on liquidation sales...
Jul. 20th, 2011 01:13 pm![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
acroyearWhy You Should Skip This Weekend's Liquidation Sales at Borders:
It is a bit more complicated than that, and certain things "move" at a very precise price-point. The profit margin for a store over wholesale (well, wholesale+distribution) is around 43 percent (a bit more for big-ticket items like washer-dryers, but those have commissions built in). Thus, at 40% off, a place still makes a marginal profit on the sale. The early stage discounts at 10-30% are thus still profitable for all involved.
Amazon can move for less because they get bulk-rate shipping and simply are a warehouse - they have to pay a ton in software to be able to find everything, but they don't have to make the place actually look nice. But Amazon pays the same price to the wholesaler for a product that Borders does.
When things hit 30-50, the first batch of 50% items are generally saturated - everybody already has it, and the good stuff is still at 30%. When the good stuff hits 40%, most of it disappears in seconds because that's about the point where someone can grab the stock and make a marginal profit reselling on ebay. Also at the 40% point, some distributors and manufacturers will pay for a recall rather than have the item sell for less and impact their larger market nationwide, so that's the point where a lot of consumer electronics suddenly vanish from the shelves in an instant. It is better for some products to not be on a shelf than it is to be seen priced for 50% and still not moving.
By the time you get the 50-70%, it's either not worth it, or the saturation factor hits (translation: you've already got it, and so does everybody else, or even at that price point you know you don't want it).
Some items I simply never saw at 50% (unless it had a damaged package). I saw at 40, but when 50 was the baseline, that entire section of the shelf was empty. This happened at Tower, Circuit City, and the one Borders nearest me that closed already. So if you really want it, look for the 40% mark and grudgingly accept that somebody's making a profit anyways, because it'll probably be gone in a few days.
However, in the time since Borders declared bankruptcy, dealnews has listed 22 coupons for discounts ranging from 30% to 50% off. You heard that right: Everyday Borders coupons offered better savings than the merchant's initial store-closing sales.Someone noted this article and the 'it'll be 8 weeks before 80% so best to wait' and I left the following:
Obviously one cannot hope for a coupon this time around, but, if Borders does indeed roll out discounts that are comparable to its initial round of liquidation sales, then it will be offering middling markdowns at best — and in some cases, falling short of its regular post-coupon prices.
The Reason Behind Modest Markdowns
Liquidation sales are often run by an outside party that buys the merchant's remaining stock, resets prices to MSRP, and then begins slashing prices.
It is a bit more complicated than that, and certain things "move" at a very precise price-point. The profit margin for a store over wholesale (well, wholesale+distribution) is around 43 percent (a bit more for big-ticket items like washer-dryers, but those have commissions built in). Thus, at 40% off, a place still makes a marginal profit on the sale. The early stage discounts at 10-30% are thus still profitable for all involved.
Amazon can move for less because they get bulk-rate shipping and simply are a warehouse - they have to pay a ton in software to be able to find everything, but they don't have to make the place actually look nice. But Amazon pays the same price to the wholesaler for a product that Borders does.
When things hit 30-50, the first batch of 50% items are generally saturated - everybody already has it, and the good stuff is still at 30%. When the good stuff hits 40%, most of it disappears in seconds because that's about the point where someone can grab the stock and make a marginal profit reselling on ebay. Also at the 40% point, some distributors and manufacturers will pay for a recall rather than have the item sell for less and impact their larger market nationwide, so that's the point where a lot of consumer electronics suddenly vanish from the shelves in an instant. It is better for some products to not be on a shelf than it is to be seen priced for 50% and still not moving.
By the time you get the 50-70%, it's either not worth it, or the saturation factor hits (translation: you've already got it, and so does everybody else, or even at that price point you know you don't want it).
Some items I simply never saw at 50% (unless it had a damaged package). I saw at 40, but when 50 was the baseline, that entire section of the shelf was empty. This happened at Tower, Circuit City, and the one Borders nearest me that closed already. So if you really want it, look for the 40% mark and grudgingly accept that somebody's making a profit anyways, because it'll probably be gone in a few days.
![[identity profile]](https://www.dreamwidth.org/img/silk/identity/openid.png){kind=small}
no subject
Date: 2011-07-21 03:36 am (UTC)