Eastman / Aero price gouging on overseas sales

[Jeff M]

Re: Eastman price gouging on overseas sales

Good work guys. I hate to think this was/is going on without anyone even knowing, but now that it's out there, it should be interesting to see if anything changes. Maybe this group is too small and they'll blow it off - maybe they will change it. ..

Perhaps. But one thing I've learned over the years is to not piss off the customer.
You build your business through customer loyalty and satisfaction. Pissing off one or two now and again...or a small group...may not seem like all that much of a problem at the time, but it will come back to bite you more times than you would imagine.
Especially if you are pissing off folks who "specialize" in your product. Those are the people who spread the word among others in their group...who advise their friends when they come to them asking "where do you recommend I buy this"?

I'm willing to pay a bit more for a product/service if I trust the business is being up front with me.
If I get the feeling they are trying to screw around with me....forget it.

 

[ButteMT61]

Re: Eastman price gouging on overseas sales

Good work guys. I hate to think this was/is going on without anyone even knowing, but now that it's out there, it should be interesting to see if anything changes. Maybe this group is too small and they'll blow it off - maybe they will change it. ..{/quote]

Perhaps. But one thing I've learned over the years is to not piss off the customer.
You build your business through customer loyalty and satisfaction. Pissing off one or two now and again...or a small group...may not seem like all that much of a problem at the time, but it will come back to bite you more times than you would imagine.
Especially if you are pissing off folks who "specialize" in your product. Those are the people who spread the word among others in their group...who advise their friends when they come to them asking "where do you recommend I buy this"?

I said that because another maker said something to the effect of that in another place, another thread. I get you - I believe it's a bad move, but they may not think so. For now.

 

[SuinBruin]

Re: Eastman price gouging on overseas sales

It'd be a good idea to exactly find out how things work.

HM Revenue & Customs have a website, and they also can be contacted by phone.

If it really matters I'm sure some of the above will find the time to contact them.
If it is indeed urgent I expect no less than at least a couple of fellers calling them tomorrow 08:30 am and have the exact and final answers posted up here by the evening.

Also, if Aero is doing the exact same thing, the title of the thread should be changed, and I wouldn't be surprised if the list would ultimately endless.

We sell a lot of machinery all over the world, if I can find the time I'll ask our financial guy about it. It's of no immediate concern to me but an interesting topic.

VAT is a tax charged on goods used in the EU, so if goods are exported outside the EU, VAT isn't charged. You can zero-rate the sale, provided you get and keep evidence of the export, and comply with all other laws. You must also make sure the goods are exported, and you must get the evidence, within three months from the time of sale.

http://www.hmrc.gov.uk/vat/managing/int ... oods.htm#6

 

[m444uk]

Re: Eastman price gouging on overseas sales

Jeff, do you remember this jacket I sold you ?

viewtopic.php?f=19&t=11895

As you know I'm VAT registered. The price was the same to you as to anyone else. There was only one price.
If someone in the UK had bought it I would have had to account for the VAT because new and
used goods go through my books in the same way as the rules state. I then would have handed 20% of £350 to the Vat man in due course.
This is what Eastman mean using the term absorb. It doesn't mean anyone buying has been done out of 20% :|

This jacket also went Stateside. Same deal.

viewtopic.php?f=19&t=11721

 

[Jeff M]

Re: Eastman price gouging on overseas sales

Jeff, do you remember this jacket I sold you ?

http://vintageleatherjackets.org/viewto ... 19&t=11895

As you know I'm VAT registered. The price was the same to as to anyone who bought it.
If someone in the UK had bought it I would have had to account for the VAT because new and
used goods go through my books in the same way as the rules state. I then would have handed 20% of £350 to the Vat man in due course.
This is what Eastman mean using the term absorb. It doesn't mean anyone buying has been done out of 20% !!!!!!!!!!!!!!!!

You might as well stop trying to defend ELC to me.
I understand everything you are saying. Repeating it over and over won't change my mind.

They are an international company with an on-line presence who advertises their products through a company site.
My expectation was that I would be paying 20% less than I would if I were purchasing the product in the UK.
f I DID purchase the ELC jacket in the UK, I WOULD be paying 20% less because I would be applying for the VAT refund as I left the country.

That was not the case when I purchased your jacket. I had no idea that you were VAT registered... no idea that you were a vendor selling the jacket as part of a business.

For the third time or fourth time, what has pissed me off is not so much the policy (though it does) as how ELC answered my first direct question.
if ELC did not in their heart think they were doing anything objectionable, why obfuscate when I asked?

If I had known that you were subject to VAT, and I had asked you if you were adding VAT to the price for UK buyers, I hope you would have been up front with me.

 

[SuinBruin]

Re: Eastman price gouging on overseas sales

This is what Eastman mean using the term absorb. It doesn't mean anyone buying has been done out of 20% !!!!!!!!!!!!!!!!

Eastman charges x for a jacket. The tax man requires that y also be charged based on the value of x, but only for EU sales. So in the EU, x + y = total price.

For non-EU sales, the tax man doesn't require that y be charged. So the total price should just be x. But Eastman is still adding y, only instead of giving it to the tax man they're keeping it. So, yes, non-EU buyers are being "done out of" y, which is measured as 20% of x.

For small-time businesses or individuals who deal in used goods or only occasional sales I can see not bothering with a VAT overseas discount. But for a business like Eastman (and, for that matter, Aero) who routinely sell overseas as part of their business (and market overseas as well), I think it's pretty shoddy to do this without disclosing it to the customer. If there were a page on the ELC web site explaining that ELC does not deduct VAT for overseas sales as a matter of business practice it would be one thing. But the way Gary has handled this (the price "doesn't include VAT to the US") reveals a very sneaky attitude and approach to the whole issue.

 

[Jeff M]

Re: Eastman price gouging on overseas sales

This is what Eastman mean using the term absorb. It doesn't mean anyone buying has been done out of 20% !!!!!!!!!!!!!!!!

Eastman charges x for a jacket. The tax man requires that y also be charged based on the value of x, but only for EU sales. So in the EU, x + y = total price.

For non-EU sales, the tax man doesn't require that y be charged. So the total price should just be x. But Eastman is still adding y, only instead of giving it to the tax man they're keeping it. So, yes, non-EU buyers are being "done out of" y, which is measured as 20% of x.

For small-time businesses or individuals who deal in used goods or only occasional sales I can see not bothering with a VAT overseas discount. But for a business like Eastman (and, for that matter, Aero) who routinely sell overseas as part of their business (and market overseas as well), I think it's pretty shoddy to do this without disclosing it to the customer. If there were a page on the ELC web site explaining that ELC does not deduct VAT for overseas sales as a matter of business practice it would be one thing. But the way Gary has handled this (the price "doesn't include VAT to the US") reveals a very sneaky attitude and approach to the whole issue.

Exactly.

 

[m444uk]

Re: Eastman price gouging on overseas sales

This is what Eastman mean using the term absorb. It doesn't mean anyone buying has been done out of 20% !!!!!!!!!!!!!!!!

Eastman charges x for a jacket. The tax man requires that y also be charged based on the value of x, but only for EU sales. So in the EU, x + y = total price.

For non-EU sales, the tax man doesn't require that y be charged. So the total price should just be x. But Eastman is still adding y, only instead of giving it to the tax man they're keeping it. So, yes, non-EU buyers are being "done out of" y, which is measured as 20% of x.

For small-time businesses or individuals who deal in used goods or only occasional sales I can see not bothering with a VAT overseas discount. But for a business like Eastman (and, for that matter, Aero) who routinely sell overseas as part of their business (and market overseas as well), I think it's pretty shoddy to do this without disclosing it to the customer. If there were a page on the ELC web site explaining that ELC does not deduct VAT for overseas sales as a matter of business practice it would be one thing. But the way Gary has handled this (the price "doesn't include VAT to the US") reveals a very sneaky attitude and approach to the whole issue.

I'm not disagreeing with you. A volume exporter will always offer the tax free option as it gives them a price advantage. For me who has sold a grand total of 4 jackets in two years it's neither here nor there. There are other VAT registered members here . None display dual pricing here or on Ebay.

Aero is a medium size company so I would say what they are doing is wrong. As for Eastman, it depends on their volume. I said on the BK thread they are a small family business and I've never read anywhere how many jackets they actually make and what percentage go Stateside.

BTW. I've been charged local taxes ordering from Flightsuits in California. It was years ago in the days of hard catalogues.

 

[Dr H]

Re: Eastman price gouging on overseas sales

I haven't seen the situation discussed in the Hat Place so I presume that it's not widely known there? A lot of UK sales emanate there judging by the frequency of the threads.

 

[Jeff M]

Re: Eastman price gouging on overseas sales

I haven't seen the situation discussed in the Hat Place so I presume that it's not widely known there? A lot of UK sales emanate there judging by the frequency of the threads.

I suspect it will pop up there fairly soon.

 

[SuinBruin]

Re: Eastman price gouging on overseas sales

BTW. I've been charged local taxes ordering from Flightsuits in California. It was years ago in the days of hard catalogues.

That's not right, either (see below), but at least there was some transparency in that the sales tax was added to the advertised price so that you could see it on the invoice/receipt (and, I would hope, Flight Suits passed the funds on to the state and didn't pocket them as a bonus profit). The sneaky thing about ELC's practice is that it's completely opaque and the non-EU buyer has no idea that there's an extra 20% tax built into the price that he shouldn't have to pay (and that is going into ELC's pockets).

If any out-of-state or international buyer is purchasing from California, I hope they're not paying taxes they don't have to. Be sure to point out the below if it comes up.

http://www.boe.ca.gov/pdf/pub101.pdf

http://www.boe.ca.gov/pdf/pub104.pdf

 

[derleicaman]

Re: Eastman price gouging on overseas sales

As I pointed out in my earlier reply, not trying to bash anyone, but this just isn't right. When I owned a retail store, we charged sales tax on in state sales of course. Whenever I shipped out of state or out of country, we did not. And I'm talking big ticket items here - Leica cameras and lenses! I still reported both types of sales to the state (Illinois) every month. The state could have audited me at any time to ensure I was properly reporting and paying taxes due. I would think the folks over in Great Britain would have a similar monthly accounting to the tax people. Assuming they do, how do they report out of country sales which should be excluded from VAT? And there's the rub! Extra profit or properly passing on tax revenues, or maybe even sloppy or lazy accounting? Something just doesn't seem kosher here and I hope its not the gauging/lazy/sloppy case for everyone's sake. If it is, I will never purchase from these two outfits again.

I don't know why the light bulb didn't go off sooner. VAT is always included in the price of everything in the EU. That's what is so sneaky about it, and what makes me cringe whenever it's promoted here in the States as a National Sales Tax, the saviour to all our problems. This is fine if it replaces all of our other state and local taxes, but man, put anywhere between 10 & 20% on top of all the other taxes we're already paying and this is nuts. And because it is opaque, people tend to forget how they're being screwed yet again. At least with state and local taxes, the money gets back to the state itself, all of whom need the money and at least on the face of it try to benefit everyone in the state, and not to the black hole of waste that is the Leviathan, Washington!

Good Wear is looking better and better for us here in the States.

 

[m444uk]

Re: Eastman price gouging on overseas sales

I don't know why the light bulb didn't go off sooner. VAT is always included in the price of everything in the EU.

No, many things like children's clothing, books ,food, prescription drugs etc. are zero rated. See this list

http://www.hmrc.gov.uk/vat/forms-rates/ ... rvices.htm

 

[Dr H]

Re: Eastman price gouging on overseas sales

Good Wear is looking better and better for us here in the States.

And it's not too shabby here either!

 

[Jeff M]

Re: Eastman price gouging on overseas sales

As I pointed out in my earlier reply, not trying to bash anyone, but this just isn't right. When I owned a retail store, we charged sales tax on in state sales of course. Whenever I shipped out of state or out of country, we did not. And I'm talking big ticket items here - Leica cameras and lenses! I still reported both types of sales to the state (Illinois) every month. The state could have audited me at any time to ensure I was properly reporting and paying taxes due. I would think the folks over in Great Britain would have a similar monthly accounting to the tax people. Assuming they do, how do they report out of country sales which should be excluded from VAT? And there's the rub!

I have the same thoughts myself. How is this explained to the tax man?
"Oh yeah, don't pay attention to the advertised price on our web site. For sales in the UK, this is PLUS the VAT. For sales outside, it is the "real price".
I think it would be "safer" from ELC's standpoint to just advertise two different prices...or at least have a noticeable disclaimer on the web site, stating that they are charging two "base" prices, one for folks in the UK to which VAT is added, the other for folks outside the UK which is not taxed, but which adds up to the exact same as the "UK combined base/VAT" price.

When they do their accounting and come up with the VAT taxable income, what figure do they use? Do they take the total UK sales, subtract 20%, report the left over 80% number as their "UK Sales", then send the 20% they shaved off in?
If so, then they most certainly do charge a higher base price for non UK sales.
No matter how or / when you try to cut it at some point when the math is finally done folks outside the UK are being charged a higher base price.

Extra profit or properly passing on tax revenues, or maybe even sloppy or lazy accounting? Something just doesn't seem kosher here and I hope its not the gauging/lazy/sloppy case for everyone's sake. If it is, I will never purchase from these two outfits again.

Sorry to say I am coming to the same conclusion. (I checked with Aero. They do the same.)

Good Wear is looking better and better for us here in the States.

Yep
And hopefully BK will be able to step up to the plate and deliver.

 

[Geir]

Re: Eastman price gouging on overseas sales

I've just now ordered the Complete Season 3 & 4 of Midsomer Murders from Amazon.co.uk and VAT was automatically deducted from my shopping cart as this was an order from outside the EU. There is NO reason why Eastman should not do the same. They are making an extra 20% profit on export orders. To deduct VAT is not rocket science, even if it's a family business someone should be able to do the math.

 

[derleicaman]

Re: Eastman price gouging on overseas sales

Just thought of another thing regarding VAT. I have been on a number of German websites, and to my recollection, many of them stated clearly that if you are purchasing from outside the EU, VAT will be deducted upon checkout. These days when most transactions are done overseas by computer, this would seem to be a very easy thing to do. The paper trail for these type transactions readily exists and should be very easy to report to the tax authorities.

Failing this, are there forms you can download from the tax authorities to claim a refund? Again, this would seem to be very easy to do these days. Any relavent documentation would be easy to supply via email online, I would think. This would get ELC and Aero off the hook for needing to provide a two tier pricing structure for VAT and non-VAT sales. I would also think this is a very fair way to handle this. It would be up to the buyer to claim a refund for taxes he is not supposed to pay. Most folks probably wouldn't bother, but those that do claim are at least treated fairly with no additional burden on the sellers.

Just my .02

 

[Jeff M]

Re: Eastman price gouging on overseas sales

Just thought of another thing regarding VAT. I have been on a number of German websites, and to my recollection, many of them stated clearly that if you are purchasing from outside the EU, VAT will be deducted upon checkout. These days when most transactions are done overseas by computer, this would seem to be a very easy thing to do. The paper trail for these type transactions readily exists and should be very easy to report to the tax authorities.

Failing this, are there forms you can download from the tax authorities to claim a refund? Again, this would seem to be very easy to do these days. Any relavent documentation would be easy to supply via email online, I would think. This would get ELC and Aero off the hook for needing to provide a two tier pricing structure for VAT and non-VAT sales. I would also think this is a very fair way to handle this. It would be up to the buyer to claim a refund for taxes he is not supposed to pay. Most folks probably wouldn't bother, but those that do claim are at least treated fairly with no additional burden on the sellers.

Just my .02

That would be great...but I suspect ELC would not want to offer that. That would have to cut into the extra profit they are making from non UK customers.
This isn't about it being difficult or costly to track UK vs. non UK purchases for tax purposes. That's just a line of computer code in a program.
This is about extra profit.

 

[derleicaman]

Re: Eastman price gouging on overseas sales

Who knows what evil lurks in the minds of men. Only the Shadow!

 

[saunders]

Re: Eastman price gouging on overseas sales

HPA doesn't carry everything in the Eastman line, and as Jeff points out, the costs wind up being about the same.

Most orders aren't going to involve exchanges for size, so it makes no sense to include a 20% overcharge on all overseas orders to cover those that do require an additional shipping fee (especially if Eastman has the same policy for UK and EU buyers -- what, no return shipping surcharge for them?). A fairer way to do it would be to not charge the 20% extra but to require an extra shipping fee on exchanges. This is more economically efficient, allocating costs to those who actually incur them (i.e., those who don't get their sizing right) while providing an incentive to order correctly.

As for "extra paperwork," c'mon. A couple of postal forms that take a few minutes to fill out = 20% surcharge? Uh, no. And how complicated it is to multiply something by .8? "Keeping things simple" really means "keeping an extra hundred pounds or so without disclosing the price discrepancy."

Finally, what with the additional competition for Eastman from Good Wear and now Kelso, you'd think they'd try to take advantage of the pricing differential and 20% discount for U.S. buyers. That would make their prices quite competitive, but apparently they'd rather keep their undisclosed 20% windfall. That's their business decision to make, just as it's my decision to not buy from them.

This sucks for all non-EU buyers, but there is something particularly galling about ELC making reproductions of vintage U.S. flight gear and hawking them to American buyers at artificially inflated prices. Blech. (The same goes for Aero, too. Now I'm glad I got mine through Mark Moye.)[/quote]

The questions raised are valid and the topic is interesting and worthy of discussion. I'm not trying to defend ELC per se, but I am trying to present a fully-illuminated alternate perspective to what is being bandied about. Time is money, and what you dismiss as just some simple postal forms may not be that. I can't speak for UK forms, but ELC ships via Fed Ex and I do know Fed Ex international forms from my own use and they take about 15 minutes to accurately complete. And if you have a commercial Fed Ex account and ship commercial packages, the forms are more detailed. Knowing how EU nations come under the tax gun more than we do in the USA, I'd not be surprised if the forms ELC fills out could take up 20-30 mins. to complete. If you think 15-30 mins. isn't much time, maybe you'd be willing to give that much time up for free on every job you do. That much time on every order would add up very fast.

Yes, ELC and Aero could discount non-EU sales, but they must have sound reason for doing as they do, and that could transcend what you see as gouging. Charging only customers who make returns for the return shipping on exchanges certainly can be done, but it isn't the way things are typically done in retail sales. It's the same thing for credit card sales, where you could discount non-credit card sales, as HPA chooses to do and which is, admittedly, very fair - only those who elect to pay w/ CC pay the fees the banks charge. But most retailers work with a markup of 2.2 - 2.75 times their cost of goods, which covers all the evils of doing business, including credit card fees, postage on exchanges, etc., though those who don't pay with credit cards, those who don't make exchanges, etc., end up subsidizing those who do. Businesses typically work on simple formulas that function well enough for all buyers to make the cost of doing business less costly, and that allows the businesses to remain viable so you can buy the products you like buying from these retailers. If you work for someone else and aren't directly involved in understanding how your company's profits have to justify your own pay and existence, then you may not understand or appreciate how difficult and precarious it can be for the small business to stay viable and in the game. You complain of what you perceive as gouging, but you have no idea what real profit looks like in terms of the big-box merchants and what they make on each item sold. And because you don't see this and don't know about it and never will, we all just keep the ball rolling and buy ...

Big-box merchants deal in staggering volume compared to what we are talking about here and its all relevant to expenses and profit models. The average item sold at full price in L. L. Bean would have a profit of 5 - 10 times cost built in the retail price (a shirt made in China), while some items would operate on less profit (Bean Boots made in the USA). Big-box stores have significant expenses and overhead, and may even have shareholders to satisfy, so profit models that seem excessive, and they often do, do have some justification. Working the basic numbers on what the approximate labor and materials cost premium manufacturers to make top-notch flying jackets, companies like ELC and, even more so GW, make more like 3 times their actual cost to produce an A-2. Is it justified? For ELC, more likely the answer is, yes, as they have significant expenses and overhead and have to have a wholesale price, whereas GW has few of these factors to contend with. And, presumably, Aero would have expenses very similar to ELC.

I also sent an e-mail to HPA to check if they carried all ELC items and they replied, saying the only ELC items not carried are those items ELC will not wholesale: Elite-unit items, storage boxes, coasters, etc. They do carry all of the sweaters, which was how this thread got started, I think, so it would seem they carry 98% or more of ELC goods. That's hardly justification for saying they don't carry all ELC goods (though "not all" is true, the perceived implication is that there are many they do not, which is not so), and most of what they carry is available for less that what you'd pay with ELC and free of attendant issues of VAT, customs duty and import hassles, etc.

I don't give a rat's ass where you make your purchases: Aero, ELC, BK, GW, HPA, Cockpit, etc. But I do like trying to keep a balanced perspective on that which we discuss, and I like seeing facts without much bias or personal agenda slipped in.

Saunders