6 ms·

The answer is, in part, that Best Buy and other retail stores are addicted to kickbacks from manufacturers. If a product in a retail store is anywhere other tha

by gamble 14y ago

The answer is, in part, that Best Buy and other retail stores are addicted to kickbacks from manufacturers. If a product in a retail store is anywhere other than sitting on an obscure shelf, it's because the manufacturer paid the store for more prominent placement. Special displays like the Apple mini-stores and iPhone kiosks in Best Buys only exist because Apple kicks back a lot of money to buy them. Retailers can't experiment with better displays without undermining a lucrative profit center. Apple can structure its stores the way it does because they only exist to sell their own goods.

tseabrooks 14y ago
Do you know that apple kicks back? I'd think that apples own retail presence would give them the ability to say, "You sell our products this way on this table or you don't get to sell our products". Apple's strong retail presence has to give them more negotiating power than most other CE companies.
- MBCook 14y ago
  There are still plenty of places in the US without an Apple store, but there are Best Buys everywhere. Even if Apple didn't sell laptops, you know they would want their own little corner for the iPad. The last time I was in my local BB, the Apple section looked like a little Apple store (as always). The other tablets were lined up shoulder to shoulder and locked into plastic cases bolted to the shelves. Some were setup so you could actually pick them up. Quite a few were dead (probably uncharged). Other than a basic grouping by screen size, it was a "Here's a bunch of tablets, good luck" situation. It's no surprise they don't sell too well. I'd imagine BB loves the Apple stores. It gives them something that no one else has... a little Apple store. Even if they have to kowtow to all of Apple's demands, it must be a good deal. When an Apple laptop sells (lets say at an average of $1200), how much do you think Best Buy gets of that? $50? $100? When a $400 or $800 PC laptop sells, how much do you think Best Buy gets? $15? $25? Even if BB gets the same percentage for all laptops, or even a lower percentage for Apple... I'm guessing the higher average sales prices makes up for it. Apple's margins are famous, and if I was Best Buy I'd want in any way I could. It's actually a pretty good deal for Apple too. Some beautiful Apple computers, fun to play with, and well setup. Just 10 feet away there is a sea of identical PCs, often with cheap plastic and poor screens. There are some good ones in there (and maybe promoted on isle caps), but still.
  - jpxxx 14y ago
    Apple's margins are famous, for sure, but Apple reseller margins are basically nonexistent. Service and sales have withered on the vine, support is all that's left. All that said, Apple accessories and third party accessories? Yes ma'am! Sickening margin.
    - toyg 14y ago
      It's also about attracting in store the sort of affluent buyer who can afford to buy Apple, who is also likely to have more disposable income to spend on other stuff in the same store.
  - chimeracoder 14y ago
    > When an Apple laptop sells (lets say at an average of $1200), how much do you think Best Buy gets of that? $50? $100? Technically, none. Best Buy doesn't mark up Apple computers at all; Apple pays kickbacks after the sale of devices. (At least, I'm assuming that nothing has changed since 2009). May seem pedantic, but from an SCM standpoint, it's an important difference.
    - greedo 14y ago
      Not to abuse the "citation needed" meme, but can you point to any proof of kickbacks?
- elithrar 14y ago
  > Do you know that apple kicks back? I'd think that apples own retail presence would give them the ability to say, "You sell our products this way on this table or you don't get to sell our products". Apple's strong retail presence has to give them more negotiating power than most other CE companies. They absolutely do - they pay for the floor space in retail stores. They also have their own reps who manage the products there; performing software updates to new OS versions, installing new demo apps (i.e. iWork, iLife, etc), and managing the ticketing. They also provide training to staff (in-store and online) and have a strong preference that only trained staff sell their products. (I did a short stint in retail here in Australia between jobs when I was studying; so this is first-hand).
Steko 14y ago
"If a product in a retail store is anywhere other than sitting on an obscure shelf, it's because the manufacturer paid the store for more prominent placement. " I don't doubt this is true for most commodity pcs but I wonder if Apple isn't the exception here. I'm sure they do pay setup and material costs on the special displays themselves but I doubt they are paying special kickbacks above that for better placement. For one thing they don't have to pay special kickbacks they could just sell their gear to best buy for less. We know that isn't the case because we can confirm that the margins for Apple stuff at Best Buy is pretty terrible because the commission staff there always steer you towards something else.

by gamble 14y ago

tseabrooks 14y ago

Do you know that apple kicks back? I'd think that apples own retail presence would give them the ability to say, "You sell our products this way on this table or you don't get to sell our products". Apple's strong retail presence has to give them more negotiating power than most other CE companies.

MBCook 14y ago
There are still plenty of places in the US without an Apple store, but there are Best Buys everywhere. Even if Apple didn't sell laptops, you know they would want their own little corner for the iPad. The last time I was in my local BB, the Apple section looked like a little Apple store (as always). The other tablets were lined up shoulder to shoulder and locked into plastic cases bolted to the shelves. Some were setup so you could actually pick them up. Quite a few were dead (probably uncharged). Other than a basic grouping by screen size, it was a "Here's a bunch of tablets, good luck" situation. It's no surprise they don't sell too well. I'd imagine BB loves the Apple stores. It gives them something that no one else has... a little Apple store. Even if they have to kowtow to all of Apple's demands, it must be a good deal. When an Apple laptop sells (lets say at an average of $1200), how much do you think Best Buy gets of that? $50? $100? When a $400 or $800 PC laptop sells, how much do you think Best Buy gets? $15? $25? Even if BB gets the same percentage for all laptops, or even a lower percentage for Apple... I'm guessing the higher average sales prices makes up for it. Apple's margins are famous, and if I was Best Buy I'd want in any way I could. It's actually a pretty good deal for Apple too. Some beautiful Apple computers, fun to play with, and well setup. Just 10 feet away there is a sea of identical PCs, often with cheap plastic and poor screens. There are some good ones in there (and maybe promoted on isle caps), but still.
- jpxxx 14y ago
  Apple's margins are famous, for sure, but Apple reseller margins are basically nonexistent. Service and sales have withered on the vine, support is all that's left. All that said, Apple accessories and third party accessories? Yes ma'am! Sickening margin.
  - toyg 14y ago
    It's also about attracting in store the sort of affluent buyer who can afford to buy Apple, who is also likely to have more disposable income to spend on other stuff in the same store.
- chimeracoder 14y ago
  > When an Apple laptop sells (lets say at an average of $1200), how much do you think Best Buy gets of that? $50? $100? Technically, none. Best Buy doesn't mark up Apple computers at all; Apple pays kickbacks after the sale of devices. (At least, I'm assuming that nothing has changed since 2009). May seem pedantic, but from an SCM standpoint, it's an important difference.
  - greedo 14y ago
    Not to abuse the "citation needed" meme, but can you point to any proof of kickbacks?
elithrar 14y ago
> Do you know that apple kicks back? I'd think that apples own retail presence would give them the ability to say, "You sell our products this way on this table or you don't get to sell our products". Apple's strong retail presence has to give them more negotiating power than most other CE companies. They absolutely do - they pay for the floor space in retail stores. They also have their own reps who manage the products there; performing software updates to new OS versions, installing new demo apps (i.e. iWork, iLife, etc), and managing the ticketing. They also provide training to staff (in-store and online) and have a strong preference that only trained staff sell their products. (I did a short stint in retail here in Australia between jobs when I was studying; so this is first-hand).

Steko 14y ago

"If a product in a retail store is anywhere other than sitting on an obscure shelf, it's because the manufacturer paid the store for more prominent placement. " I don't doubt this is true for most commodity pcs but I wonder if Apple isn't the exception here. I'm sure they do pay setup and material costs on the special displays themselves but I doubt they are paying special kickbacks above that for better placement. For one thing they don't have to pay special kickbacks they could just sell their gear to best buy for less. We know that isn't the case because we can confirm that the margins for Apple stuff at Best Buy is pretty terrible because the commission staff there always steer you towards something else.