These pretties cost me $11.27 per metre online (adjusting for the difference between a metre and a yard). Two weeks later I saw them at my local quilt shop for $24 per metre. That's more than twice the price! Ouch!
Since I bought the fabric online, I had to pay to have my fabric sent to me from the US. I bought a bundle of 18 half-yards, so if I factor in the postage costs, the fabric works out at $15.80 per metre, delivered to my front door.
The same fabric at my local quilt shop would cost me over 50% more, even factoring in the cost of postage from the US to Australia.
How can this be? And how can our local quilt shops survive when it’s so much cheaper to buy the same beautiuful fabric online?
I have recently written about a local quilt shop in Melbourne going out of business and about a second shop that was struggling to stay afloat - see here. I am sad to report that the second shop closed down a couple of weeks ago. I spoke to the owner and asked her why she was closing. She said, “because my suppliers offer fabric to me at $10.95 a metre but my customers can buy exactly the same fabric online for $12.00. How can I survive?”
From that imaginary miniscule margin, if the local quilt shop price-matched with the online prices, the local quilt shop owner has to pay rent, tax, staff wages, a wage for herself and all her other business overheads. I am not surprised she went out of business. I am surprised she lasted so long.
There has been a lot of interest lately in how expensive consumer goods are in Australia compared to their prices overseas.
The Productivity Commission reported on the issue in 2011 and found there were a number of factors that make consumer goods more expensive in Australia including:
- international price discrimination – this is where a single seller offers the same goods at different prices across different countries. For example, a manufacturer or first level wholesaler sells the same item to an American distributor for $5 per item and to an Australian distributor for $10 per item. This flows through to create higher prices in Australia;
- the number of intermediaries (ie, wholesalers and distributors) between the manufacturer and the retailer, because each intermediary needs to make a profit – the more intermediaries, the more inflated the price by the time it reaches the shop;
- overhead costs – a bricks-and-mortar store will have more overheads than an online only store (as a general rule) so will need to put on a higher margin to cover its overheads. Also, businesses in Australia have higher overheads than businesses in many other countries, so, again, their margins need to be bigger to cover these higher overheads;
- government taxes, including GST (there is a $1000 threshold for international online shops before they have to collect GST, which gives them an advantage over Australian shops); and
- exchange rate fluctuations.
It’s a complicated issue.
To get back to my beautiful purchases from a US shop on etsy, I have to say, even understanding the above factors and having read the Productivity Commission report, I am shocked that my fabric, which was manufactured in Japan, could be shipped from Japan to the US, then sold to me by a US shop, then shipped to me in Australia for about 65% of the cost for me to buy the fabric at my local quilt shop.
No wonder our local quilt shops can’t survive.
Something needs to change.
Amber x
(Please note, I have converted all prices above to Australian dollars, using the exchange rate that applied at the time, and I have converted prices per metre to prices per yard to reflect that a metre is slightly more than a yard.)
