A timely Reminder !

The importing and exporting of cosmetics... not as black and white as you may think. Have you ever bought a perfume that smelt more like water than waterlily? Less like a rose, and more like a bitter, 10 dollar bottle of rosé from your local liquor store?

Your favourite brand of eyeliner that looked exactly the same on the outside, but did not quite measure up to the consistency of your previous, beloved version?

We all love the hunt for a bargain, but it can come at a cost.
Discount cosmetics and fragrances may seem like a good idea at the time, but how much do we actually know about them? Do you know where the product has been sourced from or why is it so cheap?

When goods are sourced from outside registered channels of distribution and sold on at drastically reduced prices it is referred to as parallel importing, or, the grey market. The practice is alive and well in Australia and you may be surprised at some of the big name retailers taking part. If you look past the carefully made up facade and sweet smelling fragrance, it is happening right under our noses.

In 2012, Target Australia found itself in hot water with Estée Lauder in the US after the retailer sourced Makeup Art Cosmetics (MAC) via parallel importing. Target believed the MAC products supplied to them were sourced lawfully by a domestic supplier from a legitimate MAC wholesaler overseas, and they were assured of the authenticity and quality of the make up by the supplier. The cosmetics and fragrance giant conducted independent testing and launched legal proceedings against Target after they claimed the products sourced from the grey market were counterfeit.*

How is it that incidents like this can occur? The reason is, in Australia, parallel importing is not illegal. Not to be confused with the black market, the grey market differs in that the products crossing Australian borders are completely legal, and not restricted in terms of importing and reselling. The black market is illegal because it trades and sells illegal or restricted products.

In most cases parallel imports are legitimate, simply imported from another country where the original price of the product is lower. It is due to the means of importing and the lowered attention to quality control counterfeit products are more common on the grey market. As the authenticity of the product cannot be guaranteed, you might be buying a fake perfume, a genuine perfume that has been diluted, or a genuine perfume that has been sitting in a warehouse for the last 10 years.

Guy Launder, director at the Australian Competition and Consumer Commission (ACCC) said the ACCC doesn’t necessarily encourage nor discourage parallel importing.

“At the ACCC we see parallel importing as another form of competition,” he said. “Competition is a good thing because it can drive down the price for consumers.” Launder said that once parallel imports arrive in Australia, consumers are protected by sections 18 and 29 of Consumer Law, in addition to guidelines set out by the Therapeutic Goods Administration (TGA).

“Under Australian Consumer Law advertising cannot be false or misleading, and products cannot be sold if they are not ‘fit for purpose’,” he explains. “In Australia we see goods being marked up by as much as 30per cent to 50 per cent. As long as they are the same product and appropriate steps have been taken to ensure a product is not a fake, if parallel importing is a way to cut these costs then it can only be a good thing for the consumer,” he said.

Despite the fact that parallel importing is a-ok in the land down under, not all retailers are prepared to take the risk. Desiree Hinze, Retail Operations Manager for Cosmetics Fragrance Direct (CFD) says whilst she is constantly approached by grey market distributors, often offering the company perfumes that have yet to be released in Australia, it’s not what the company believes in.

“Our mission statement is genuine people, genuine products at genuinely discounted prices. Everything is real,” she said. CFD guarantees one hundred per cent the authenticity and quality of their perfumes and cosmetics. They can only do this, because the company cuts out the middle man, avoiding grey market distributors by dealing directly with the brands themselves. Hinze says that it is important to CFD that customers know their products come from a genuine source, but it is a constant battle for the retailer to get the message across.

“Every time there is an A Current Affair story about fake perfumes we get another influx of people saying, “but it’s so cheap? Is it real?” There is always going to be an element of people that think that just because it is discounted it is counterfeit,” she says. Often a bargain basement price is not a reliable indicator that a product has been sourced from an unorthodox supply channel. In some cases, the very presence of a luxury brand name alone can set off alarm bells for a clued-in consumer.

“Brands like Dior and Chanel do not discount their products,” Hinze explains. “When customers see that we don’t sell Dior or Chanel, in a way that can cement in their minds that we deal directly with the companies that we do business with because those high end companies would not let their product be in other stores. If you see those brands in other retailers you have got to question where they source their stock from,” she said. Hinze and CFD recognise the potential risks associated with grey market perfume and cosmetics but for the company it extends beyond bodily harm. “Yes, there are skin reactions and the fragrance might not last as long as it should but it’s more the fact that they have been had. They thought they were buying something real and it’s not,” she said.

Regardless of the legality of the practice, it appears that parallel importing is not without its faults. The grey market is a complicated issue, so what is Frock’s advice? Tread with caution, if something

*At the time of writing, the court case against Target is ongoing, after Estée Lauder rejected the retailer’s offer of a settlement in June 2013.

Ref: Frock Paper Scissors Magazine, November 2013, Beauty feature article p70