman movies for $30 (if you really want Batman and Robin, I’m not here to judge).

Buying books online also gives you the benefit of getting books in hardcover, usually for the price of the Australian soft cover version – hardcover books are becoming few and far between for book shops in Australia, simply because of the price.

You think it ends there? Browse through shops online in the US, and you’ll be hard pressed to find a recent music CD over $15, and most are around $10.

At the higher end, a 160GB Playstation 3 is $299US – or a full $150 cheaper than it retails for in the ‘lucky country’. For a place where the dollar is so strong, that kind of disparity is astounding.

Yes, there are reasons why our Australian dollar is so strong and yet we don’t really see an impact. But at a time when everything from interest rates to food prices keep rising, wouldn’t it be nice to enjoy buying something cheap for a change?

Ignore the potential downsides, such as a dip in foreign investment because there’s cheaper places elsewhere, or the fact that we’re so far away and so expensive for the rest of the world to visit that Tourism Australia actually needs that publicity boost provided by Oprah.

Isn’t it time you reveled in our high dollar, did Christmas shopping ahead of the time, from the comfort of your own home in your pyjamas?

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31 comments

Show oldest | newest first

    • Macca says:

      06:49am | 18/10/10

      The fluctuation (or lack of) ignores the concept of inventory. JB Hi-Fi didn’t buy their goods this week. Lowering the prices would result in massive losses. They need to keep their margins up inorder to prevent a loss.

      The Australian Dollar is over valued and there is no way that the purchasing power we are currently experiencing internationally is a fair reflection of an economy that is showing minimal signs of growth.

      Reply

    • TimB says:

      08:34am | 18/10/10

      That’s a fair point Macca, and one that was raised in response to Zumbo’s article a couple of weeks back. However surely there should be some sort of delayed effect that comes through?

      Otherwise it’s simply a case of “we need to keep our prices this high for when the currency is down, but when it’s up we’re just going to gouge you”.
      And given the size of the price differences involved, you can’t write it all off to simple hedging on currency rates. Retailers do appear to be taking advantage.

      Surely there’s a middle ground solution where every few months they can review prices against some sort of average expected currency rate for the upcoming period.

    • Macca says:

      09:40am | 18/10/10

      @TimB, Considering the sales we are seeing in department, home and electronic stores, I don’t think anyone in retail is doing well right now. I bought a top-end Sony 32’’ plasma on June 30 thinking I was getting a bargain on the end of year sales. That same TV is now 20 - 30% cheaper on sale still. I could buy the 42’’ for nearly the same price now and I’d get a PS3 thrown in.

      Right now, the Aussie Dollar is bad for retailers because they have all this product which they purchased 6 months ago which is now 25% over valued. Things are looking good for the future, but you still have to shift they inventory to make any money, which if you are domestic, is ok. But if you are an international distributor or manufcaturer, you are in real strife.

      Whilst I can see your point, I don’t know that we’ll see many instances where retail growth does really well after a period of the Australian Dollar falling. Still, if this did occur, I would agree with you that the retailers would milk it for all that it is worth.

    • Jenni says:

      11:59am | 18/10/10

      @Macca - I would have more empathy for this argument if any of the large retailers waited before *raising* their prices, but they don’t. They might have bought their stock at a cheaper price, but they’re still charge you the markup on whatever the current cost is.

      It works both ways, all I’m saying.

    • Seventh says:

      03:33pm | 18/10/10

      You see, I understand the companies need to keep their margins up and they bought their current stock at a higher price than it is current, but thing is - I really don’t care.
      When the dollar was low, I would buy my games and electronics from JB-HiFi because they were cheaper than say, GAME or EB. Now the dollar is high, I’m going to import my games and electronics from overseas as, once again, it’s cheaper to do so.

    • acotrel says:

      06:58am | 18/10/10

      For a long time now we’ve been exploited by importers.  Isn’t it about time their mark-up was taxed?

      Reply

    • Dash says:

      08:02am | 18/10/10

      Hi actotrel, the only issue is that any additional tax as a cost of doing business, will get passed on to the consumer. Just like a tax on carbon will be passed on to the consumer.

      And their mark-up is already taxed. We have a flat tax of 30% on corporate profits. The more profit businesses make, the more tax they pay!

      If you want to keep prices under control you need demand and competition. It’s simple Keynesian macro ecomonics. Government intervention and socialist styled wealth redistribution is not the answer.

    • The Badger says:

      08:18am | 18/10/10

      Can someone explain why petrol is still so high?

      Priced in US$ without the inventory issue?

      Reply

    • Jim says:

      11:02am | 18/10/10

      I thought you were the worlds leading expert on EVERYTHING, Badger.

      Most of our petrol comes from refineries in SE Asia…as a result the petrol prices follows the Singapore dollar more than the US dollar.

    • The Badger says:

      12:41pm | 18/10/10

      Not everything Jim

      If I’m looking for information about animal droppings or the union movement in Australia, I’ll defer to you.
      you might also be a useful source of information regarding why flies pop in and out of nostrils with no apparent ill effect on your expression.

      As a general rule, for every one cent the Australian dollar improves against the US dollar, the price of petrol should drop 1 cent at the bowser.

      This may affect you 1,800 per month electricity bill. Be prepared and expect crackdowns.

    • Macca says:

      08:29am | 18/10/10

      @Acotrel, did you just argue for something that is overly costly to be taxed?

      Is this how economics works on the left? You believe they are charging you more than the product is worth so you want to tax them. That has to be the dumbest economic statement I have ever seen. What effect will taxing importers have on prices, and the economy is general.

      Reply

    • TimB says:

      09:04am | 18/10/10

      Unfortunately Macca, yes that is how the Left sees the economy.

      “Look there’s someone making money! What additional tax should we hti them with?”

      Doesn’t matter if they’re already being taxed. The point is someone, somewhere is becoming wealthy and that’s a big no-no in the eyes of the Left. Everyone should be equally poor.

    • Chewy says:

      08:42am | 18/10/10

      You the Australian worker are complicit in the higer costs of goods here.
      As someone in wholesale I can assure you nobody is getting ripped off as much as common belief is.
      GST,Higher taxes so you cand have medicare etc, higher wages and super, workers comp, exorbitant customs charges and duties, small population over a large expanse etc all add to the cost of goods.
      The store person packing your online orders in the US is getting paid alot less than a store person here.
      Put your hands up any person who wants to take a massive pay cut and move to the US so the can have cheaper goods but no universal healthcare?
      Wanting to take the Australian pay cheque and the benifits that go with it and exploiting cheap US Labor makes you a C..
      If the Government gave a stuff about small business they would at least put GST on ALL goods purchased from overseas like the UK government enforces VAT on all overseas online purchases through the mail. After all the playing field aint that level…

      Reply

    • Swampy says:

      08:57am | 18/10/10

      To see a huge disparity in pricing check out the the online Lego shop. Do a search for a product with your country set to “Australia” then do the same search with your country set to the “USA”, we’re paying almost double for the same items!
      How can we be paying almost double what US citizens pay for the same item?

      Reply

    • HappyGamer says:

      09:12am | 18/10/10

      I’ve found electronics are the cheapest.

      I have a PS3 and just released games for it in Australia are usually around the $100 to $120 mark.  However with the dollar as strong as it is now, and the lack of region protection on PS3 games (Bluray movies are still region protected though) I can buy direct from the US or Japan for $60 (max) plus a $10 to $15 delivery fee.  This also means that if the OFLC decides to get annoyed and censor a PS3 game for Australia only (kinda like what happened to Left for Dead 2 on Xbox 360) I can still purchase the uncensored version.

      Now the only problem is finding enough time to play all the games I’ve been buying smile

      Reply

    • TimB says:

      09:29am | 18/10/10

      Doesn’t work for anything with a territory lockout though.

      I Import DS games all the time, but I think I’m going to be forced to stop when the 3DS releases. Plus I’ll no doubt be gouged on the hardware itself too. *sigh*

    • Macca says:

      10:03am | 18/10/10

      @happygamer, thats me with f1 2010 at the moment, a race weekend takes an hour at least. Needless to say there are not enough hours in a day right now. Lord knows how I’m going to cope when Football Manager 2011 comes out at the end of the month.

    • Nate says:

      02:28pm | 20/10/10

      I agree, some of the games I buy are only $29.99 USD in the US and $99.95 AUD here. And this even applies to the ones delivered digitally where they have absolutely no excuse for the increase in prices. I can understand a $29.99 USD game selling for say $39.99 AUD here due to taxes, differences in employee wages etc. But when it costs twice as much or more then it’s clearly a huge rip-off. Especially for new games because there is no way that they bought those games from their source at the old exchange rates.

    • Dino says:

      09:27am | 18/10/10

      I got my bi-monthly care package from Amazon this past week. While the frieght is expensive (about $45) I bought 11 books, got them for about 3/4 the Aussie price and only took a few weeks to get here. Why are books so expensive in Australia? Long live internet shopping.

      Reply

    • Dash says:

      09:56am | 18/10/10

      Dino, the Rudd government promised us “cheaper books for all Australians”. Unfortunately that promise went the same way as “cheaper better childcare” , “more affordable housing” , “root and branch tax reform”, “grocery choice”, “Fuelwatch” and “there will be no carbon tax”.

    • Anjuli says:

      09:55am | 18/10/10

      Spare a thought for those who receive a British pension, at the the moment they are losing on the exchange rate some thing like like 12 cents to the dollar,at least the American is at parity.

      Reply

    • Aaron says:

      10:45am | 18/10/10

      How does that work when the GBP and EUR are both valued at around 1 = $AUD1.50? Unless of course you mean that it has gone down from $AUD1.62.

    • Shaun says:

      10:22am | 18/10/10

      Have fun with your international warranty on those overseas bought electronics!

      Reply

    • Chewy says:

      10:56am | 18/10/10

      We get consumers demanding warranty on purchases made from the US online because we are the ‘Australian distributor’. Ditto for people who want technical help. It cracks me up the gall of some people..

    • PacMan says:

      11:18am | 18/10/10

      I can buy two of said game for the price of one over here so it still works out cheaper and with the amount you save you can take the product to a repairer and still come out better off.

    • MF says:

      12:17pm | 18/10/10

      New camera gear from the US - US$950 including shipping. With full international warranty.

      Exact same gear in Australia - AU$1899 excluding shipping.

      Dive computer from the US - US$399. Same thing from local dive shop? AU$1500.

      I’m prepared to pay a certain degree of markup to buy locally, but they can get stuffed when they’re more than doubling the price.

      Reply

    • Dash says:

      03:58pm | 18/10/10

      MF, the last work trip I did to NYC earlier in the year, I was amazed at the prices in the US. I bought a camera lense $400 cheaper than it would have cost me here. And I bought a pair of shoes for US$35 which are selling for AUS$90 in Sydney. How is that justified when they come out of the same Chinese factory? Levis are almost half the price. And don’t get me started on motor cars! The Pontiac G8 GT which is the Holden Commodore SSV V8, sells for under US$30K compared to A$60K here! So it’s built in Australia and shipped to the US and they still sell it for half the price!!!!!!!!!

    • YB says:

      12:44pm | 18/10/10

      Unfortunately while the base prices of things overseas can be as cheap or cheaper than the Australian version, you have to then factor in overseas postage and handling.  I know in some cases when I have tried to buy even relatively small items, this has been almost as much as what I was trying to buy.  And since very few online stores seem to have free postage Down Under your “savings” go straight out of the window, especially on large items.

      Reply

    • nate says:

      02:35pm | 20/10/10

      While for some items that may be true, for most items, it’s false. All the stuff that I bought from overseas (Asia, US or UK) are at most 75% of the Oz price when shipping is included. Some are as low as 45% when shipping is included. And I’ve bought many different things from clothes to boardgames to books to electronics etc.

      Of course you wait longer for it to get here but for that price I don’t really mind.

    • Katea says:

      03:55pm | 18/10/10

      After a pair of Doc Martens.
      Tried on said pair in Brisbane - cost $240
      Purchased same online in USA $99 + $32 postage
      I win.
      Wake up Australian retailers - we are not idiots.

      Reply
 
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