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"That's not really all that differentiable, and it costs money both short and long-term." The classic counter example is Nordstrom. Nordstrom looks at you and

by jerrya 15y ago

"That's not really all that differentiable, and it costs money both short and long-term." The classic counter example is Nordstrom. Nordstrom looks at you and figures that if they keep you as a customer, you will spend $100,000 at Nordstrom over the course of your life. (http://en.wikipedia.org/wiki/Customer_lifetime_value http://en.wikipedia.org/wiki/Customer_lifetime_value) Because of that, they will (Snopes says "maybe" http://www.snopes.com/business/consumer/nordstrom.asp http://www.snopes.com/business/consumer/nordstrom.asp) allow you to return tires to Nordstrom that everyone knows you purchased somewhere else, because they aren't losing money so much as they are ensuring their $100,000 of your money. Regardless of the truth of the tire story, Nordstrom is known for having excellent customer care and that helps customer retention and supports their other pricing policies.

kenjackson 15y ago
If it's such a good idea, why doesn't Walmart do it? 1) It works great as a publicity, but not in actual practice. If we all returned tires to Nordstrom they'd very quickly shutdown the practice, if they actually even do it now. Upgrades to Android phones would have to be practiced -- Samsung just can't create an urban legend that some phone in the midwest of the US was updated before. 2) Most people prefer cheaper prices rather than more expensive prices w/ better support. I don't have data, but I suspect that Walmart consistently does better than Nordstrom. And if Samsung effectively doubles the lifetime of each Android device and it's successful then other Android manufacturers will do the same. The net effect? Half total revenue in the Android marketspace -- unless this practice is able to eat away at iPhone -- which I doubt since Apple already does a pretty solid job of updates. It's one of those things that would be better for the customer. But due to the way the market is segmented it likely hurt the bottom line. The only company that could pull this is off is Motorola. Google doesn't care about the total revenue in the HW market. What's Samsung and HTC going to do? Focus on Windows Phone? Not likely. Google could squeeze almost all of the profits out of the HW manufacturers knowing they have very little alternative. I wouldn't be surprised if Google did just this.
- jerrya 15y ago
  Are the Samsung Galaxy S, S II, Nexus, Note devices more of a Walmart product, or more of a Nordstrom product?
  - kenjackson 15y ago
    http://www.walmart.letstalk.com/product/product.htm?prId=39809 http://www.walmart.letstalk.com/product/product.htm?prId=398... Cell phones don't really have the same kind of super high margin distinction as exists in high-end retail. Another reason why the Nordstrom example doesn't work. Nordstrom has jewelry with crazy markup so they can make up in a single purchase for the cost of a lot of service. That doesn't exist with Android smartphones. When there are $2000 Android smartphones (after subsidizing) we can talk the "Nordstrom" brand.
    - jerrya 15y ago
      My point wasn't whether you can purchase these phones there, although that you can, certainly does weaken my point. My point is that Walmart is positioned as "Always low prices". The Galaxy line is not positioned that way. The Galaxy line seems to directly take on the iPhone as its competition, not the low end feature phones. Galaxy II S: $529, Galaxy Note: $600, Galaxy Nexus: $685. I think that's closer to your putative $2,000 phone than a $29 feature phone, especially priced in comparison to that iPhone. These are clearly high end phones segmented to a market that values that. (Regardless, there is always this $50,000 Android phone: http://techspy.com/news/538379/the-50-000-android-phone http://techspy.com/news/538379/the-50-000-android-phone)
      - kenjackson 15y ago
        Well I think one thing we can both agree on -- if you pay $50,000 for an Android phone you should get two years of guaranteed updates. :-)
- wycats 15y ago
  I don't have data, but I suspect that Walmart consistently does better than Nordstrom I'm not sure what you mean by "consistently", but that doesn't actually seem true. Over the past year (Nordstom did better most of the year): http://www.google.com/finance?q=NYSE%3AJWN%2CNYSE%3AWMT http://www.google.com/finance?q=NYSE%3AJWN%2CNYSE%3AWMT Over the past five years (Nordstom got off to a bad start but did better towards the end): http://www.google.com/finance?q=NYSE%3AJWN%2CNYSE%3AWMT http://www.google.com/finance?q=NYSE%3AJWN%2CNYSE%3AWMT Walmart and Nordstrom have similar stock prices, similar EPS, and similar P/E. I think it's fair to say that Nordstrom is doing fine.

by jerrya 15y ago

kenjackson 15y ago

If it's such a good idea, why doesn't Walmart do it? 1) It works great as a publicity, but not in actual practice. If we all returned tires to Nordstrom they'd very quickly shutdown the practice, if they actually even do it now. Upgrades to Android phones would have to be practiced -- Samsung just can't create an urban legend that some phone in the midwest of the US was updated before. 2) Most people prefer cheaper prices rather than more expensive prices w/ better support. I don't have data, but I suspect that Walmart consistently does better than Nordstrom. And if Samsung effectively doubles the lifetime of each Android device and it's successful then other Android manufacturers will do the same. The net effect? Half total revenue in the Android marketspace -- unless this practice is able to eat away at iPhone -- which I doubt since Apple already does a pretty solid job of updates. It's one of those things that would be better for the customer. But due to the way the market is segmented it likely hurt the bottom line. The only company that could pull this is off is Motorola. Google doesn't care about the total revenue in the HW market. What's Samsung and HTC going to do? Focus on Windows Phone? Not likely. Google could squeeze almost all of the profits out of the HW manufacturers knowing they have very little alternative. I wouldn't be surprised if Google did just this.

jerrya 15y ago
Are the Samsung Galaxy S, S II, Nexus, Note devices more of a Walmart product, or more of a Nordstrom product?
- kenjackson 15y ago
  http://www.walmart.letstalk.com/product/product.htm?prId=39809 http://www.walmart.letstalk.com/product/product.htm?prId=398... Cell phones don't really have the same kind of super high margin distinction as exists in high-end retail. Another reason why the Nordstrom example doesn't work. Nordstrom has jewelry with crazy markup so they can make up in a single purchase for the cost of a lot of service. That doesn't exist with Android smartphones. When there are $2000 Android smartphones (after subsidizing) we can talk the "Nordstrom" brand.
  - jerrya 15y ago
    My point wasn't whether you can purchase these phones there, although that you can, certainly does weaken my point. My point is that Walmart is positioned as "Always low prices". The Galaxy line is not positioned that way. The Galaxy line seems to directly take on the iPhone as its competition, not the low end feature phones. Galaxy II S: $529, Galaxy Note: $600, Galaxy Nexus: $685. I think that's closer to your putative $2,000 phone than a $29 feature phone, especially priced in comparison to that iPhone. These are clearly high end phones segmented to a market that values that. (Regardless, there is always this $50,000 Android phone: http://techspy.com/news/538379/the-50-000-android-phone http://techspy.com/news/538379/the-50-000-android-phone)
    - kenjackson 15y ago
      Well I think one thing we can both agree on -- if you pay $50,000 for an Android phone you should get two years of guaranteed updates. :-)
wycats 15y ago
I don't have data, but I suspect that Walmart consistently does better than Nordstrom I'm not sure what you mean by "consistently", but that doesn't actually seem true. Over the past year (Nordstom did better most of the year): http://www.google.com/finance?q=NYSE%3AJWN%2CNYSE%3AWMT http://www.google.com/finance?q=NYSE%3AJWN%2CNYSE%3AWMT Over the past five years (Nordstom got off to a bad start but did better towards the end): http://www.google.com/finance?q=NYSE%3AJWN%2CNYSE%3AWMT http://www.google.com/finance?q=NYSE%3AJWN%2CNYSE%3AWMT Walmart and Nordstrom have similar stock prices, similar EPS, and similar P/E. I think it's fair to say that Nordstrom is doing fine.