The current environment is also highly favourable for importers, with Australian Dollar trading above USD $1.00, importers can achieve much higher net profits than exporters in today’s market.
Perhaps you are looking to set up a new shop in Australia? Perhaps you simply want to run an importing-exporting business, or maybe you have a great idea and able to import new innovative product into Australia? Then read on.
Australia: The Challenges
I would like to start of with the challenge, as years of business experiences have taught me that Australia is actually full of challenges, and many dreams may not be realized.
1) Australia is a very small market. This, unfortunately is not going to change, there are really just 4 markets in Australia, Sydney, Melbourne, Queensland then the combined Adelaide & Perth markets; many aspiring entrepreneurs have expressed their disappointments as the market is simply too small compared to other global markets.
2) Australian consumers are regarded as” Conservative” consumers in many sense, especially when comes to fashion, electronics, technology. This means, they are usually slow to adopt new products or accept new ideas.
3) There are very large number of taxes, Australia has one of the highest tax imposed on sales, import duties, luxury goods — etc, it is a very long list, this was created to protect its local manufacturers.
4) Many industries are monopoly industries, we have learnt this the hard way when we tried to import ladies’ fashion labels into Australia as well as security alarms, while individual store owners like them, we could not distribute them; Dick Smith is owned by Woolworths, most of fashion chains are owned by big groups; once you add them up, the top retail shops in Australia are essentially controlled by 4 groups, it is a big barrier for individual importers.
Australia: Land of Uncovered Importing Opportunities
If you look from the positive side based on the above factors, Australia is a market that has been overlooked by most major retailers in the world as the market is too small, and therefore, customers actually end up paying a much higher price for the goods compared to Asia and North America.
From consumers’ choice of view, this is not such as good news, but from business point of view, for people like yourself who has connections and abilities to import goods into Australia, it’s a ticket to wealth.
Another positive trend is Australian consumers are increasingly looking for alternative shops to make purchases; they tend to have preference in buying from individual shops rather than large department stores and supermarkets.
Furthermore, Australian market is one of the most advanced market when comes to Internet shopping, I remember seeing an article showing that more than 50% of Australian consumers now shop online, this figure is lower than North America , Japan, Singapore and Taiwan but actually higher than European markets.
Let’s have a look of some products I have identified with good importing opportunities.
I have carried out this research for over 2 years now, the following are based on the 3 factors:
1) If there is a big price premium between products sold in Australia and overseas?
2) If there is a sufficient market in Australia, for instance, luxury goods have only very small market in Australia
3) If there are Government regulations in place, for example, pharmaceuticals, food all have very strict regulations in place; Asian manufactured goods often fail to comply with the safety standards in Australia, and you can even be prosecuted if you import unsafe products
Opportunity 1: CDs & DVDs
The premium Australian consumers pay for CDs & DVDs are enormous, they can be between 3 to 5 times more expensive. Yet, the demand for good quality, non-pirated CDs & DVDs in Australia is increasing, one reason being pay-TV is very expensive in Australia, many consumers therefore still prefer to watch DVD over Pay-TV. Additionally, many CD titles are released at much later dates in Australia, if you are able to import good quality, original CDs & DVDs in Australia; you are able to sell them directly to consumers or even to shops.
But remember, do not attempt to sell pirated CDs/DVDs as they will be prosecuted, Australia has been cracking down on piracy, and a large number of Chinese migrants have been prosecuted over the past few years.
Opportunity 2: Clothing
Another product which you will notice that we are paying premium as much as 10 times in Australia! A recent trip to an US outlet has shocked many Australian visitors where they found a pair of Levis jeans would cost just $29.00 a pair where as back in Australia, it could be as high as $290! Even if AUD is at $0.50 against USD, it is still 3 to 4 times more expensive than in United States.
You don’t need to import branded clothing into Australia, I have known many migrants have chosen fashion stores as their business, especially Chinese and Korean families.
Many of them have been operating retail shops back in Asia, and they are now utilizing their connections with manufacturers to import new clothing into Australia. Winter clothes, like jackets, cardigans and jumpers are especially expensive in Australia, as well as shoes & leather goods.
Opportunity 3: Toys & Video Games
Thanks to the government baby bonus program last 5 years, Australia has experienced a largest baby boom in history with over 100,000 babies born over the course of last 5 years, these babies are now reaching towards elementary school age; and this also means opening up opportunities for toymakers and toyshop owners.
The demand for toys and other pre-school & elementary school age children have been increasing consistently in Australia.
However, as you can see from shopping centers, there remains just a handful of toy shops in Australia notably the 2 department store chains (Myer & David Jones), then you can find toys at Kmart and Target, but often lower quality toys, and Toys “R” Us.
Price range wise, our research has also shown we are paying on average 3 times more for the equivalent toys overseas; and even more when comes to video games.
As more than 90% of toys are now manufactured in Asia, we believe there is a very big gap and opportunity in Australia, but importers have to be aware of the strict conditions on safety issues in Australia as it is one of the strictest in the world; if you intend to import toys into Australia, make sure the products comply with the standard and you should also obtain adequate insurance for potential product recall problems.
Opportunity 4: Telecommunications Accessories
I saw an interesting article last week that Australia ranks 8th cheapest in terms of Apple products. When you read it first time, you would thought that’s not so bad, then if you look at the top 7 cheapest countries in the world, you then realize we are the most expensive in advanced economies!
Many have said the margin for Apple products is at least 50% and can be as high as 300%, my own research has shown that accessories like headsets, batteries, memory cards is on average twice more expensive in Australia.
The most expensive items sold here are accessories like phone cases, small decorative pieces for your cell phones which do not even exist in Australian shops. There is a real money to be made here, my research shows that it’s best to focus on accessories than the actual phones, and items such as batteries may also need to comply with stricter regulations to ensure their safety such as fire safety. My advice will be stick with decorative accessories that are uniquely designed, and unavailable in Australia, then you can potentially open up both the retail market or sell to major shops.
Opportunity 5: Textbooks (University Text Books)
I remember that back in my University days in Sydney University, our lecturer from US had mentioned to us that students here are getting ripped off, she had told us many times to make formal complains to University and the Study Board of Australia how unreasonable the price for books, especially textbooks are in Australia.
Subsequently, I studied the price difference for over 10 years, and was “disgusted” to find out that we are paying 3 to 4 times more than North America and Asian bookshops. Indeed, most of my friends have bought their textbooks from overseas shops, since most of Australian University Textbooks are from overseas anyway, why bother paying 4 times more in the local bookstores?
Another ironic problem in Australian universities is they often run out-of-stock, hence forcing students to pre-order them with full payments. At one particular year, I could not get my textbook until the 2nd last week of the semester; which was simply unacceptable.
If you have children currently in Universities, ask for their opinions, I am sure the same problems still exist here.
To me, this is a great business opportunity as students are always looking for cheaper options, many have opted to buy text-books overseas but not everyone can afford to fly overseas regularly, and postage can also add up to quite a substantial cost for smaller orders. If you are able to source text books from overseas or operate a direct-mail ordering service, then I think this can be a very profitable importing opportunity.
Opportunity 6: Stationary
Have you ever noticed how ugly the stationary are in Australia? Also, how often stationary get stolen in Australia? We used to buy pencils and pens from Taiwan and Hong Kong, and they always get stolen by Australian students.
My friend runs a major stationary manufacturer based in Taiwan and China, and he told me that the margin can be between 300% to 400% in Australia, as there is very limited number of suppliers in Australia, but he also mentioned that Coles and Woolworths are also creating barriers of entries to stop competitors opening new stores.
Therefore, his strategy is to supply stationary directly to these shops, these used to be another store called WC Penfolds, but it had closed its doors, a new emerging stationary company Smiggles has emerged as a new force which can be another customer to consider for importers.
As you can see from above, the opportunities I have selected are based on the 3 criteria I have set. When comes to importing, one must be aware of all the potential regulation issues as well as importing duties; these can take up enormous amount of time and cost, which could delay your business launch. Always plan ahead and make sure you do not import pirated products as Australian rules are very tough on pirated goods, it is much safer to sell comply with the local regulations than try to find a loophole in it.