If the iPad had more margin Best Buy would drop the price. Best Buy often sells Macs for less than Apple and I know Macs don't have a lot of margin for resellers to begin with. Best Buy isn't the victim of anything but what it does to itself.
So lately I've had to go to BestBuy a lot to get something sooner than I would only. On three difference occasions, I went and asked for help. The people are clueless. I waited for 30 minutes to get help on a camcorder (and that person didn't really know anything). I ended up researching the products on Amazon on my iPhone. Then when I made a purchase decision, I learned (as the rep looked though all the cupboards) that they didn't have my product in stock. In fact they didn't have the entire BRAND in stock! When I asked about just buying the floor model, he said he can't.
Now why would you show something that you don't stock???
Of course then he said "I can order it for you". Um. No. Why would I order it to have to pick it up again when I can just have Amazon send it to my house. Besides, I already had the product page bookmarked by this time.
Just yesterday I went to purchase a projector. Again, I went to BestBuy. I checked the products and found a 720p version on sale for $399!!! Woo hoo! Amazingly, the product was in-stock and he rang it up. It came up as $599. Um... no, it was on sale. I showed him the product and the sign and he said "oh, no, see...we put them in the wrong place".
Did I mention I tried to buy an Android tablet for development there and how clueless the sales people are?
I eventually just went to Staples and purchased the projector. Same price, but without the stupidity.
Does anyone really think that companies like Samsung, Dell, HP and others give BB higher margins than Apple? If you do, then you're dreaming.
Based on what I do know about what the margins for Apple resellers are I'd say that, yes, margins for retailers on Apple hardware are lower than Samsung, Dell and HP and always has been the case. You can't sell an Apple product for anything other than the given price and you can't create your own deals. It's part of the reason the neighborhood Apple Authorized Reseller is gone from Main St.
And it's one reason why Apple was wasting their time in brick and mortar consumer stores such as CompUSA, CC before there were Apple Stores and especially before IOS became such a runaway success, though naturally not the only reason. If those stores made more of a profit on Apple in the pre iPhone/data contract era the Apple tables wouldn't have been the ghost towns they were. A clueless salesperson didn't sway you past it because of any misguided anti-Apple prejudice necessarily.
But I'm completely in agreement that this BB story obviously has little to do with Apple and their margins and everything to do with Amazon and other online kin.
AI. The WSJ article literally doesn't mention the iPad once, and only mentions mobile devices as a threat to their margins in terms of people checking prices on them while in the stores.
I was doing some reading at other sources and just came to the same conclusion. AI looks to have come up with this pretty much out of thin air. BB didn't place blame on Apple's iPad, nor did Reuters who initially reported this story.
Then they should stop blaming the iPad for their problems and cite it as part of the solution -- which, if you ignore the flamebait AI headlines, is closer to the truth.
Best buy isn't. As you say it's AI hit baiting, nothing more or less
If the iPad had more margin Best Buy would drop the price. Best Buy often sells Macs for less than Apple and I know Macs don't have a lot of margin for resellers to begin with. Best Buy isn't the victim of anything but what it does to itself.
No, you can't sell an Apple product for a dollar more or less than what Apple says you can. It has never been within any store's ability to sell any Apple widget for $20 less than a competitor. The only reason BB takes on low margin items is to upsell service contracts and extended warranties, which is the biggest part of their business in every department.
The iPad ecosystem, which includes AppleCare, AppStore, iTunes, iBooks, NewsStand, all the rest of these directly compete with the other shelves in Best Buy, including their Warranty, SW sales, Music Sales, Movie Sales, Monitor Sales, etc, etc etc.
In short, iPads don't feed the rest of the store, like PCs do, or even TVs do.
There are very low margins on PCs/TVs, but the fact that you buy the software, the printer, as well as buy the music (CDs), Movies (DVDs), accessories, powerstrips, et al. iPads do not drive that level of 'upsell' purchase.
Heck, I'm thinking the biggest ticket items you buy for an iPad would be an AppleTV and/or a smart cover. Both of which are likely having Apple controlling the same margins as the iPad. In short, you're not making it up on Margin.
But I agree, BestBuy is competing poorly online, and on their own brands, which drive profits now. I worked for BestBuy.com at one point, and it's was argued at the time, as a 'loss leader' or a 'very expensive ad site' for driving price comparisons against amazon. The issue is Amazon is a 'buy anything site, and with free shipping, and it's competitive pricing with it's virtual storefronts, Best Buy is trying to subsidize the big-box stores to no avail.
This has nothing directly to do with Apple. It's like the excuse for poor PC sales is being given as the floods in Thailand. That's also a lot of hooey.
Upsell is a term with little meaning. So you sell a very low margin computer, and often GIVE away a cheap printer. Other times, you sell a printer with even lower margins than that low margin computer. So what has the store gained?
It's true that Apple's products have lower store margins. But, they always sell for list, or very close to it. A $499 iPad sells for $499, or at best, $479. But a competing tablet that lists for $499, few of that them that exist, will usually sell for $429, or $399, or even for as little as $379. And that's when it's not being discounted under manufacturers cost for the purpose of getting them out of inventory altogether. If they don't heavily discount, then the product fails to sell at all.
So we can look to the Android Asus Transformer Prime. This is the most highly touted Android tablet out there, and with all the gushing praise we read on the web, one would think Asus has a winner on their hands. But no, they don't.
So there's that pesky lawsuit that Hasbro brought against them for the name. Forget that. What's important about the suit is that in these cases, in order to show damage, the companies must show sales, and possible sales.
So let's say that BB is not happy about Apple"s margins, which makes no sense, but let's pretend. They look at this wonder tablet of Asus, and think that they'll sell a lot of them with those higher margins. But wait! The lawsuit has shown just how popular that high margin product is. So, in order to insure that as many people as possible would get a Prime, like Apple, Asus held a preorder period. So how did it do? According to the lawsuit's revealing of the numbers, they presold a whole 2,000 tablets. Yup, not a typo, that's 2,000. And in addition, for the quarter, their WORLDWIDE shipments to retailers was a whole 80,000. Again, not a typo. That's 80,000.
So BB did get these. They got about an average of 2 per store. WOW! They're sure gonna make a lot of money on that! They have so few, that they should sell out. That will then be worthy of a headline: Best Buy Sells Out of Popular New Android Tablet. Supply can't meet demand.
I was doing some reading at other sources and just came to the same conclusion. AI looks to have come up with this pretty much out of thin air. BB didn't place blame on Apple's iPad, nor did Reuters who initially reported this story.
Add me to the "REALLY?!" crowd on this story. Is it a slow news day and AI had to come up with something to get clicks? (Apparently they succeeded since I'm writing this.)
As for margins, didn't Costco recently drop Apple products because Apple wouldn't let them sell for less than Apple's set price?
Not going to comment on the rest of the article since it's pure click-bait.
It has never been within any store's ability to sell any Apple widget for $20 less than a competitor. The only reason BB takes on low margin items is to upsell service contracts and extended warranties, which is the biggest part of their business in every department.
The bolded statement is absolutely wrong.
There are quite a few sites that allow comparison shopping for Apple products among major retailers. For Macs, there are always dealers selling for less than retail. Here's one example:
[...] The report noted that the popularity of Apple's iPad has contributed to Best Buy's struggles, as the device carries "relatively low margins" for the retailer. As a result, its mobile computing sales business has seen "strained margins" of late. [...]
Many consumer electronics products carry "relatively low margins" for retailers.
iPad is just one of those products.
Best Buy's problem is that people are buying iPads *instead* of PCs.
So who's idea was it to put the articles focus on Apple if it's outright false? AI? WSJ? Best Buy? That's a curious thing to do.
Because, as usual, any headline with Apple, or one of its products in it will draw readers like flies. Unfortunately, AI isn't immune from this because headline news aggregators will pull the article into their own sites, and in order to get hits, a headline has to stand out. I'm not thrilled by it either, but that's the way it works. As for this site and it's readers, the editor, or whomever wrote or approved of the headline and the article knows the readers won't take it literally.
It's a sad commentary on the depths of reporting the web has dropped to.
Mel, if you say some people or even most people, I might agree with you .... but I think there is ample evidence with what just Apple is doing to show that a company can make very good profits by concentrating on quality, not price. The same thing happens with a lot of so called niche companies. They manage to carve out very nice profits from small market share, thank you very much .... because they are not trying to be all things to all people. IOW .... they identify what they are good at .... and then focus almost exclusively on those qualities. Big box stores seem to focus solely on volume. Big fail, imho.
You're making a mistake in comparing a manufacturer like Apple, with a mass market big box retailer. They have nothing in common. As far as I know, BB has no real products of their own.
If you make that mistake, then you're missing out on what is happening to retail everywhere.
Quote:
Further proof that when your focus is on the lowest retail price .... you will eventually lose, in most cases.
That's true if your costs to stay in business are high, as they are in retail brick and mortar businesses. Amazon survives on a 3.37% margin, because their costs are lower, and Walmart does the same on a 3.67% margin because they can sell the volume, and the way their stores are organized, and their size allows it.
Quote:
While I don't know for a fact that the PC profit margins are higher than Apple for BB, but based on my personal experiences and observations when I visit a BB store and watch as the staff continually try to "switch people" from buying a Mac to buying a PC, I strongly suspect that is the case.
Ever hear of spiffs? That's one reason why. The other reason is that most employees are no different from any other semi tech person, they use PC's, and have a dislike for Apple. PC makers have very low margins of their own, and computers sold in these stores also have very low margins.
What you are misunderstanding is that while a company may offer BB a supposed margin of 40%, where Apple offers 20%, those products are usually discounted by 30% or more, whereas Apple's aren't. This shows the true margin, which is very low.
Quote:
What truly amazes me is that, after all this time of watching Apple climb to the top in all the truly important metrics, other companies still don't seem to "get it" when they try to imitate Apple's success. Simply amazing.
You can't compare BB to Apple, as they are in very different businesses. Samsung is a much more comparable company, and even there, there are too many differences. Apple is somewhat unique, and it makes comparing any other company to it very difficult, and usually wrong.
Based on what I do know about what the margins for Apple resellers are I'd say that, yes, margins for retailers on Apple hardware are lower than Samsung, Dell and HP and always has been the case. You can't sell an Apple product for anything other than the given price and you can't create your own deals. It's part of the reason the neighborhood Apple Authorized Reseller is gone from Main St.
And it's one reason why Apple was wasting their time in brick and mortar consumer stores such as CompUSA, CC before there were Apple Stores and especially before IOS became such a runaway success, though naturally not the only reason. If those stores made more of a profit on Apple in the pre iPhone/data contract era the Apple tables wouldn't have been the ghost towns they were. A clueless salesperson didn't sway you past it because of any misguided anti-Apple prejudice necessarily.
But I'm completely in agreement that this BB story obviously has little to do with Apple and their margins and everything to do with Amazon and other online kin.
As I explained elsewhere, that margin is illusory. My company was partly in retail. I can tell you that the supposed margins you get are not what you can sell most products with. So whereas most electronics comes with a 40% margin, after the usual 25-35% discount, the margin is minimal. How much does BB make on the average sale? Very little. And with most of their products costing $25 of less, the actual profit isn't there. Have a sales person spend five minutes with you, and the item is now sold at a loss, when the paperwork is included. How much profit is made on that $199 surround sound receiver, discounted to $129? About $6!
Pretty sure it has more to do with pushy sales people that don't know the first thing about what they are trying to sell.
No joke, went in looking for a charger for a camera and the little girl told me the one I had in my hand is "the one you need for that camera". I said I wasn't sure and picked another one up and "oh, that is DEFINITELY the one you need for that camera". I ended up getting the first one because I knew what number I needed and left.
I only go to Best Buy when I need something right now and can't wait three days for amazon. I know what I need 99% of the time and will ask if I need help the other 1%.
Comments
Now why would you show something that you don't stock???
Of course then he said "I can order it for you". Um. No. Why would I order it to have to pick it up again when I can just have Amazon send it to my house. Besides, I already had the product page bookmarked by this time.
Just yesterday I went to purchase a projector. Again, I went to BestBuy. I checked the products and found a 720p version on sale for $399!!! Woo hoo! Amazingly, the product was in-stock and he rang it up. It came up as $599. Um... no, it was on sale. I showed him the product and the sign and he said "oh, no, see...we put them in the wrong place".
Did I mention I tried to buy an Android tablet for development there and how clueless the sales people are?
I eventually just went to Staples and purchased the projector. Same price, but without the stupidity.
Does anyone really think that companies like Samsung, Dell, HP and others give BB higher margins than Apple? If you do, then you're dreaming.
Based on what I do know about what the margins for Apple resellers are I'd say that, yes, margins for retailers on Apple hardware are lower than Samsung, Dell and HP and always has been the case. You can't sell an Apple product for anything other than the given price and you can't create your own deals. It's part of the reason the neighborhood Apple Authorized Reseller is gone from Main St.
And it's one reason why Apple was wasting their time in brick and mortar consumer stores such as CompUSA, CC before there were Apple Stores and especially before IOS became such a runaway success, though naturally not the only reason. If those stores made more of a profit on Apple in the pre iPhone/data contract era the Apple tables wouldn't have been the ghost towns they were. A clueless salesperson didn't sway you past it because of any misguided anti-Apple prejudice necessarily.
But I'm completely in agreement that this BB story obviously has little to do with Apple and their margins and everything to do with Amazon and other online kin.
Surely all the money they make on them would make up for the loss of selling so many iPads.
AI. The WSJ article literally doesn't mention the iPad once, and only mentions mobile devices as a threat to their margins in terms of people checking prices on them while in the stores.
I was doing some reading at other sources and just came to the same conclusion. AI looks to have come up with this pretty much out of thin air. BB didn't place blame on Apple's iPad, nor did Reuters who initially reported this story.
Then they should stop blaming the iPad for their problems and cite it as part of the solution -- which, if you ignore the flamebait AI headlines, is closer to the truth.
Best buy isn't. As you say it's AI hit baiting, nothing more or less
Don't they sell Kindle Fire or Samsung Galaxy Tab?
If you believe the stories, no. They have them in the stockroom but no one is buying them, or at least not keeping them
If the iPad had more margin Best Buy would drop the price. Best Buy often sells Macs for less than Apple and I know Macs don't have a lot of margin for resellers to begin with. Best Buy isn't the victim of anything but what it does to itself.
No, you can't sell an Apple product for a dollar more or less than what Apple says you can. It has never been within any store's ability to sell any Apple widget for $20 less than a competitor. The only reason BB takes on low margin items is to upsell service contracts and extended warranties, which is the biggest part of their business in every department.
yes... but.
The iPad ecosystem, which includes AppleCare, AppStore, iTunes, iBooks, NewsStand, all the rest of these directly compete with the other shelves in Best Buy, including their Warranty, SW sales, Music Sales, Movie Sales, Monitor Sales, etc, etc etc.
In short, iPads don't feed the rest of the store, like PCs do, or even TVs do.
There are very low margins on PCs/TVs, but the fact that you buy the software, the printer, as well as buy the music (CDs), Movies (DVDs), accessories, powerstrips, et al. iPads do not drive that level of 'upsell' purchase.
Heck, I'm thinking the biggest ticket items you buy for an iPad would be an AppleTV and/or a smart cover. Both of which are likely having Apple controlling the same margins as the iPad. In short, you're not making it up on Margin.
But I agree, BestBuy is competing poorly online, and on their own brands, which drive profits now. I worked for BestBuy.com at one point, and it's was argued at the time, as a 'loss leader' or a 'very expensive ad site' for driving price comparisons against amazon. The issue is Amazon is a 'buy anything site, and with free shipping, and it's competitive pricing with it's virtual storefronts, Best Buy is trying to subsidize the big-box stores to no avail.
This has nothing directly to do with Apple. It's like the excuse for poor PC sales is being given as the floods in Thailand. That's also a lot of hooey.
Upsell is a term with little meaning. So you sell a very low margin computer, and often GIVE away a cheap printer. Other times, you sell a printer with even lower margins than that low margin computer. So what has the store gained?
It's true that Apple's products have lower store margins. But, they always sell for list, or very close to it. A $499 iPad sells for $499, or at best, $479. But a competing tablet that lists for $499, few of that them that exist, will usually sell for $429, or $399, or even for as little as $379. And that's when it's not being discounted under manufacturers cost for the purpose of getting them out of inventory altogether. If they don't heavily discount, then the product fails to sell at all.
So we can look to the Android Asus Transformer Prime. This is the most highly touted Android tablet out there, and with all the gushing praise we read on the web, one would think Asus has a winner on their hands. But no, they don't.
So there's that pesky lawsuit that Hasbro brought against them for the name. Forget that. What's important about the suit is that in these cases, in order to show damage, the companies must show sales, and possible sales.
So let's say that BB is not happy about Apple"s margins, which makes no sense, but let's pretend. They look at this wonder tablet of Asus, and think that they'll sell a lot of them with those higher margins. But wait! The lawsuit has shown just how popular that high margin product is. So, in order to insure that as many people as possible would get a Prime, like Apple, Asus held a preorder period. So how did it do? According to the lawsuit's revealing of the numbers, they presold a whole 2,000 tablets. Yup, not a typo, that's 2,000. And in addition, for the quarter, their WORLDWIDE shipments to retailers was a whole 80,000. Again, not a typo. That's 80,000.
So BB did get these. They got about an average of 2 per store. WOW! They're sure gonna make a lot of money on that! They have so few, that they should sell out. That will then be worthy of a headline: Best Buy Sells Out of Popular New Android Tablet. Supply can't meet demand.
Better they stick with Apple.
I was doing some reading at other sources and just came to the same conclusion. AI looks to have come up with this pretty much out of thin air. BB didn't place blame on Apple's iPad, nor did Reuters who initially reported this story.
Add me to the "REALLY?!" crowd on this story. Is it a slow news day and AI had to come up with something to get clicks? (Apparently they succeeded since I'm writing this.)
As for margins, didn't Costco recently drop Apple products because Apple wouldn't let them sell for less than Apple's set price?
Not going to comment on the rest of the article since it's pure click-bait.
- Jasen.
It has never been within any store's ability to sell any Apple widget for $20 less than a competitor. The only reason BB takes on low margin items is to upsell service contracts and extended warranties, which is the biggest part of their business in every department.
The bolded statement is absolutely wrong.
There are quite a few sites that allow comparison shopping for Apple products among major retailers. For Macs, there are always dealers selling for less than retail. Here's one example:
http://macreviewzone.com/prices/imac.php
Even iDevices are not always sold at list price. For example, Walmart sells the iPhone for below list.
It's true that Apple's products have lower store margins.
Does anyone really think that companies like Samsung, Dell, HP and others give BB higher margins than Apple? If you do, then you're dreaming.
Now I'm confused. Is one of us dreaming that you said Samsung, HP, et al didn't offer BB better margins than Apple?
[...] The report noted that the popularity of Apple's iPad has contributed to Best Buy's struggles, as the device carries "relatively low margins" for the retailer. As a result, its mobile computing sales business has seen "strained margins" of late. [...]
Many consumer electronics products carry "relatively low margins" for retailers.
iPad is just one of those products.
Best Buy's problem is that people are buying iPads *instead* of PCs.
So who's idea was it to put the articles focus on Apple if it's outright false? AI? WSJ? Best Buy? That's a curious thing to do.
Because, as usual, any headline with Apple, or one of its products in it will draw readers like flies. Unfortunately, AI isn't immune from this because headline news aggregators will pull the article into their own sites, and in order to get hits, a headline has to stand out. I'm not thrilled by it either, but that's the way it works. As for this site and it's readers, the editor, or whomever wrote or approved of the headline and the article knows the readers won't take it literally.
It's a sad commentary on the depths of reporting the web has dropped to.
Mel, if you say some people or even most people, I might agree with you .... but I think there is ample evidence with what just Apple is doing to show that a company can make very good profits by concentrating on quality, not price. The same thing happens with a lot of so called niche companies. They manage to carve out very nice profits from small market share, thank you very much .... because they are not trying to be all things to all people. IOW .... they identify what they are good at .... and then focus almost exclusively on those qualities. Big box stores seem to focus solely on volume. Big fail, imho.
You're making a mistake in comparing a manufacturer like Apple, with a mass market big box retailer. They have nothing in common. As far as I know, BB has no real products of their own.
If you make that mistake, then you're missing out on what is happening to retail everywhere.
Further proof that when your focus is on the lowest retail price .... you will eventually lose, in most cases.
That's true if your costs to stay in business are high, as they are in retail brick and mortar businesses. Amazon survives on a 3.37% margin, because their costs are lower, and Walmart does the same on a 3.67% margin because they can sell the volume, and the way their stores are organized, and their size allows it.
While I don't know for a fact that the PC profit margins are higher than Apple for BB, but based on my personal experiences and observations when I visit a BB store and watch as the staff continually try to "switch people" from buying a Mac to buying a PC, I strongly suspect that is the case.
Ever hear of spiffs? That's one reason why. The other reason is that most employees are no different from any other semi tech person, they use PC's, and have a dislike for Apple. PC makers have very low margins of their own, and computers sold in these stores also have very low margins.
What you are misunderstanding is that while a company may offer BB a supposed margin of 40%, where Apple offers 20%, those products are usually discounted by 30% or more, whereas Apple's aren't. This shows the true margin, which is very low.
What truly amazes me is that, after all this time of watching Apple climb to the top in all the truly important metrics, other companies still don't seem to "get it" when they try to imitate Apple's success. Simply amazing.
You can't compare BB to Apple, as they are in very different businesses. Samsung is a much more comparable company, and even there, there are too many differences. Apple is somewhat unique, and it makes comparing any other company to it very difficult, and usually wrong.
IPad is a tiny fraction of Best Buy's sales. There is no way that the iPad is "straining" anything.
I agree. Best Buy is to blame for their woes. Any causation from iPad sales is nonexistent at best.
Based on what I do know about what the margins for Apple resellers are I'd say that, yes, margins for retailers on Apple hardware are lower than Samsung, Dell and HP and always has been the case. You can't sell an Apple product for anything other than the given price and you can't create your own deals. It's part of the reason the neighborhood Apple Authorized Reseller is gone from Main St.
And it's one reason why Apple was wasting their time in brick and mortar consumer stores such as CompUSA, CC before there were Apple Stores and especially before IOS became such a runaway success, though naturally not the only reason. If those stores made more of a profit on Apple in the pre iPhone/data contract era the Apple tables wouldn't have been the ghost towns they were. A clueless salesperson didn't sway you past it because of any misguided anti-Apple prejudice necessarily.
But I'm completely in agreement that this BB story obviously has little to do with Apple and their margins and everything to do with Amazon and other online kin.
As I explained elsewhere, that margin is illusory. My company was partly in retail. I can tell you that the supposed margins you get are not what you can sell most products with. So whereas most electronics comes with a 40% margin, after the usual 25-35% discount, the margin is minimal. How much does BB make on the average sale? Very little. And with most of their products costing $25 of less, the actual profit isn't there. Have a sales person spend five minutes with you, and the item is now sold at a loss, when the paperwork is included. How much profit is made on that $199 surround sound receiver, discounted to $129? About $6!
Best buy isn't. As you say it's AI hit baiting, nothing more or less
Yep, it's AI putting it Apple spin on everything.*
They should rename the site AppleSpinsider!
*Not that I mind, really.
No joke, went in looking for a charger for a camera and the little girl told me the one I had in my hand is "the one you need for that camera". I said I wasn't sure and picked another one up and "oh, that is DEFINITELY the one you need for that camera". I ended up getting the first one because I knew what number I needed and left.
I only go to Best Buy when I need something right now and can't wait three days for amazon. I know what I need 99% of the time and will ask if I need help the other 1%.