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Apple vs. Best Buy: The Ethics of Underselling
Atomika
Live fast and get fucked or whateverRegistered User regular
Live fast and get fucked or whateverRegistered User regular
Just two days after Best Buy began running ads supporting ASUS' new EeePad (original, no?) that openly mocked, of all damn things, the iPad/iPad2's lack of a permanently affixed keyboard, those ads can now no longer be found anywhere on BestBuy.com or in their print media. But this is the internet, where nothing ever dies, so here you go:
While there's no word yet on if Apple had anything to do with the lightning-fast recantation (I mean, for fucks sake Best Buy, you're mocking the products you actually selling), but speculation is high with news that Apple may (permanently or temporarily) no longer be selling the iPad 2 in Best Buy locations or online. Why? The rumor is that Best Buy is purposefully holding back stock on the device and telling people they're sold out, but suddenly having more in stock the following day despite having no overnight delivery.
While all just a rumor right now, it raises a good question of business ethics. In the case of a highly in-demand product, do businesses have a legal or ethical justification for increasing their foot traffic by falsely setting sales quotas below the number of units in stock?
While there's no word yet on if Apple had anything to do with the lightning-fast recantation (I mean, for fucks sake Best Buy, you're mocking the products you actually selling), but speculation is high with news that Apple may (permanently or temporarily) no longer be selling the iPad 2 in Best Buy locations or online. Why? The rumor is that Best Buy is purposefully holding back stock on the device and telling people they're sold out, but suddenly having more in stock the following day despite having no overnight delivery.
While all just a rumor right now, it raises a good question of business ethics. In the case of a highly in-demand product, do businesses have a legal or ethical justification for increasing their foot traffic by falsely setting sales quotas below the number of units in stock?
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It's a stupid business decision on Best Buy's part to mock something they sell in their store, even if they compete with it. By comparison, Wal-Mart has a line of generic products for everything that they sell, but they don't really advertise it and they certainly don't mock the competition. So like... if Best Buy wants to sell their own product, why not be classy?
As far as holding product back goes, the fact that it's only rumor points to me that no one is sure which level this is occurring on. Is it a couple of stores with GMs looking for a way to generic more foot traffic? Is it an entire district keeping their stores in the dark of the inventory? Or is company wide, and the company is fucking with all 1000 or so stores? That's the question that should be answered first.
Of course, Apple is completely within their rights to not allow Best Buy to sell the iPad for any reason whatsoever. So yeah.
Plus, who buys an iPad at best buy?
As for the ad: I don't see anything anywhere that Apple requested the ad pulled. Still a crappy ad.
3DS Friend Code: 0404-6826-4588 PM if you add.
If somebody really really wants an iPad right the fuck now, lying about not having stock "But check out this cheap netbook instead!" sounds like a great way to lose a sale to... well any other retailer that carries iPads.
Personal anecdote: I purchased an iPad from Best Buy last October (I had several hundred $$ in gift cards to blow). Went to my 'primary' BB location and they didn't have inventory in the particular model I wanted. (And they really didn't; their iPads were stocked on a riser shelf on the showroom floor, not in the back, and there was a big gap where my preferred model would have been.) The associate checked their regional inventory online and pointed me to three nearby locations that showed positive inventory; I bought it there with minimal hassle.
So here's the thing.
It doesn't matter. Your non-sale is better than a sale of an iPad for Best Buy. As strange as that sounds. If Best Buy pays 587.99 for the iPad and retails it at 599.99, as they are forced to, they only make 13 dollars on it. In order for them to make any actual money off that sale they have to sell you a bunch of accessories. And in the case of an Apple product, they probably make no money off of first party accessories as well. So they have to sell you on third party accessories to make any kind of profit. Oh yeah, selling you the iPad and the first party accessories will get them their cost back but it won't turn a profit, so it doesn't really matter if you bought it or not. And the big one is the service plan. Best Buy makes soooooooo much money off those. Because most of them are never cashed in. If you didn't buy that? Forget it. You may as well have never walked in the store.
If you walk into Best Buy and you buy a product like a digital camera, a computer, an iPad, an MP3 player, a cell phone, a TV, a DVD player, etc etc, the large items, and you buy nothing with it, no cables, no accessories, no service plans, the fact remains that in the eyes of the books, your sales person failed to do their job and the company made 0$ from that sale. Even if you left happy as can be. The employee failed as a sales person.
I agree with Justin.
Also, to add to this, Best Buy wants your foot traffic, because they want you to purchase their overpriced accessories, service plans, or anything else they can make a profit on. So it's possible that the purpose of holding back sales on the iPad is to get that return traffic.
I feel I may open a pandora's box by mentioning the big G, but this is similar to Gamestop's policy of underordering new games. They don't make jack shit off of new game sales, but they want you to come in the store in hopes you'll buy a used game or accessory.
Edit: also, store credit cards and rewards clubs memberships. can't forget about those.
the "no true scotch man" fallacy.
EVen if BB has a limited profit margin on an iPad, it still makes sense for them to sell it as soon as possible, to clear out space in inventory.
In addition, the price of that iPad taking up inventory space will only go down in the future, so it makes sense to clear as many out as soon as possible, before the retail price dips below what BB paid wholesale, and BB ends up taking a loss on the iPad, rather than having to settle for a small profit or breaking even.
Agreed. BB doesn't give a shit about anyone unless they're willing to fill up a basket with Monster Cables and 3rd party service plans. I guess what I was getting at was that, if a customer walks in off the street and wants to purchase Product A; and the retailer stocks Product A but claims they don't have any, but how about you buy Product B instead?; then unless the customer is easily convinced to buy Product B, they're probably going out the door and down the street to a dozen other retailers that carry Product A.
I guess BB did the math and figured they could "downsell" enough customers on eeePads to offset the lost sales of iPads?
I generally despise BB for the sales tactics that result from what you described and usually never purchase anything more complicated than a DVD there.
Best Buy would make more money if they kept all the TVs, all the computers, and all the cameras in the world on the shelves and just sold cables.
You want an example?
Dynex 6' USB Cable - 24.99
Generic 6' USB Cable - 1.22
Dynex is one of Best Buy's in house brands. That cable probably costs them about 1.40 . And then they sell it for about 25. I know this because employee discount at BB, as last check, was 5% over cost. I'd pay 1.57 for that cable after tax. That profit margin on that cable is utterly utterly massive. It's unfathomable in terms of percentage.
That $2000 TV you bought with no accessories? Eh, BB maybe bought it for $1900. Maybe. Could even be $1950.
I suspect that most people who are dead-set on buying an iPad (or any other heavily-hyped product) early in its lifecycle will either have gone to an Apple store or have already ordered it online.
The people who are going to be drawn in to Best Buy for an iPad are the people who aren't sure if they want an iPad, or want to try it first, or are waiting for a sale, or were just wandering between Target and Marshalls in the strip mall and decided to pop in to check things out.
the "no true scotch man" fallacy.
Installation services is another thing entirely. Plugging in cables yeah, it's a total joke but back when tube and DLP TVs were all the rage, the size, weight and removal of your old TV made an installation service more viable. These days, I'd only recommend it to someone that wanted to wall mount a TV and didn't want to do it themselves.
Also, I thought that ad was kinda funny, even if it kinda completely misses the point of an iPad.
Maybe I just really dig duct tape.
Totally. If I'm trying to lug in some 200 lb rear-projection TV or something, it's worth a little extra to have someone else do it, especially so I'm not responsible for making sure it doesn't get dropped and exploded during installation.
But even a 50" LCD or LED TV is light enough that a single person can often cart it around, if they can get around the bulk of the thing. And it's small enough to fit in an SUV or maybe the trunk of a large car if you have a bungie cord or two.
I liked the ad too, but as you said the point of the iPad is that it doesn't need certain things.
It reminds me of an article that Douglas Adams wrote for (i think) PC Magazine a long time ago (it's reprinted in "The Salmon of Doubt") about how so much successful technology is about leaving certain things out - like the Walkman leaving out speakers, he mentions some handheld camcorder leaving out a zoom function. It was right on the cusp of the internet and he talks about how websites have the potential to be magazines with all the garbage left out. No wonder he was an Apple geek, they're still sticking with that model of leaving things off (some more successfully than others).
I'm aware of how overpriced accessories are at most B&M retailers, with BB being no exception.
But why would I buy a bunch of iPad accessories at BB #1 if I wasn't buying an iPad there? When I get sent to BB #2 to buy an iPad, it's not like BB #2 won't have those same accessories as well. All buying the accessories at BB #1 means is that I have to stand in the check out line twice.
Buying accessories with a "Well, I'm already here, might as well buy them now" works in lieu of going to a 2nd store. I can see the appeal of such convenience, but it doesn't work when you have to go to the 2nd store no matter what, and that 2nd store has the same accessories. You haven't actually saved yourself any time or effort - in fact, you're expending more of both by checking out at both BBs instead of just BB #2.
I dunno, maybe BB customers really are that dumb, and I'm just too ingrained in the mentality of a "devil" BB shopper (90% of my checkouts at BB are PMs at Customer Service, after all).
No.
Every big box chain in america has their associates selling as if they were getting a comission but without paying them as such.
So there's no draw at Best Buy? Also, why should a salesperson at Best Buy really give a shit about selling more profitable items if there's not even a direct bump in their paycheck from it?
There have been a few times when I've wanted a piece of hardware really bad, and upon finding it was impossible to get just yet, have bought some software or accessories just for the visceral thrill of buying a new toy. I'd bought a couple of DVDs before I got my first DVD player, and I snagged a couple of SNES games before I got the actual SNES. Because then I at least wasn't walking home empty handed.
Yes, logically it's sort of dumb, but dumbness is one of humanity's defining characteristics.
The local Radio Shack is surprisingly honest. Their cable prices are about equal to Amazon/Newegg + shipping. Though they also run a very solid computer shop in the back, so they can afford honesty.
Because people like to eat, pay their bills, not live on the street....
But that's his point. If you're getting paid the same regardless, there's no motivation to go for the more expensive sale.
3DS Friend Code: 0404-6826-4588 PM if you add.
Quotas, maybe. The evil counterpart of commissions.
So they don't get hassled every day by their manager. They can't get fired, they need rent money. Or weed money. One or the other.
but they're listening to every word I say
Basically. Back when I worked for GameStop for a short period, my description of the job was "commission sales without the commission."
It's basically just evil, anti-employee bullshit. But people need to eat, or in my case, pay for college, so people work it.
There's the motivation of not getting fired.
There's the motivation of not having your district manager breathing down the back of your neck berating you for not pushing enough service plans/credit cards during every weekly meeting.
the "no true scotch man" fallacy.
Yep. Basically, they're using psychological tricks to motivate employees. Since the store is already broken down into logical departments. They use the percentages of service plan revenues and accessory revenues as a competition between departments.
Also, anyone that has "supervisor" or "manager" on their name-tag; yeah, they're getting a commission/bonus based on the revenue numbers from those two areas: service plans, and accessories.
If you don't make enough "more profitable sales" (not necessarily "more expensive sales") you get shitcanned.
The motivation is to not get shitcanned.
On the upside, if you and your co-workers DO make enough "more profitable sales," your store manager gets a bonus!
Disclosure: I've never worked retail, but I've had plenty of friends who have, and I've heard enough of their stories to know that I would work hard in retail but hate every minute of it.
the "no true scotch man" fallacy.
well, sure, it's their legal right, but we can still argue that their actions are undesirable and/or unethical.
the "no true scotch man" fallacy.
Can you elaborate on your point? I'm not quite getting it because of all the condescension in it.
Yeah, but it seems like it's Apple's prerogative to also decline to sell them iPads for any reason they wish.
3DS Friend Code: 0404-6826-4588 PM if you add.
This system must be great for morale.
Sales floor staff is expendable, so who cares!
Just gotta make sure they don't steal anything on the way out.
the "no true scotch man" fallacy.