Should New Camera Be in Sealed Box?

Started Jun 21, 2013 | Discussions thread
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Re: Should New Camera Be in Sealed Box?

MarkInSF wrote:

That's assuming they don't sell more goods because of their generous return policies, and that the people buying those discounted open box goods would have otherwise bought at full price. Which they probably wouldn't have. I don't doubt they're still making decent profits on them. They aren't selling them at a loss. Margins are high on goods like this. It's mostly a problem for the small stores that don't have much involved inventory. Them I feel bad for you when they get jerked around. For Best Buy they're just goods to sell in an occasional 'open box' sale. Which brings people into the store.

That may be true or might not be, but is totally not relevant to the discussion. I am saying that all three stores maintain the same ret markup, net profit levels and sales, just for this totally imaginary comparison. We're just describing the possible ways of handling returns.

Plus I don't think you're right in saying margins are high on goods like this. The standards for the retail industry taken as a whole is a 45% Net Retail Markup which translates usually in doubling the net cost of the item. If the cost of Mennen Aftershave is $145, Walmart will price it at $290 and that should average to a 45% Net Retail Markup, overall. That generally holds true for discount stores and regular stores alike. Discount selling is discount buying, which is a motto on the wall of Target's Sporting Goods buying department in Minneapolis, or was a while back. I've been told it's also an old retail saying.

Unfortunately, the markup and margins on more expensive retail products are much smaller. New car dealers typically are lucky to maintain a 10% real margin on new cars. Sometimes much less. Expensive photography gear also is in the 10% range or less. Nikon's 24-85 new FX kit lens makes a whopping $46 at average street prices. There's just no room to make money and still discount open box. Open box just gets rid of that item and frees up the cash value on that item. Even if an open box sale loses 10%, the theory is that you've at least injected that remaining cash back into the company coffers.

This is all why some stores have to repackage the open box stuff and try to get full new street price.

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