Will HOT DEALS be the end of Retailers?... READ ON!

[Madcowz]

... obviously, this is a bit of an overstatement, but it does hold some truth as I'm sure many of you would agree. Now as I'm sure many of you can imagine, most of the hot deals that can be found on such internet sites and forums usually create a net loss (or NO net gain) for businesses. There will always be those who are spendthrift or simply pay retail price, but they are becoming rarer and rarer. Now of course, this isn't the main reason for the recent decline in retail business, but it sure is a contributing factor.

You would think something like this would be self-correcting in the retail world (afterall, why would they continue to take losses by offering hot deals), but with the competitiveness of businesses (especially with the rise of e-business), the only way to survive in today's world is to offer lower prices then your competitor. Unfortunately this becomes a vicious cycle. Profits become more and more difficult to obtain, and cause many retailers to go under.

This trend has lead to a new market. Those who capitalize on some of those super-hot deals, and engage in private sales seeking profits on such sites as ebay. Now this may be a good way to make a buck or even a living, but this only hurts the economy. If one rather sought income in a regular paying job, his productiveness will then be contributing to our economy. There are many more factors envolved, and one could go as far as to say that hot deals may be hurting the job industry, but I won't even go there.

It seems that hot deals are getting worse, not in the sense that better deals are becoming rare, but rather people are starting to take advantage of this 'system.' I'm not just referring to cases where people capitalize on deals simply to resell for profit (buying 10's or hundreds of super-low priced items, but also to the reactions I've seen to pricing-errors. Case in point, look at the best-buy Geforce 4 error as an example. People jump on the deal knowing full well it was a pricing error. I mean come on, you think Best buy would take $200 in losses for each item? Give me a break...

and naturally, after the cancellation notices start coming in, which everyone should expect, the bitching and whining start pouring in. Talks about lawsuits, and boycotting... it's all ridiculous. I saw the FW thread on this deal, and it really makes me sick how these people are reacting to this whole situation. I posted this:

"You guys are crazy to expect Best Buy to honor that price, which was clearly a pricing error. They would be taking over a quarter million loss! You all knew full well that this was a mistake, and should have expected nothing. To say that this was a bait and switch case is ridiculous. Obviously, companies are well aware of the troubles pricing-errors cause (especially after the buy.com hitachi monitor fiasco), and they would be quite stupid to pull something like this simply to get HITS on their web store-front. This campaign against Best Buy isn't about righteousness or any of that crap and you all know that... this is about greed. You guys are turning into scavengers who will grab any chance to take advantage of simple common human error, and it really sickens me. You guys should be ashamed of yourselves :|"

And of course everyone gets offensive... sheesh! I swear, it just seems to me that hot deals has somewhat 'changed' people. We really have turned into greedy scavengers, and it's sad

* Feel free to add or comment. Just keep the flamethrowers at home please

 

[Madcowz]

Please don't get me wrong guys... I'm as gung-ho as the next guy over some hot deals, but what I'm trying to accomplish here is to have some of you open your eyes about the negative effects that hot deals has had.

 

[apoppin]

OT already "knows" about the HotDealin' Ferengi.

And the smart retailers will adapt to survive and prosper.

 

[Sluggo]

You have some valid points, but I believe that the real "Ferengi" of the Hot Deals forum are a very small percentage.

I think that they percentage of people who will just walk in and buy it at retail price are still pretty high, and of course stuff always breaks, and there is a lot of "must have it right now mentality."

How many people standing in line at BB on Black Friday were actually there for the super deals ( Visiontek and 60gig drive?) I bet a small percentage, and a good portion of them had no idea of how good of a deal it was.

 

[Gonad the Barbarian]

<< We really have turned into greedy scavengers, and it's sad >>



This puts us on even ground with the likes of BestBuy then. Every business in the world is designed to profit from consumers. Think about this, their entire existence revolves around profiting off of YOU. Do you think they won't take advantage of the 'system' any way the are allowed to? Bet your ass they will, and it will turn into exploitation if not kept in check. And letting things like this slide is NOT keeping them in check. If they get away with this now, what will they try to get away with down the road? It IS a righteous crusade (whether the motivation is greed or not) to not let companies like BestBuy for one, get away with their little stunts, and two, (assuming the whole thing was a mistake -ha) assure it is a mistake they don't allow to happen again.

And the 'Ferengi' of the forums are those who jump on something and buy out half the available stock to sell for profit on Ebay.

 

[iamshady]

I'm a frequent visitor of the HD forum here and at FW, but what was Black Friday?

 

[lykaon78]

I think you over emphasize the cyclical effect of competitive pricing.

Take for example my computer buying experience:

I found my motherboard/CPU combo on Pricewatch for $35 bucks less than any other retailer was offering. Consequently, I ended up buying my CD-RW, CD-Rom, case and power supply, network card, video card, and cables from the same company. I am certain that the company (I don't remember which one) might have lost money on my CPU/MB combo but certainly made that money back on the other stuff I purchased.

Non e-retailers are the same way. They under price things that will bring customers in and then make their money back on customers who buy other stuff. Grocery stores are the most obvious. Price milk, meat, and detergent at rock bottom prices to attract customers then make your money on the 50 other products the customer buys.

Obviously, stores lose when a customer comes to buy only the product that they'v be underpriced but maybe they gain on future purchases if a consumer applies a reputation of low prices to a retailer and goes there for future purchases, on sale or not.

The strong and smart retailers will survive. Look at hardware stores, the Lowes and Home Depots of the world have destroyed the mom and pop hardware stores by their ability to buy at bulk and under price the mom and pop stores.

-Lykaon

 

[Gonad the Barbarian]

Madcowz, I'll even agree with you on this point, pricing errors shouldn't qualify as hot deals. But because companies are careful enough not to let them happen in the first place, not because they can weasel out of them after the fact.

 

[Sluggo]

<< I'm a frequent visitor of the HD forum here and at FW, but what was Black Friday? >>



It is a popular name for the Friday after Thanksgiving Day.

 

[JEDI]

black friday is the fri b4 thanksgiving, where there were some great deals to be had at all the major stores.

i agree that there are some Ferengi's in here, but i think the majority of people buy the stuff for themselves. those that b*tch and moan the most are probably the greedy scavengers that saw their profits go poof.

 

[lykaon78]

XFILE - I'll admit that when I bought a Geforce 4 on BB I was going to turn around and sell it as soon as I got it. What have I lost by trying, nothing, if BB does go through with the error I've made $270+ if not I've lost nothing.

I agree though, the least I can do is not complain about not getting the obvious price mistake.

My order status on BB does still show "In process" even though I got the cancelation email.

-Lykaon78

 

[Martin]

Yes, some of these cases are very dumb.



I remember this guy posting about how much he hated Best Buy becasue the brought some items (which he knew were gonna be on sale) a few days before Black Friday and then got all mad, cuz BB wouldn't pricematch it. In effect, he hated them, because they refused to get ripped off by him.

 

[UberNeuman]

Madcowz - very well said... I'm in total agreement...

 

[MrBond]

I think the Hot Deals mentality has helped kill some etailers, and hurt several of them. Look at buy.com and their liberal coupon policy of a year or two ago. Had they continued to offer coupons like they were, they'd be out of business now. They stopped, restructered, and seem to be doing decent now (I could be wrong in my observations though).

Then there were the stupid as hell marketing tactics that places like petsmart.com used ($20 off of $20 purchase coupons come to mind). I know between my two sisters, they got probably $400 worth of pet supplies for FREE, and they continued to offer those coupons right up until their end. Sometimes I think that sock puppet was actually running the company (or was that pets.com, oh wait, it's dead too now).

The deals aren't as good as they used to be, maybe we're just jaded. I tend to think that the etailers that are left have wised up and learned from the deaths of the failed dotcoms.

 

[Hanpan]

Onvia for one was killed this way. But man oh man did we get some good deals off them.

 

[spanky]

madcows, i agree with what you said about how best buy would be just palin stupid to take a $200 loss per video card. but then again, its their mistake, and they should take responsability for it. by that... maybe coming to some compromise. one time, i remember some e-tailer had a pricing mistake on the gf2 gts card around the time of its introduction. i was one of the first ppl to jump on it. a few days later, they cancelled my order, but offered me the card at their cost. thus they were not taking a loss, but at least they would gain some trust and respect from a potential customer. when bust buy just cancels everyone's orders... it just pisses everyone off. i think if they took a little more resposability in their own error, everyone will benefit a little more. just my $.02

 

[UberNeuman]

<< Then there were the stupid as hell marketing tactics that places like petsmart.com used ($20 off of $20 purchase coupons come to mind). >>



Oh, don't forget Value America and its $100 off of $200: and you could also use a $50 off coupon with it... Yep, those days are quite over...

 

[Double Trouble]

Mad, I understand the gist of what you're saying, but you need to take a course in economics. Nobody pursuing 'hot deals' to either make a profit themselves or get good deals is "hurting the economy". That's like saying someone's hurting the economy because they use coupons at the grocery or buys items that are on sale. That's simply part of the normal business environment, people try to get the best deals they can. The interent has proven to be a useful tool in doing so, but it doesn't change the same fundamental business principles, which is why we've seen the rise and fall of all the dot-coms. At the end of the day the 'normal' or "old economy" business rules apply.

If two gas stations open up right next to eachother, it's likely they'll drive prices down trying to gain customers. The customer will go where there's a better deal. Eventually, either prices will stabalize and both companies find an optimal price point, or the weaker company goes out of business or is taken over by the stronger one. Standard economics. The internet basically reduces the distance between the retail outlets -- nothing more, nothing less.

With regard to jumping on pricing errors and demanding compensation etc.... let me toss this out: Lets say I select the wrong item at an online store by accident (in other words, a mistake). I realize my mistake, and I decide to cancel my order, but then find out it's already been shipped. When I ship the item back to the vendor, the vendor will charge me a 15% restocking fee. Now we reverse the situation, and the vendor is the one that makes a mistake (pricing error). I purchase the item at the 'wrong' price, and my card is charged. The merchant realizes the error, and wants to back out of the mistaken price...... at which point, I decide I want a 15% reimbursement, just like they charged in the earlier scenario..... No different.

 

[Gonad the Barbarian]

<< Yes, some of these cases are very dumb.



I remember this guy posting about how much he hated Best Buy becasue the brought some items (which he knew were gonna be on sale) a few days before Black Friday and then got all mad, cuz BB wouldn't pricematch it. In effect, he hated them, because they refused to get ripped off by him. >>



Uh, BestBuy is breaking their own policy there. He had every right to be mad. Sort of an underhanded thing for him to do, but what if BestBuy started to hop around all their polices when it suited them? Say you bought a TV that was on sale, but it broke a week later. You took it back for an exchange and they tried to charge you another $50 because the TV's not on sale anymore. Wouldn't that upset you a little?

 

[UberNeuman]

Using that logic - maybe they should refuse to take the item back and force you to keep it - as you seem to want them to honor what clearly was a mistake from the start - and you all knew this...

 

[Gonad the Barbarian]

Methinks UberNeuman is a little upset he decided to sleep in Wednesday.

Or maybe he just thinks people shouldn't be responsible for the mistakes they make. How about this example for you. You see a '95 Topps Mark McGuire USA baseball card at a garage sale for sale for $20 dollars. You know this has to be a mistake on the sellers part. They couldn't possibly know how much the market value is for this. Do you buy it? And if you do, will you pay them the other $100 (or whatever it's worth now) when they come banging on your door? Or do you sell the card back to them for $20?

 

[Madcowz]

<< Mad, I understand the gist of what you're saying, but you need to take a course in economics. Nobody pursuing 'hot deals' to either make a profit themselves or get good deals is "hurting the economy". That's like saying someone's hurting the economy because they use coupons at the grocery or buys items that are on sale. That's simply part of the normal business environment, people try to get the best deals they can. The interent has proven to be a useful tool in doing so, but it doesn't change the same fundamental business principles, which is why we've seen the rise and fall of all the dot-coms. At the end of the day the 'normal' or "old economy" business rules apply. >>



It's not even a matter of economics, but rather simple logic. lykaon78 said it perfectly when he stated, "They under price things that will bring customers in and then make their money back on customers who buy other stuff." The problem with the so-called 'Ferengi' of hot deals, is that they'll capitalize on the under-priced items, and under-priced items alone with resell purposes in mind. Not only are they stealing SALES from retail business, they are basically taking their money (money lost from sale). To put it crudely, they are a drain on the economy.



<< With regard to jumping on pricing errors and demanding compensation etc.... let me toss this out: Lets say I select the wrong item at an online store by accident (in other words, a mistake). I realize my mistake, and I decide to cancel my order, but then find out it's already been shipped. When I ship the item back to the vendor, the vendor will charge me a 15% restocking fee. Now we reverse the situation, and the vendor is the one that makes a mistake (pricing error). I purchase the item at the 'wrong' price, and my card is charged. The merchant realizes the error, and wants to back out of the mistaken price...... at which point, I decide I want a 15% reimbursement, just like they charged in the earlier scenario..... No different. >>



That's a big difference.

1) Mostly small non-reputable businesses charge restocking fee's. In all the pricing-error fiasco's I can remember, non of the retailers charge restocking fee's, including best buy.

2) The chances of you buying the wrong item is very slim. Even if you do happen to purchase the wrong item you can still cancel the order at no charge. And if it takes receiving the product for you to realize your mistake, you can ship it back for a full refund (no restocking fee). They only charge restocking fee's for opened items. Most people return these opened items simply because they decide they don't want it anymore, not because they bought the wrong item

2) Best Buy & most other if not all etailers do NOT charge your credit card until the item has shipped... they simply AUTHORIZE it during processing to make sure you have the money available

 

[Madcowz]

<< Or maybe he just thinks people shouldn't be responsible for the mistakes they make. How about this example for you. You see a '95 Topps Mark McGuire USA baseball card at a garage sale for sale for $20 dollars. You know this has to be a mistake on the sellers part. They couldn't possibly know how much the market value is for this. Do you buy it? And if you do, will you pay them the other $100 (or whatever it's worth now) when they come banging on your door? Or do you sell the card back to them for $20? >>



I don't really buy that example. In that case, both parties are happy anyway. A proper example would be:

You see a '95 Topps Mark McGuire USA baseball card at a garage sale for sale for $5 dollars, that's worth $100. You take it to the seller with the money, at which the seller realizes his mistake. He meant to mark the card $50 and apoligizes for the error. He's not OBLIGATED to sell it to you for $5 now is he?