7 things electronic retail stores don’t want you to know
As a fomer CompUSA (rest in peace) employee, I know a thing or two about chain-store electronic retail. Actually, I know seven things electronic retail stores don’t want you to know. The big dogs (I won’t mention their names, but you know who they are) are going to hate me for this.
1. Depending on the cable, most cables (USB chords, basic video cables, firewire, etc.) cost the store less than $5 each to bring in, yet they’ll sell them at anywhere from $20 to $120 in store. Obviously, internet stores take advantage of this, offering customers much better prices.
2. Electronic retail stores don’t make much money on computers or any complete unit of hardware (TVs, laptops, printers, etc.). They make big money on accessories (ink cartridges, cables, cases, especially extended warranties, and more). Many times, stores will break even or lose money in selling a computer or TV. It’s likely the next time a salesman really pushes you to buy an extended warranty, the store’s selling the laptop at a loss and it’s trying to recooperate the money.
3. This next one is absolutely terrible and I never participated in this. At the specific store I worked at (and I suspect it happens all over the country), employees and even some managers purposely “dropped” laptops or computers in the store room if a customer didn’t buy an extended warranty to “teach them a lesson”. If you notice that your product’s box has one too many dents in it, pay close attention to its condition during the return period.
4. Repair services like Best Buy’s Geek Squad are goldmines for stores because they charge something like $30 for installing a piece of RAM. Other services simply require a “technician” to click a mouse a few times, press a few buttons. The store pays the “tech” $2.00 for the fifteen minutes of work and it pockets the other $28, nearly pure profit.
5. Unfortunately, many store employees don’t know anything about certain products. They’ll pretend to know, but they don’t. You’ll even find them at the Apple Store, popular for it’s “great customer service” (yeah, right). They spout incorrect specifications and prices every time I visit. Half the time, employees like this don’t know what theyr’e talking about, and the other half they’re bullshitting you whether you know it or not. There are good employees scattered throughout retail electronic stores, but it’s hard to find them. Remember: Don’t trust what they tell you in store, do your own research.
6. Most extended warranty plans are a waste of money. Why? Most manufacturers release their products with a 1 year waranty anyway, and the store usually won’t cover anything the manufacturer doesn’t. During the first year of an extended warranty, the store typically falls back on the manufacturers warrany. So it’s pointless to buy a warranty to avoid dealing with a manufacturer, which is a big selling point for these “service plans” or “product insurance”. Futhermore, a lot of people end up losing, breaking, or replacing what they bought instead of getting it fixed because they want something new. What was new last year is ancient technology this year.
7. Finally, the biggest thing electronic retail stores don’t want you to know: Shopping online is a much better way of shopping for your gadgets, gizmos, and computers. Online stores don’t have to deal with as many employees, allowing them to offer lower prices. Brick and mortar stores need to pay managers, salesman, customer service agents, the warehouse guys, etc, etc. Online stores (normally) don’t lie to you. A product’s specs are posted clearly on the product’s page. There’s no dealing with salesman BS, extended warranty lies, pitches to buy accessories. You choose what you want and checkout.
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December 10th, 2007
Interesting, but I think you’re off the mark on Apple. I use PCs and Macs and there is no comparison insofar as the support you get from Apple versus the motley crew of Windows companies. On the phone, online and at their retail stores, they are unreal. I once called Apple about setting up a wireless network using Macs and PCs with Airport and they solved the problem I had with the Windows machine! I only wish that MS, Dell or HP (to name three) were half as good as Apple.
December 10th, 2007
It is no wonder why C-USA is closing down. With statements like that from employees (former or not). I would like to respond to all 7 points if you don’t mind.
1. There may be a profit in cables, but I can assure you that business stay in business from loyal customers not “over pricing.” Do you know the difference between a “Wal-Mart” HDMI cable and a Monster 1000?
2. Not all stores sell “extended warranties.” If you actuall read the print or speak to an employee, it can cover thing the manuf WON’T touch: Power surges, little Johnny and his cup of milk, try to get Sony to give you a new LCD screen on your camera after it hit the corner of a curb…
3. That is 100% the exception and not the rule… As a stock owner (and a very happy one) Whoever in our business that would do that should be exiled to a far away place. I would not wish that on any customer, mine or my competitors.
4. Geek Squad is there to protect, serve, and upgrade those who do not have the TIME or knowledge to do so themselves. No different that a car mechanic. I know how to change my oil, and I am sure you do as well…
5. No sure about C-USA’s training program, but remember, YOU were one of them. The majority of the salesforce may be young, but their knowledge is centered around what they love to do. Sure, they all do not have CCNA certs, or a MCP, but they love the technology and are excited to sell it. Plus we enjoy learning from our customers as well!
6. My response for #2 fits… No Lemon Policy… Why upgrade in a year at your cost… With the Service Plan, your equipment can be upgraded at the store’s cost!
7. If we did not want you to know this then why whould there be a http://www.bestbuy.com site? Plus, can you get a real face to help you at new egg? wow, I don’t mind paying $6 to ship my $5 cable back because it was wrong or crappy either!
Thanks for the opp to clear the air. And thatnk CompUSA!!! Circuit City, you are next… We will see if the “Slim Factor” will save you too!
December 10th, 2007
You’re telling me nothing I do not know, having worked for a computer store as well as big box retailers. And the aforementioned statment is the same for ‘Nig Buddy’.
Michael
Gods of Time
December 10th, 2007
I can’t believe number 3. That is just unbelievable!!!
If I was managing that store and saw one employee do that, i would fire him quick, i don’t care how much insurance he would sell. The more and more i learn about how people are the more I hate people in general. They are cruel and unloving.
I know about the retail business, and I agree. Now the Geek squad thing is of course just business practice. The pricing that is. Geek Squad themselves have a bad rep. If i didnt know anything about my computer I would never go to geek squad, because none of them seem to be trained. I am not sure why people bring it there. I had one lady come in to my shop and asked me to fix her computer. she told me she brought it to best buy’s geek squad a month ago and charged her $120!! I found rootkits installed and a bunch of nasty viruses, which aparently geek squad did not fix.
Like i said though, untrained, or lack of intrest to customers is the problems with these stores. and ruining products for these poor people is just cruel.
December 11th, 2007
You sir, are so off base.
You worked at the lowest level of retail electronics. Coming from the top of the food chain, where I worked as the best supervisor in the whole company of Best Buy for five years, I can sure tell you that the billion dollar business of Best Buy doesn’t share the same problems or issues you talked about.
For example:
1. Most cables are marked up 100 or 200 percent. Since this is the industry standard, and is called “Keystone” markup, you should know that since you “worked” in a retail store. They are not all 5 bucks.
2. Also for electronics profit, the only thing in the store that a company loses money on are PCs. The produtts they sell generally bring in a margin of 30%. That includes Home Theater, Appliances, as well as car audio.
3. No one destroys products in a store that a customer buys. Not this day and age in a reputable dealer. We don’t live in your mom’s basement. Most electronics sales reps are professionals at Best Buy, many educated and with undergraduate degrees.
4. Are you a communist? Is there a problem with making a profit? Geek Squad services, after millions of dollars for the acquisition as well as market testing, proved to be a boom for customers and Best Buy alike. Customers like the fact that there is a brand image they can go to so that they can get their problems solved. Besides, Best Buy always had a tech bench. They just bought the rights to the name “Geek Squad”.
5. Many real retailers worth their stock prices, such as Best Buy and Verizon Wireless, Sprint and many others put their employees through hundreds of hours of extensive product trainings and knowledge. That’s why they make much more money than Comp USA slugs.
6. Extended warranties? Did you work at a Rent To Own? No one reputable sells extended warranties. Quality retailers sell Service Plans or Contracts. The reason they do this is because consumers need some peace of mind as well as a net to catch them if they have problems. These are profitable, of course, but then again most people can’t do their own repairs. That’s why they sell, and sell well.
7. Wrong wrong wrong. I think you are braindead Danny.
Many retailers spend millions and millions such as Circuit City, Verizon and Best Buy, for their online stores. They do this because it INCREASES their profit margins by not paying for the overhead of a brick and mortar.
Each item that they can get their customer to purchase online, not only increases profits, but helps formulate the following year’s budgets. If the companies can reduce costs and increase profits then they make more money and stock prices go up. That’s why many retailers force customers to get mail in rebates in the store and instant discounts online.
That is what makes the world go round. Profit.
It sounds like you probably were a bad employee who got fired from a subpar sales store and is taking it out on whoever will listen.
I’m a consultant making lots of money from my expertise in sales and marketing that I learned from my retail days. Too bad you probably won’t learn from someone like me.
Subway’s not too bad, and it looks like it’s in your future.
-Paul in Chicago
December 11th, 2007
“I’m a consultant making lots of money from my expertise in sales and marketing that I learned from my retail days. Too bad you probably won’t learn from someone like me.”
It’s too bad you don’t know how to form complete sentences, but that’s a character attack, a logical fallacy that just backfires when you use it in an argument. If you can’t understand why I’m saying that, “Paul in Chicago”, I’m sorry. Either way, I’ll avoid the use of character attacks in this response.
“Subway’s not too bad, and it looks like it’s in your future.”
As a professional writer working in Hollywood and for various blogs, I doubt Subway is in my future. Although I’m sure I’ll make lots of money in my the future (I’m a junior at a private University), money is not all that important to me. It’s sad that people like “Paul in Chicago” feel like they’ve accomplished a lot just because they’re a “consultant making lots of money”. A consultant! Yeah, that’s a really exciting life. Good job, Paul. Do you feel better now that you’ve tried to put someone down?
Furthermore, I know some of you disagree with some of the stuff I’ve said. Please understand that I’m not saying these are necessarily “bad” things. I’m simply saying that electronic retail companies don’t want you to know this because it would hurt them, but the reason I bring them up is because knowing them helps the customer.
“Extended warranties? Did you work at a Rent To Own? No one reputable sells extended warranties. Quality retailers sell Service Plans or Contracts.”
Service plans, product insurance, service contracts: they’re all euphemisms for “extended warranty”. By the way, I’ve had “service plans” from various retailers including Circuit City and Best Buy, and I know for a fact that they always send them in to the manufacturer if the manufacturer’s warranty is still good.
“Are you a communist? Is there a problem with making a profit? Geek Squad services, after millions of dollars for the acquisition as well as market testing, proved to be a boom for customers and Best Buy alike.”
Geek Squad services are a rip off. I’m standing by that statement because it’s true. It’s not illegal for Best Buy to make a profit, but taking advantage of the ignorant isn’t necessarily illegal too.
“7. Wrong wrong wrong. I think you are braindead Danny.”
This is why I know “Paul in Chicago” is brainwashed. Shopping online is always cheaper, usually easier, and you can usually trust that the information on a given item is accurate and true (unlike the almost always misinformed salesman at places like Best Buy).
“Most electronics sales reps are professionals at Best Buy, many educated and with undergraduate degrees.”
I bet I can find a simple, basic question on a Best Buy product that would stump at least half of all Best Buy employees trained to know about it. The last time I visited Circuit City and Best Buy, the TV reps didn’t even know what HDMI is. They responded with, “Yeah, it has HD.”
December 11th, 2007
Oh yeah, one more:
“You worked at the lowest level of retail electronics.”
No, CompUSA was not the lowest level of retail electronics. CompUSA was known as the place to visit when you had a question. CC and BB were the places to go buy your product at after you ask your questions at CompUSA. The employees at CompUSA were paid much more than their counterparts at CC and BB, and I know this because many of my coworkers came from those stores. They also described CC and BB as terrible places to work because of working conditions and the low pay they received. CompUSA fell because corporate couldn’t manage the company not because the in store employees sucked. Every CompUSA employee that worked around the time the company fell apart knows that corporate had no idea what it was doing. Please, “Paul in Chicago”, be more informed the next time you make such accusations.
December 15th, 2007
I think all of you need to understand one thing… Customers will shop where they want, when they want. The sucessful companies will strategize around the insights of those customers and formulate a customer retention plan to increase loyalty. The ones who only focus on the product… (Wal-Mart, Fry’s, CC, C-USA, and others) will falter in the wake of the increasing gap between conusmer knowlegde and technology advances… Thay is where BBY and the Geek Squad will use their employees unique ideas and experiences in service of the customer… NOT in service of the product.
Check the earnings release next week for BBY and CC… YOU WILL SEE!
February 9th, 2008
I think Paul in Chicago either has his wires crossed or his cables in a knot!
October 27th, 2008
Thanks for the inside info. I think anyone who has been around long enough to get burned by some of these groups is in on much of this info. It’s just nice to see it confirmed so many times and out on the net more and more so people move on to the groups that won’t cheat them.
The people who purport to work in these retail stores and take a beef with you are quite foolish. These are nation-wide chains. That means if you work in one or even manage a few in your town there are hundreds if not a few thousand other kiosks or full blown stores where untrained and unethical managers or sales people work.
Your cable assumption is right. Paul in Chicago is a fool. The point you made was that retail stores mark up their usb and other lower cost cables by an insane margin. Charging $20 for a $.75 usb cable is not a 100% or even a 200% mark up, Paulie.
The whole rebate system is another issue I’d like to have seen thrown in. I’m guessing more stores offer “instant rebates” (how is that different than a regular “sale” special?) now because of all the backlash against places like Comp and, surprise, surprise, Best Buy.
Thanks Danny for being an honest person. Your kind of people are becoming rarer than a good electronics store. Especially since so many of them are getting the ax now.
October 28th, 2008
I think I was one of the worst employees at any electrical store. Not for the fact I did not know what I was selling, it was due to me telling customers, “You know what, don’t buy this here buy it on Amazon.com, it’s half the price”. I quit my job shortly after getting the position. I didn’t like how sly these big corporate businesses actually are.
November 30th, 2008
Great article! But, I have seen worse! On item number three. As a customer, I witnessed the General Manager and a supervisor line up digital cameras and throw them at a wall. They even opened a few packages to sell at discount “demo” prices—they were never used- and they dropped them onto the floor ON PURPOSE. These “shake and bake” cameras were marked on the outside and at the bottom of the carton with a piece of color masking tape. If they bought accessories and a warranty, they sole them a “good” camera. If the customer hammered them on the price, or didn’t by extras they sold them a marked camera. One time they had a sale on a certain popular brand of camera and they wanted to upsell them to a more expensive and profitable camera. Every single camera was mistreated.
January 22nd, 2009
Mr. Mendez,
You have your head so far up your back side it amazes me you can breath. I work for Samsung, the largest TV supplier in the world. Places like the FORMER Circuit City and Best Buy do not send all defective products back to the manufacturer. You are wrong. Sorry, but I was working retail while you were still an itch in your fathers pants. Big Box retailers like that repair at least their own television and companies like us give them an extra 10% of gross sales back to take care of defective products and labor costs. Can you imagine the shipping charges on televisions??? Plus no shipper on the planet would take that kind of liability on the products. I could go on but i won’t, after all you are just a junior. My advice, keep your mouth shut on issues you know nothing about. Currently i have a Master’s degree in Business from Harvard University, and PHD in Electrical Engineering from UCLA. Thank you for your time!
April 8th, 2009
This article is in fact the truth. I used to work for Best Buy parttime during closing hours, and the stuff I saw them do was exactly what this article claims. Those dents and scratch marks on the boxes were not from the shipping I actually saw them drop and kick them, and they would open a sealed item so they can mark it down for themselves. Needless to say I quit Best Buy and told the manager what I saw and he said he will look into it. Here’s the problem these guys who were suppose to train me on the floor told me that the manager was aware of what they were doing. Because the manager would get great deals himself. Since then I don’t shop at retail stores anymore and now do all my shopping online. The best move I’ve made. Now I see why so many companies were closing back in 2005. Consumers are tired of being treated like they owe these companies something. I sure it’s just a matter of time when Best Buy closes. As the online shopping continues to grow we will see more stores closing. Online is the way to go.
April 25th, 2009
I cant appear as smart as the rest of these guys, but i can tell you i went to high school with a guy that now works on the “GEEK SQUAD” and he was the biggest drug addict i have ever seen in my whole life, and dumb as rock… Lets look at it this way, a keyboard at best buy will run you from $20.00-$140.00 as to were Newegg.com sells them as low as $6.99. then you have to pay shipping about ehh $7.00 so you do $6.99+$7.00= $13.99, now you do $20(best buy)-$13.99(NewEgg.com) and you get a difference of $6.01, now it may not seem like much but this is just an example, it is a recession right? we should be looking for savings every were right? Think about if you saved from $1.00-$100.00 every time you bought one item, i would be happy as hell, now what gets me more then retailers is technology it self think about this the keyboard was invented in 1868, 141 years ago!!!!! why are we still using this same technology!! I mean the gas powerd motor was invented in 1876 8 years after the keyboard, Why do we still use stuff like this today?…So i would have to go on to say that, retail stores are the biggest rip in the world, and most of the people that run the “STORES” are well FAGGOTS sorry guys, maybe you should think about the people you rob, i don’t at all mind watching your shoplifting rates go up and i hope they continue to grow.
Sincerely
FU RETAILERS.
October 7th, 2009
I think it’s funny how some people here are giving their opinion on what works on retail because they have a middle class job or a master’s.
Electronic retailers do make 100-500% margin on some products, believe it or not, if you buy a PS2-USB adapter for 6.99$, it probably costed less then 0.10$, it’s called BUY LOW SELL HIGH, the oldest and most common principle of any business. If you need a master’s degree to know that, you’re a moron.
Extended warranties aren’t all that evil, if some people are happy with paying 20$ to extend their PS3 warranty by a year, then let them, the peace of mind it gives them is probably worth the 20$.
I won’t comment on number 3, people are idiots, and a teenager working or young adult working on minimum wage probably doesn’t care much about their job, maybe Corporate should share their huge margins more fairly with their employees, you call the guy who wrote the article a communist, I call you fascist.
Number 4 is just like number 2, if a 67 year old man is happy with paying a kid 20$ to fit his computer memory because he is too afraid of breaking it, then let him, I mean, Maths and Law is pretty easy yet people hire over paid lawyers and accountants for advice, right?
Number 5 is opinion, not fact. Ofcourse not everyone who works in a electronics retail store is absolutely sure of what their doing, perhaps corporate should invest in training, wages and incentives more?
Shopping online is easier, cheaper and more efficient. People that respond with ” you wouldn’t buy a 5$ cable online ” are just trying to be argumentative and failing at it. Ofcourse you wouldn’t buy a cable online to save 1$, but you could be a External HDD or a Sound Card and save 30-50$.
November 12th, 2010
I went to Newegg.com to buy a cheap netbook.
I found an Acer Aspire One for $299.00. I bought the same one at Wallmart for $250.00. Wallmart.com charges $278.00. So much for online electronic values.
December 1st, 2010
Love the Playstation design of this website, Could the Author email me as soon as they can.