Wesfarmers owners Officeworks has an amazing deal right now on Reflex paper. In fact, the deal is so good that it is well below what newsagents can buy this paper for at wholesale. I’ve checked around and I doubt even hundreds of newsagents buying in bulk together could buy better than the Officeworks retail price.
This price of $3.20 a ream looks to me like it is below cost. It looks to me like predatory pricing.
Here is what the ACCC says about predatory pricing:
Predatory pricing occurs when a company with substantial market power or share of a market sets is prices at a sufficiently low level with the purpose of damaging or forcing a competitor to withdraw from the market.
This Reflex pricing is another attack on small business by a giant company that is half of the supermarket duopoly in Australia. We’d be letting ourselves down if we do nothing about this.
What should we do about this?
We should complain to the ACCC. Use the small business complaint form and tick the anti competitive behaviour box as this covers predatory pricing. Completing the complain form will take a couple of minutes. Making the complaint puts pressure on Wesfarmers and it puts pressure on their Reflex supplier Australian Office.
We should also complain to our local member of parliament and use this reflex pricing to pressure them to support reining in the power of Coles and Woolworths.
I plan to stop selling and using Reflex. I don’t want to carry a product that can be subject to price comparison in such an unfair way. Newsagents owned GNS has paper I can stock that is not treated this way and that’s what I’ll carry.
I am pretty sure Woolworths supermarket is also running this special, a staff member mentioned it yesterday.
I gave up selling paper years ago, it just became too hard to compete!
I believe Officeworks may be price matching the Big W advertised special.
I have put my complaint in to accc. Thanks for the link.
Stocking paper is a must if you sell stationery in my view but it can be tough.
I get that the general population believes that Reflex is the pinnacle of printing paper but my customers tell me that Victory is just as good if not better depending on the machine it is being used in. I get it from GNS like everyone else and am proud to do so.
Kudos to Reflex for creating a top of mind product in the consumers mind but I don’t stock it regardless of any special that may come and go.
We sell our Reflex at the Officesmart price of $6.49. We never change it even if our competitors do because we still sell it. We show our customers that maybe the paper might be cheaper at O/works but their whole basket will end up the same price as O/works overcharge in other areas (Ink jets!!). Plus the service we provide is better, we have a personal relationship with our B2B customers and they appreciate that. In saying that, I still sent the link thanks Mark.
What’s the difference between predatory pricing and a loss leader?
Brett the ACCC would need to make a determination. Their website offers guidance though:
Section 46 prohibits businesses with substantial market power from taking advantage of that power for the purpose of eliminating or substantially damaging a competitor, preventing the entry of a person into a market or deterring or preventing a person from engaging in competitive conduct in the market.
Woolworths in NSW also pushing the same deal. $3.20
Complaint sent. I wonder how many ink cartridges they sell at up to $10.00 more than us to customer that are saving a couple of dollars on paper.
Why can’t gns price match this ?
Mark,
Seems to me they will be fine with this. IF however they massively undercut on most items they would be in strife.
Shaun I suspect because the majors are selling below cost in a effort to lure customers. AKA predatory pricing.
Brett the least they should do is acknowledge the complaint and investigate. The claimed focus of the current government on small business should attract attention from politicians.
I’m not happy to see this deal as the customer always remembers (and quotes) the lowest price they ever paid for a product, but hey it improves my margin, as I buy all my reflex from officeworks. They kindly deliver it free of charge to my door. I have had this out with GNS but they don’t care. We retail at $6.95 and online at $4.95. Everyone needs to move with the times and get the best outcome for themselves.
I spoke with Mark Ward, Managing Director Officeworks, today about this post. He asked me to call to discuss what I published here. He made the point that in offering this deal Officeworks responded to Woolworths offering Reflex at the discounted price. He said this is what Officeworks had to do to honour their price match commitment.
We had a discussion about my questioning whether this is predatory pricing. I suggested we agree to disagree noting that the ACCC would have to be the final arbiter.
I received a reply today from ACCC. They said they would not follow it up. They defined predatory pricing as SUSTAINED discounting that is designed to drive competitors out of business. I guess at this stage it isn,t sustained enough.
What about their advertising strategy? Sustained lies?
Yes, we talked about their selective approach to price matching. Frustrating.