I want to give you a little advice on price. My strongest recommendation is to buy tech (and toilet paper🤣) now. Supply, not price, is your greatest concern. So, if it is on the shop floor, by all means, haggle, but buy tech now.
There are a few factors to us giving a little advice on price – Coronavirus, failing Aussie dollar, failing Aussie bricks and mortar stores and the impending recession.
Let’s quickly look at some impacts and why we have issued a little advice on price – buy tech now
Aussie dollar – now pushing A$0.65↓ to US$1.00
So, now a US$100 item costs A$154 (54% difference)
Importers place orders on a factory at least three months
ahead of the desired date of supply. In most cases, where models change less regularly,
like TVs, sound systems, PCs, laptops it is more like six months.
They then pay for these orders at the prevailing exchange
rate which six months ago was about A$0.75. So, a US$100 item then cost $133 (33%
difference)
Logic – any new goods will cost around 20%↑ more than existing stock.
Freight
The reason for the long order lead time is to be able to
ship the goods by sea – not air. Sea takes about a month, and air takes about a
week.
Freight is a very fluid market based on ‘inverse’ demand. High demand means lower shipping costs and low demand means higher cost because a ship or plane costs the same if it is fully loaded or not.
Last year the average sea freight cost was about $700 for
200kg/1cbm ($3.50 per kg) and this year is looking to be closer to $1500 ($7.00
per kg).
Last year 200kg/1cbm of air freight cost about $1000 ($5 per
kg). Shipping analysts are saying that with reduced airline capacity (backhaul/tourism)
into China, then airfreight will also double, if not triple.
Then consider reduced demand due to the ‘R’ word resulting
in smaller shipments, so there is no discount for bulk freight.
Logic: By sea, a 3kg laptop (boxed) cost $10 then and now
will be $20. By air, that laptop cost $15 and will now cost $30. A TV usually
weights 20-40kg, so the era of cheap TVs draws to a close. And as these are US
prices add 54%.
Coronavirus
China is the epicentre of the virus and has sensibly closed mass
gatherings. That means the great assembly factories like Foxconn have been at
reduced capacity or idle for a month – if not more.
Analysts say that a one-month interruption to the manufacturing
chain means a three to six-month delay here.
