Khaled rambles technology, tea/coffee, consumer rights and other interest from Saudi Arabia

May 31, 2009

Crazy retail mark-ups in the UAE

Filed under: General — Tags: , , , — Khaled A. @ 3:06 pm

Armina Ligaya over at the The National have written a great story on the crazy retail markups in the UAE. I decided to check it out since the Saudi Arabian and the United Arab Emirates markets are similar in many ways.

Most of the brands in Saudi Arabia are available through the UAE. For example, Apple in Saudi Arabia is distributed by Arab Computers who is a representative of Arab Business Machines in the UAE. So our two markets are similar in many ways.

An investigation by The National shows that local outlets for some of the world’s best-known shopping chains are marking up prices by 70 per cent or more. The evidence is hanging from the items themselves: the original price in the currency of origin and the local cost. Among the worst examples were a pair of girl’s jeans with a 78 per cent mark up, a photo frame with a 70 per cent mark up and a birthday card that was more than twice the original cost. Naeem Ghafoor, the chief executive of Skyline Retail Services consultancy in Dubai, said while import charges might be seen as an added expense, retailers in the UAE are exempt from the taxes applied in many parts of Europe and North America and enjoy lower labour costs.

Now this is an important fact, we have no taxes and that should understandably reduce the price instead.

“There’s no problem with charging more money, but it’s how much more you charge,” he said. “In my opinion, prices that are 10 to 15 per cent more expensive are acceptable. If you are over that you are ripping off the public.”

I can find a brand new Nokia N97 in the US for only 2,400SR while in Saudi Arabia it will be sold for 3,400SR.

Because the dirham is pegged to the US dollar, the exchange rates between the two currencies are stable. Yet, a Hallmark family photo album tagged at $20 (Dh73.40) for US consumers was sold at Gulf Greetings in Dubai for Dh125, a 70 per cent markup.

Being tied to the US$ didn’t help at all. This is an interesting article and I hoped that it would talk about technology as well as cloths and furniture.

I have talked about price gouging (or should I just call it “high mark-up”?) in Saudi Arabia (using Nokia E75/N97 as examples). You can read The National’s report on their site. You can also check their interactive price guide.

May 29, 2009

Nokia in Saudi Arabia: Screw the consumers

Filed under: General — Tags: , , , — Khaled A. @ 11:20 pm

Update: This will happen again with the new Nokia N900 that will be released in Saudi Arabia soon.

I had high hopes when Nokia decided to officially enter the Saudi Arabia market (through their Nokia Stores) that the prices of the Nokia phones will be reduced to more acceptable rates. But instead those Nokia stores are doing what I can only describe as price gouging.

I will quickly explain “price gouging” as I will talk more about price gouging tech in Saudi Arabia. Price gouging is a pejorative term for a seller pricing much higher than is considered reasonable or fair.

nokia-e75Let’s start with the Nokia E75. Before the phone was released the Saudi Arabia Nokia Stores took pre-orders on the phone. You had to pay 100SR deposit and pay the rest later. The phone was sold for about 1,900SR for pre orders only. But when the phone was released it was sold for 2,300SR. Now it cost 2,199SR. These prices were for the “black” Nokia E75 only. The red edition of the phone (same features) was only released this week and it cost 2,499SR. So you are paying 300SR (almost $100) more just to get a different color. The 2 phones are identical in every way, both are sold for the same price at Amazon.com. This is neither reasonable nor fair.

The pricing on the Nokia E75 is not fair for Saudi Arabia as well. The Saudi custom fee is cheap on electronics. Yet the Nokia E75 is sold in by Amazon.com for $450 (1,750SR) much cheaper than 2,200-2,500SR sold by the Nokia Store. The E75 is sold in Jordan for what’s equivalent to 1,880SR! But to be fair the Nokia E75 is sold by Amazon.de (in Germany) for 382 EUR (1,988SR). Update: Nokia E75 is sold in the eastern province branch of Hyperpanda for only 1,990SR! Thanks Ahmed for reminding me.

nokia-n97The second example is the upcoming Nokia N97. The Saudi Nokia Store is beginning to take pre-orders for the the phone and the posters only showed the white model. I expect they will do the same as what they did with Nokia E75 red and gouge the price even more. The expected price of the Nokia N97 in Saudi Arabia will be 3,400SR! The N97 is expected to be sold for 3,000Dh in the UAE!

On Amazon.com the Nokia N97 will be sold for $604 (2,300SR). You read this right! 1,000SR difference! In the German Amazon.de website it will be for 650 EUR (3,384SR). Not reasonable or fair, isn’t it?

This is just Nokia’s way of thanking the Saudi Arabia market, by overcharging us for their phones. What do you think? Is Nokia justified with these prices?

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