FYI: Eastman and Aero including undisclosed upcharge on overseas sales

[cloudylemonade]

Charging us more and then calling us fat - tough love!

Haha! Not at all, but it is a real factor which needs to be accounted for. We have never charged different prices according to size, and this is one of the conditions which has helped allow us to do this.

 

[GriffDeLaGriff]

As a customer of 4 jackets this has become a problem for me.

All serious companies do reduce the VAT if you ask them because we in the Nordic countris pay 25% on everything we buy from outside the country. On top of that there is fees and stuff and this has escalated lately.

On my latest jacket i had to pay £230 extra to get the jacket inside the country. Thats about $318. Or in other words, a jacket that lists as $800 cost me almost $1200 in the end.

On my other 3 Aero jackets this wasnt a problem since first of all the prices from Aero was much much lower - hence the tax got lower aswell, and the jackets also came from UPS. This last one came from DHL and I almost choked when i saw I had to pay additional 40% on an already payed for jacket. I called them and there was no mistake, they walked me through the fees and therefore I will expect the same amount on my next jacket.

Now....I havent asked Aero to deduct the VAT, but on my next order I was going to ask if they could. If not - then there is no more Aeros for me as you can clearly understand. A £700 jacket will cost me £980 plus shipping and its starting to come close to an almost ridicilous amount. Not that the jacket isnt worth it, but to pay £280 to a company who all they do is sit there and not give me the choice of a similar jacket from my own country and therefore....charges me. (the country of Norway)

 

[ButteMT61]

As I eluded to, it's a way to cover other costs, but at the cost of being up-front, which looks bad. I'm torn in the "we use more hide here" bit. I've been the recipient of a higher bill for larger items in the past. I don't like the way it feels, but I also understand my bigger [item here] costs more to make. So, level costs for all, or charge big guys more? Individual choice for the business.

Now, we're seeing indeed the VAT paid by "us" is covering many things that Aero and presumably ELC incur. I'm not terribly upset at that. I was upset at what was reportedly ELC's response, as opposed to Holly's here. It would make sense for me to see this somewhere on the websites, - explained for all to see. We also pay a chunk in shipping. UK buyers don't.
In the end, honesty is best, but I believe the info posted by Holly and I'm good with that. Others may do as they wish. Free market and all...

 

[billyb]

I don't see how it's not unethical. I'd wager most here don't either.
As for VAT, you need serial receipts there and you need to pad for time in the way out to stand in line and get the refund. Bottom line is they make it somewhat of a pain, likely hoping many will skip it. You've already paid, so most likely don't care. All depends on how much money and how wealthy you are...
Either way, it's shady. And I'm shocked it's not come up before. I guess trust is often misplaced.

Yep Butte, the process at the airport is a bit painful...likely on purpose as you say.

As cloudylemonade has explained, it's a business decision and Aero seems to be willing to be transparent about this issue by way of a detailed reply.

Since the "cat is out of the bag" and in the spirit of the Olympics..."Let the Games Begin".

Will I be ordering that Long Half-Belt lined with shearling in Russet Goat in the future at the list price with VAT? Hmmm, how much do I want that jacket. Only time will tell...choices, choices.

In the end, supply and demand rules. Gotta love Capitalism!

 

[Jeff M]

Probably they are considering all their internet sales as locally made sales, therefore, collecting VAT always. As long as they declare this VAT to the treasury, they are ok. Besides, they are free too tag their products as they want.

Overseas customers can chose to not buy from them and everybody happy.

Then, there are reasons why a business wanted to follow this pricing policy. If they were discounting overseas sales a 20%, they could face a problem of parallel importations. That it is to say, their very same product, 20% cheaper in the shop next door.

If anybody of you manage to have an ELC jacket without VAT, please let me know because I'll re-purchase from you

I would be surprised if they were sending 20% of their overseas sales income to the UK tax man.
One indicator that they aren't......sales through HPA.
HPA charges basically the same for their Eastman sales as Eastman does if you buy direct from them.
I don't see how they could do this if they had to purchase their Eastman merchandise at the same prices the rest of us folks in the US do.
If Eastman is discounting the VAT from their sales to HPA...then HPA is paying 17% less than the rest of us...and can now make a profit when they turn around and re-sell the items at the same prices that Eastman advertises.

Re; "parallel importations"....I thought that VAT applied to items both made in and sold in the UK....so the shop next door would have to be selling at the same price as Eastman.
That, plus add on custom duty fees on imported items.....

One thing that I found interesting...this link to a London store selling Eastman jackets;

http://www.youmustcreate.com/products/jacketsandcoats/ymc-x-eastman-leathers-a1-bomber-jacket/

£495.00 for an Eastman A1 (what I had planned on purchasing).

http://www.youmustcreate.com/payment-and-security/

"All prices on our site are in pounds sterling and are inclusive of European Union sales tax (VAT) at the prevailing rate. If your order is being despatched outside the European Union (EU) then we will deduct VAT."

So...less approx. 17% % off that price when sold to the states...+ £20.00 shipping, comes to £416.00

Eastman charged me £624.99

 

[HorseHide]

Now, we're seeing indeed the VAT paid by "us" is covering many things that Aero and presumably ELC incur.

Not like it's the first time we've been asked to carry the British...:flame:

 

[ButteMT61]

Not like it's the first time we've been asked to carry the British...:flame:

Yeah, maybe we can beat them at darts in the Olympics to get even lol

 

[SuinBruin]

The factory is closed for a 2 week holiday, but I've just noticed this thread and wanted to respond to assure you we're not dodging the issue. I won't be able to respond regularly as I'm on holiday for most of this time too, but here's our response.

We do, and always have, had one price Worldwide. It is standard practice in Europe is to list items for sale at a price that includes VAT, how many European firms deduct any proportion of that price relating to the VAT on exports I couldn’t say.

When we first started Aero over 90% of our production went to trade customers with very little retail other than in The UK.

Once we started to make Horsehide jackets we found strong price resistance in The UK while our overseas market increased. The bottom line was that if we wanted any home market we were going to have to swallow the loss of the VAT content of the price we get in The UK or price ourselves out of The UK market. As these sales were such a small portion of our sales it seemed a price worth paying. Basically we were/are supplementing our UK retail business by taking the loss, rather that overcharging our export customers.

In the same way the volume of our trade sales keep the prices down on all retail sales even though traders pay far less than anybody for their jackets.

Over the years our home market has increased and while one Worldwide price might seem unfair, and I can see everyone’s point, there is more to consider.

Cost of supplying a customer overseas is more expensive than within The UK.
While local sales are usually done by phone, overseas sales can take dozens of (time consuming) emails, all needing to be written and replied to by Amanda who runs the office single handed, and export paperwork is more involved.

Then there is the cost of exchanges, returns. We do not charge return postage for replacements, even if it’s not our fault that a second jacket or alteration is needed.

Also we do not charge for alterations to returned jackets. While the cost of this is very low within The UK it can run well into 3 figures for exchanges, returns from North America or Japan.

Twice during the last twenty years when the dollar was low against the pound we gave free shipping to North America (That was several years in total) and we also put hundreds of free Lochcarron scarves in with jackets going overseas.

Not wishing to upset anyone, but the average size tends to be 2 or 3 sizes larger for the USA than any other country, therefore uses a good few feet more leather, which is another price balancing factor.

OK, I’m sure there will be some who think none of this might seem to justify what is being described as a “surcharge” on export jackets but it all adds up and as all Aero customers know, we go out of our way to give the best possible customer service whilst keeping our prices as low as possible and we will continue to do the best by our customers.

While I appreciate this response, it is disingenuous to say that you do not charge for all of the things you listed (alterations, returns, larger sizes) when in fact you do charge an additional 20% for them. You also levy this charge irrespective of the actual nature of the order. That is to say, a buyer in the US (or Norway, for that matter) who purchases a size 38 jacket and has no communications with the factory after the initial order is placed and does not send the jacket back for a return or alteration is still charged 20% more than a UK buyer who orders a size 50, emails multiple times about the order, and sends it back to be exchanged or altered. There are fairer and more transparent ways to deal with the complications of overseas orders than a blanket undisclosed 20% upcharge. And clearly Aero is willing to sell overseas without the VAT component added, or else how do you explain the existence of Aero USA? Surely you weren't charging Mark Moye VAT?

The bottom line, too, is that it took some unfavorable publicity on this point for it to be addressed at all. So far as I can tell, Aero's VAT policy isn't identified on its web site. So from an outside perspective it appears that ELC and Aero have taken advantage of the opacity of the VAT component of their prices to gain an additional margin from overseas sales.

It's up to each of us to decide who we want to do business with -- but in order for us to be able to make an informed decision, we have to have all of the pertinent information. I used to think that HPA's extra charge for using a credit card was silly, but now it looks more like upfront pricing that gives consumers the choice of how, and how much, to pay.

 

[GriffDeLaGriff]

The problem is that by law a company have to tell us what the price is and what the VAT is. They also kinda have to deduct the VAT if a customer have to pay it in their country.

Offcourse a company can refuse to sell you an item if you are "bothersome".

I dont have any problem at all with Aero using some overlap to pay for other stuff, this is how its done everywhere, the wok in a restaurant pays for the lobster - this is how it works.

My problem is to pay the extra charge in my country. Thats what hurts me and thats what I cannot do. The only way to lessen the cost is to subtract the VAT in the first place, making the added cost add up to a total not that enormous.

Now a jacket list as $800 and cost me about $1200
With the way its supposed to be:
List $800 - 17% = $664 + 40% = $929

Looks alot better to me.

 

[Aerojoe]

I would be surprised if they were sending 20% of their overseas sales income to the UK tax man.
One indicator that they aren't......sales through HPA.
HPA charges basically the same for their Eastman sales as Eastman does if you buy direct from them.
I don't see how they could do this if they had to purchase their Eastman merchandise at the same prices the rest of us folks in the US do.
If Eastman is discounting the VAT from their sales to HPA...then HPA is paying 17% less than the rest of us...and can now make a profit when they turn around and re-sell the items at the same prices that Eastman advertises.

One thing that I found interesting...this link to a London store selling Eastman jackets;

http://www.youmustcreate.com/products/jacketsandcoats/ymc-x-eastman-leathers-a1-bomber-jacket/

£495.00 for an Eastman A1 (what I had planned on purchasing).

http://www.youmustcreate.com/payment-and-security/

"All prices on our site are in pounds sterling and are inclusive of European Union sales tax (VAT) at the prevailing rate. If your order is being despatched outside the European Union (EU) then we will deduct VAT."

So...less approx. 17% % off that price when sold to the states...+ £20.00 shipping, comes to £416.00

Eastman charged me £624.99

This is the wholesaling business. Whenever you buy in bulk, you get a discount. When you upfront the money or you pay within x days, you get further discount. As a result, you can offer better prices in your shop.

Sometimes makers have an agreement with retailers abroad, so they can offer similar prices in their countries and yet have a profit.

Re; "parallel importations"....I thought that VAT applied to items both made in and sold in the UK....so the shop next door would have to be selling at the same price as Eastman.
That, plus add on custom duty fees on imported items.....

The shop next door is collecting a VAT that previously didn't pay. Custom duty fees depend on where the buyer has his headquarters. He can locate in any famous Caribbean Island with no taxes over offshore operations.

BTW, toying with VAT and taxes in Europe is not a game. In my country, government just approved jail penalties for this kind of offenses.

 

[hpalapdog]

As a customer of 4 jackets this has become a problem for me.

All serious companies do reduce the VAT if you ask them because we in the Nordic countris pay 25% on everything we buy from outside the country. On top of that there is fees and stuff and this has escalated lately.

The Nordic countries Finland and Sweden are in the EU so pay no additional VAT.

 

[GoodTimesGone]

Since last looking at this thread yesterday I have changed my thinking on this issue.(Even before reading Aero's detailed explanation.) I also think Gary Eastman's statement that his company "absorbs the VAT for U.K. customers" is reasonable. If the U.K. customers received some of their VAT money back like we do here in the U.S. with income tax then I would say that overseas customers should be given a discount. When it comes down to it, whether you're in the U.K. or overseas country you pay the same base price before shipping or customizations. If the prices shown on the Eastman website did not include VAT and it was added to my bill then I would be upset.
Also- I am not as big as most modern Americans. I'm more the size of the average American soldier in WWII. Maybe I could get a 20% discount for that?

 

[GriffDeLaGriff]

The Nordic countries Finland and Sweden are in the EU so pay no additional VAT.

Yeah ok, but I live in Norway so no luck for me.

 

[Jeff M]

Since last looking at this thread yesterday I have changed my thinking on this issue.(Even before reading Aero's detailed explanation.) I also think Gary Eastman's statement that his company "absorbs the VAT for U.K. customers" is reasonable. If the U.K. customers received some of their VAT money back like we do here in the U.S. with income tax then I would say that overseas customers should be given a discount. When it comes down to it, whether you're in the U.K. or overseas country you pay the same base price before shipping or customizations. If the prices shown on the Eastman website did not include VAT and it was added to my bill then I would be upset.
Also- I am not as big as most modern Americans. I'm more the size of the average American soldier in WWII. Maybe I could get a 20% discount for that?

ELC is "absorbing" nothing.
From what I can tell, ELC must keep track of their UK sales...otherwise they couldn't report that income to Her Majesties Tax services to calculate the VAT owed.

What is confusing for us Yanks is, when you purchase an item in a state with sales tax, the seller must show what that tax amount was on the receipt you receive. You know exactly what it is.
Either you pay it...or you don't.
The tax is unambiguously paid by the buyer...the seller is just collecting it for the state.
If they don't collect it....the seller is going to have a problem with the tax man.


ELC and Aero seem to do the calculating behind the scenes at the end of the year...and don't divulge what taxes are actually being paid on each individual sale.
They then send in that calculated amount from the income they have earned on ALL of their sales. Including non UK.
What is happening is customers outside of the UK are paying a % of UK customers VAT.
Lets say 1/2 of their sales are from the UK, 1/2 outside.
Their UK customers are in effect paying a 10% VAT, as are their non UK customers.
Again, ELC and Aero are "absorbing" nothing.

I refer you again to the links on my prior post to a London shop selling some Eastman jackets...who state up front that their prices include VAT, and that that is deducted from non UK sales;


http://www.youmustcreate.com/product...bomber-jacket/

£495.00 for an Eastman A1 (what I had planned on purchasing). THIS INCLUDES INCLUDING VAT....WHICH THEY WILL DEDUCT TO NON UK CUSTOMERS.

http://www.youmustcreate.com/payment-and-security/

"All prices on our site are in pounds sterling and are inclusive of European Union sales tax (VAT) at the prevailing rate. If your order is being despatched outside the European Union (EU) then we will deduct VAT."


Directly from Eastman
http://www.eastmanleather.com/product_info.php?products_id=162

£ 624.99 WITH NO VAT DEDUCTION FOR NON UK CUSTOMERS.


We have purchased many items from the UK over the years. I can't recall of a time where we could not get the VAT refund.

 

[ButteMT61]

Yes, if the explanation is to be believed, then UK customers win. Smacks of dirty racism - payback for that whole tea thingy... lol

 

[Persimmon]

Not wishing to upset anyone, but the average size tends to be 2 or 3 sizes larger for the USA than any other country, therefore uses a good few feet more leather, which is another price balancing factor.


Thank you, thank you my dear fat American cousins for once again saving us poor Brits.
It seems that the Eastman and especially the Aero flight jackets I have purchased in the UK in both Scotland and England have been subsidized by your kind agreement to over paying for the same jackets.
And its because you are bigger.
Goodness knows how the generally smaller, thinner, Far East population feel.
Or any smaller US guys and girls
Overpaying and that with smaller sizes too.

As for the comment about Aero being on holiday now, and only now its coming out as there is no one to counter, this has been well known to the Aero management team for a while but they choose to say nothing as no one was posting here.

Instead because it was the VLJ Forum where the members seldom choose Aero jackets for want of the words, accuracy of design, quality of leather , Goodwear, etc they were hoping it would blow over before my far richer (not for long if Eastman and Aero continue to take you for saps) found out about it.

Aero seem to have a much larger fan base in the USA on the Fedora Lounge so you can well understand there lack of response up until now and Cloudy Lemonade's remarks are well, shall we say ...interesting.
And yes it would hurt them if it came out on this Forum to hear of their ways of taking increased profits.

Yes in the UK we do seem to suffer from a price in Dollars for a pair of jeans, chino's etc translated straight into Sterling Pounds etc etc.
Rip off Britian we seem to call it.

Well know you can join us in 2012 with ...Rip Off USA

Eastman and Aero can charge what ever they wish as is there right.
Perhaps though it now might make some non European overseas customers choose to look around a little more.

Trust is a too way thing and after the Aero USA ( which is not a subsidery ......!!) debacle it is worth considering alternatives if you don't like being ripped off.

If you are happy to be taken for a ride keep buying Eastman and Aero and keep the British punters costs down !!

Alan

 

[SuinBruin]

Note also that as Griff's story demonstrates, there is invariably tax due in the country in which the jacket is received. In California we can get hit with US customs fees, and technically we are also supposed to pay tax on items we buy outside of California. Though as a practical matter this is rarely done, it still exposes the buyer to liability in the case of an audit or other attention from the authorities. So, again using Griff as a model, not only are non-EU buyers getting dinged for an extra 20% retail cost, but they are then liable for additional taxes at home for the inflated "VAT"-added price. We get to pay more retail and pay more in tax. Does that sound fair?

I'd also like to point out that this is not an all-or-nothing situation. Consider this alternative: Aero and/or ELC having a section of their sites that explain that 20% VAT is inclusive in the price and that foreign buyers are eligible for a 10% discount, the other 10% going to defray the additional costs from selling overseas. Full disclosure is made, the customer gets a discount, and the seller gets additional proceeds to cover its costs.

Or they can keep doing what they're doing.

In any case, full disclosure needs to be made. Otherwise unwitting buyers are still getting gouged.

 

[Aerojoe]

payback for that whole tea thingy... lol

You were very very naughty.

 

[ButteMT61]

You were very very naughty.

And I drink coffee. too much coffee

 

[Persimmon]

The Nordic countries Finland and Sweden are in the EU so pay no additional VAT.

Ha ha
Lets hope you are a big fat Norwegian like those big Americans !!
At least then you can feel happy that you have used up a lot more material

Seriously if you were not being charged for VAT the jackets would be cheaper and you actually might buy more.
Both Aero and Eastman could actually increase their sales and yes profits too ..if they were smart about this.
And us Brits would not even have to pay more even if the Fat more material US subsidization "tax" was lost !!

Alan