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Internet Pricing Angers Australian Industry

Published February 7, 2011

LAGUNA HILLS, CA (BRAIN)—Australian dealers and wholesalers are fighting back against what they believe to be unfair pricing from Internet retailers, particularly Chain Reaction Cycles, Wiggle and PBK (Pro Bike Kit.)

Bicycle Industries Australia (BIA), a wholesale trade organization, is lobbying Australia’s Parliament to lower the taxable threshold on imported parts and components shipped to Australia, said Phil Latz, founder and president of Bicycling Australia, the country’s leading consumer magazine.

Latz described the pricing issues posed by the three mail order companies, with headquarters in the United Kingdom, as a significant problem for Australia’s 800 key dealers and wholesalers.

Currently, the Australian government collects a 10 percent tax on all products coming through customs with a value of $1,000 or more. (The Australian dollar and the U.S. dollar on now on par in terms of value.) “There are allegations that a lot of $999 groups are coming into the country,” he said.

The BIA is part of a group of trade associations that want to see the 10 percent GST (Goods and Services Tax) applied to all lesser value imported products—a move that has sparked the ire of Australia’s consumers. But as it stands now, Latz said, mail order companies get a 10 percent price break right off the top on products valued below $1,000.

Australia, a continent with 22 million people, must import the vast majority of cycling equipment sold at retail. And while Australian dealers generally operate with high margins, the cost of living in Australia is generally high and margins reflect that cost. “Everything is more expensive,” Latz said.

As a publisher, Latz refuses to accept advertising from mail order companies—a rare position among most magazine publishers. But Latz, 48, who began his cycling career working in a bike shop and later raced in Australia and Europe, said he indentifies with the nation’s dealers. “They hate mail order with a passion,” he said.

Latz has been in the U.S. for almost three weeks visiting dealers and to announce the publication of his company’s first cycling guidebook to a U.S. city—Chicago. SRAM hosted a launch party last week on Latz’ behalf because of his support of World Bicycle Relief, an organization founded by F.K. Day.

“I have spent more time driving on snow and ice since I got here than I have in my entire life,” Latz quipped, after spending extra time in a Chicago hotel waiting out Chicago’s historic blizzard.

QBP is distributing Latz’ guidebooks as they become available. By the end of the year Latz will have published guides to Philadelphia, Washington D.C., Los Angeles, New York and San Francisco. Latz, currently in Los Angeles, visited BRAIN’s Laguna Hills office Monday.

—Marc Sani

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