mickbayne wrote:I guess I just don't see what Best Buy is losing in this scenario. They issued him store credit, so it's not like he took the money across the street to spend at Wal-Mart or something. And they still get to sell the DVDs to some sucker(s) for $200 or whatever.

They gave him credit for what he would have paid for them. At best they will break even, but they are essentially losing money.

The Nightman Cometh wrote:

mickbayne wrote:I guess I just don't see what Best Buy is losing in this scenario. They issued him store credit, so it's not like he took the money across the street to spend at Wal-Mart or something. And they still get to sell the DVDs to some sucker(s) for $200 or whatever.

They gave him credit for what he would have paid for them. At best they will break even, but they are essentially losing money.

If they don't sell them, they return them to the distributor for what they paid there and most likely the same distributor sold to both amazon and best buy.

So the distributor made the same either way, amazon made say $20 in profit. Best Buy issued a store credit which becomes profit once goods are sold and is pure profit if it is never redeemed (which happens a lot).

lethal wrote:

The Nightman Cometh wrote:

mickbayne wrote:I guess I just don't see what Best Buy is losing in this scenario. They issued him store credit, so it's not like he took the money across the street to spend at Wal-Mart or something. And they still get to sell the DVDs to some sucker(s) for $200 or whatever.

They gave him credit for what he would have paid for them. At best they will break even, but they are essentially losing money.

If they don't sell them, they return them to the distributor for what they paid there and most likely the same distributor sold to both amazon and best buy.

So the distributor made the same either way, amazon made say $20 in profit. Best Buy issued a store credit which becomes profit once goods are sold and is pure profit if it is never redeemed (which happens a lot).

Got ya. I'm confused about how the store credit is profit. Even if they return the DVDs the amount in store credit they gave away is still much higher than the money they will get back.

The Nightman Cometh wrote:

lethal wrote:

The Nightman Cometh wrote:

mickbayne wrote:I guess I just don't see what Best Buy is losing in this scenario. They issued him store credit, so it's not like he took the money across the street to spend at Wal-Mart or something. And they still get to sell the DVDs to some sucker(s) for $200 or whatever.

They gave him credit for what he would have paid for them. At best they will break even, but they are essentially losing money.

If they don't sell them, they return them to the distributor for what they paid there and most likely the same distributor sold to both amazon and best buy.

So the distributor made the same either way, amazon made say $20 in profit. Best Buy issued a store credit which becomes profit once goods are sold and is pure profit if it is never redeemed (which happens a lot).

Got ya. I'm confused about how the store credit is profit. Even if they return the DVDs the amount in store credit they gave away is still much higher than the money they will get back.

If the store credit is never redeemed, then the profit is whatever the return price to the distributor is or the profit on the sale of the DVDs, whichever occurs.

If the store credit is redeemed for say PS3 games, then there is still profit on the sale of the other items. If they sell the DVD, then they break even on that portion of the transaction. If they don't, then they return the DVD to the distributor and they still make money on the sale of the video games. They probably break even there.

Ah okay that makes sense, thanks.

VoxOrion wrote:

mickbayne wrote:Maybe I'm an asshat, too, but I just don't think there's anything "we" should be worried about getting ruined. Best Buy was charging an outrageous price that one of their competitors blew out of the water. A savvy shopper discovered this and used it to their advantage.

"Savvy shopper" = lying and fraud and "used it to their advantage" = stole $100 in store credit from an innocent bystander.

There isn't much people can't rationalize, is there?

More rationalization: Best Buy might even be okay with this scenario because it got someone (and presumably others) who would not typically shop there to walk into their store and make an impulse buy.

VoxOrion wrote:

mickbayne wrote:Maybe I'm an asshat, too, but I just don't think there's anything "we" should be worried about getting ruined. Best Buy was charging an outrageous price that one of their competitors blew out of the water. A savvy shopper discovered this and used it to their advantage.

"Savvy shopper" = lying and fraud and "used it to their advantage" = stole $100 in store credit from an innocent bystander.

There isn't much people can't rationalize, is there?

there's a considerable degree of rationalization in any economic system. That's partly why behavioral economics has so much traction: how do you tease out the rational from the rationalized?

VoxOrion wrote:

mickbayne wrote:Maybe I'm an asshat, too, but I just don't think there's anything "we" should be worried about getting ruined. Best Buy was charging an outrageous price that one of their competitors blew out of the water. A savvy shopper discovered this and used it to their advantage.

"Savvy shopper" = lying and fraud and "used it to their advantage" = stole $100 in store credit from an innocent bystander.

There isn't much people can't rationalize, is there?

I'm not going to say it is the right thing to do, but stores know these things happen and they make the best of it that they can. Store credit isn't cash out the door, the consumer has to spend it only at that particular retailer, so its goods in, goods out. Sometimes goods never go out because the consumer doesn't spend the entire credit or doesn't spend the credit at all.

Or as mickbayne said, sometimes the consumer spends even more than the store credit. Best Buy is trying its best to maximize profit in this scenario, they're not losing out.

Amazon is probably profiting the most on the series of transactions.

the government too. they get all this sales tax money and nothing is really happening.

lethal wrote:I'm not going to say it is the right thing to do, but stores know these things happen and they make the best of it that they can.

Yes, but in the same way that retailers factor "shrinkage" into their pricing and cost model. I'd bet that there isn't even a different category on their P&L or whatever internal economics they use to track this sort of thing.

lethal wrote:Amazon is probably profiting the most on the series of transactions.

How is Amazon profiting? Their involvement begins and ends with the purchase of the DVD's. They profit in the same way they profit from any sale - they have no idea what's being done with the product once it is delivered, assuming it's not returned (and in this case it isn't).

I sometimes worry about being out of tune with the times.

It's arguable that 1999 was the pinnacle year of American civilization. Our economy was awesome, we had relative tranquility at home and abroad, culturally things were at least no worse than they'd been before or since (and a really striking number of great movies came out that year), things generally seemed to be going really well. But it was an awful time for me: I was miserable in grad school and living in DC which I hated, completing the better part of three years single in a sexual desert with very few drunken oases with exes, the Phillies and Eagles were terrible, and one of my close childhood friends dropped dead in December at age 25.

This decade has been largely an unending series of bummers for the country and world. But things have been, at least by previous standards, great for me: I got married, built a career, bought a home (this was stupid and, at least right now, a financial bloodbath, but it still represents an accomplishment of some kind I think), enjoyed my family and friends, and saw the Phillies win a title and two pennants and the Eagles go to the playoffs eight times. This year, arguably the worst year of the decade, I went to Australia and Japan, had an absurdly easy recovery from open-heart surgery, and got a new job at the end of it, as did my wife, and we started thinking about having a kid.

I'm not asserting any kind of causal relationship or anything. It's just weird and a little disconcerting.

I must have missed the news that you got a new job.

VoxOrion wrote:

lethal wrote:Amazon is probably profiting the most on the series of transactions.

How is Amazon profiting? Their involvement begins and ends with the purchase of the DVD's. They profit in the same way they profit from any sale - they have no idea what's being done with the product once it is delivered, assuming it's not returned (and in this case it isn't).

I think lethal was referring to the increased sales that Amazon would receive on the item as word spreads about the opportunity. It's doubtful that King of Queens DVDs would be flying off their shelves, but once a bunch of people figure out they can make a quick $100 off of them that could change pretty quickly for a few days (or however long it takes Best Buy to lower their price).

VoxOrion wrote:

lethal wrote:I'm not going to say it is the right thing to do, but stores know these things happen and they make the best of it that they can.

Yes, but in the same way that retailers factor "shrinkage" into their pricing and cost model. I'd bet that there isn't even a different category on their P&L or whatever internal economics they use to track this sort of thing.

lethal wrote:Amazon is probably profiting the most on the series of transactions.

How is Amazon profiting? Their involvement begins and ends with the purchase of the DVD's. They profit in the same way they profit from any sale - they have no idea what's being done with the product once it is delivered, assuming it's not returned (and in this case it isn't).

The subs for my company have a line on their P&L named GSLR, Gross Sales Less Returns. I use that number to determine allocation of certain expenses among affiliates. I'm not going to mention any tax implications, but you know I can, and they are favorable to the retailer.

Amazon's profiting because they make a sale and don't take a return. Best Buy probably breaks even (in some scenarios they make a profit). The consumer still spent 90 bucks.

lethal wrote:The subs for my company have a line on their P&L named GSLR, Gross Sales Less Returns. I use that number to determine allocation of certain expenses among affiliates.

I knew of all people you'd have an answer to that

Hey, I'm not saying this never occurred to Best Buy. I'm not saying you're not paying for BB's liberal return policy in other ways or that Best Buy is a noble company.

I'm simply saying that the friend is doing something wrong. He can live with this and that's fine.

Intuitively, I agree with Jeff. But is it any different from the carry trade? Or reselling zhu zhu pets on e-bay?

TenuredVulture wrote:Intuitively, I agree with Jeff. But is it any different from the carry trade? Or reselling zhu zhu pets on e-bay?

I don't know what carry trade is - but the e-bay thing doesn't require an lie, either implicit or explicit, by claiming that a product was purchased at store a when you know you didn't.

This is basic return fraud, regardless of whether "you're only getting store credit." It's hardly any different than stealing an item from one store and returning it to another. This kind of stuff costs retailers billions per year

I'm kinda surprised Best Buy even has this policy. The reason the other stores don't is because people do this crap all the time.