Retailers such as E Store are set to start sourcing products direct from overseas parallel marketers, in an effort to remain competitive; the move has been forced on them they claim because vendors in Australia are not able to sell their own products at competitive prices.

The retailers blame the likes of Harvey Norman and JB Hi Fi, for pushing up the price of goods by demanding margins of up to 25% from vendors, as well as marketing support dollars for advertising campaigns spanning TV and catalogues.

Lorenzo Coppa, the CEO of eStore, which is a division of City Software, said at a Kickstart technology conference on the Gold coast that retailers including his own company have to remain competitive and to do this they have to source from parallel marketers who are operating in Australia from places like Hong Kong, Malaysia, Indonesia and China.

Lorenzo said that his company was already selling products from grey marketers with warranties being supplied domestically.

This, he claims, allows eStore to be competitive in what he describes as a “very competitive market”.

Last month ChannelNews revealed that grey marketers out of Hong Kong were already offering branded camera brands from vendors such as Nikon, Canon, Samsung and Panasonic at prices up to 30% cheaper than the same products being offered to retailers.

Lorenzo claims that this is set to be the “norm”.

“We will offer the warranty in Australia on these goods as this is what the Australian consumer wants”. He said.

When asked whether vendors were “loading” up the price of their products in Australia to facilitate the margins that the traditional retailers such as The Good Guys, Harvey Norman and JB Hi Fi were demanding, Lorenzo said “Yes, this one of the issues”.

He also admitted that the move to sourcing supply from overseas distributors Vs domestic distributors was set to put pressure on the local distribution channel.

“Local distributors are already under pressure and for those margins are an issue especially as the same products they are distributing are available from a parallel importer at significantly cheaper price. I believe that local distributors may have to rethink their business model” he said.