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Circuit City takes further steps to reduce its costs

Hot on the heels of the announcement that CompUSA and Tweeter are closing 126 and 53 stores respectively is word that Circuit City is firing 3,400 employees and bringing in lower-cost workers to fill their roles. The company says that the move is aimed to help realign its cost and expense structure.

"These actions represent the execution phase of the work initiated this winter to accelerate Circuit City's transformation. We expect to deliver improvements in our selling, general and administrative expense rate while maintaining appropriate investments to drive our key strategic initiatives such as digital home services, multi-channel and home entertainment," said Philip J. Schoonover, chairman, president and chief executive officer for Circuit City. "Unfortunately, a number of Associates are directly impacted by the actions, but we are making Circuit City stronger for the long term."

This move comes after Circuit City announced in February that it was closing 62 stores in Canada along with seven underperforming stores in the United States.

The 3,400 employees affected by the job cuts represent 8% of Circuit City's total work force. Employees will be given four weeks’ worth of severance pay and will have the option of reapplying for their positions at a lower pay grade after a 10-week hiatus.

"This strategy strikes me as being quite cold," said Bernard Baumohl, an executive director for The Economic Outlook Group. "I don't think it's in the best interest of Circuit City as a whole."

Likewise, Timothy Allen, an analyst for Jefferies & Co., said that the move could end up backfiring for the company. "It's definitely going to have some cost-savings, but I think the bigger impact could be seen in weaker, poor service," said Allen. "I have a feeling the people they're letting go have probably been there longer, have more experience, more product knowledge."

Jose Macias of San Diego, California was fortunate enough to skate through Circuit City's jobs cuts in 2003. At that time, employees making more than $18 an hour were fired -- Macias was making $17.70 an hour at the time. This time around, Macias wasn't so lucky. His hourly rate translated to $18.72 an hour which is well above the full-time pay cap up $15.50 for his department.

"I dedicated seven years to them. Loyalty gets you nothing," said Macias.

Circuit City also plans to outsource its IT infrastructure operations to IBM in order to reduce costs by roughly 16%. This separate move will affect an additional 130 employees -- 50 of which will become IBM employees while the other 80 will be fired.

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Sign of the times
By saltypeanuts on 3/29/2007 4:27:21 AM , Rating: 5
For any type of computer components or electronics I never purchase at a brick and mortar store, its online all the time for me. Most of the time its free shipping and no sales tax and the prices are way cheaper. Markups are to high at places like this.

It is a shame for the long term employees. As a long term employee of Costco (11 years), I would be absolutely devestated if they did this.




RE: Sign of the times
By ninjit on 3/29/2007 4:37:57 AM , Rating: 5
Which is exactly why all these computer/electronic superstores are closing shop. The tech savy buyer is more likely to make all their purchases online these days.

I don't remember the last time I even stepped inside a BestBuy, CircuitCity, or likes. I pretty much do all my shopping at local grocery stores, Costco, and online (amazon, mostly) in that order.


RE: Sign of the times
By FITCamaro on 3/29/2007 8:59:47 AM , Rating: 5
Well luckily for stores like Best Buy and Circuit City, tech savy people represent about 5-10% of the US population. The rest are people who think an Emachine is a quality computer.

I shop for DVDs, video games, and larger items at Best Buy and Circuit City. I like being able to take larger items back to a store if I have a problem since its kind of a pain in the butt to ship a large TV back if it doesn't work out of the box. Also as I live in an area that sees lots of rain, I like the warranties Best Buy offers that cover surges. I got a 21" TV replaced with a 23" TV for $60 because I had lightning fry it. Just took it back, showed the warranty, got the same money I paid for the TV 3 years ago to buy a new TV, and then just had to pay for a new warranty. Unfortunately I didn't have it on my speakers. :(

I understood when CC fired people when they went to hourly because with the commissioned pay there, the floor employees were at times making twice what their full time managers made. There was one guy in Tampa I heard about who was making $100,000 a year because he was a good salesman. It's not a bad thing to be a good salesman but when your supervisor makes $35-40,000, is full-time, and has more responsibility, thats a problem. Basically it creates an atmosphere where no one wants to be promoted. However this time around, I think they at the least should have offered them a choice of take the max allowed pay or loose your job. Not just fire them.

Circuit City's real problem as far as I'm concerned is the high price of their extended warranties. For the same TV, the Best Buy warranty is always a good amount cheaper than Circuit City's. They do sell some higher end stuff than Best Buy but still, the warranty price is high.


RE: Sign of the times
By BMFPitt on 3/29/2007 9:44:05 AM , Rating: 5
quote:
There was one guy in Tampa I heard about who was making $100,000 a year because he was a good salesman. It's not a bad thing to be a good salesman but when your supervisor makes $35-40,000, is full-time, and has more responsibility


I would consider firing people for being good salesmen to be outstandingly bad business practice.


RE: Sign of the times
By Xavier40 on 3/29/2007 11:27:49 AM , Rating: 1
quote:
There was one guy in Tampa I heard about who was making $100,000 a year because he was a good salesman. It's not a bad thing to be a good salesman but when your supervisor makes $35-40,000, is full-time, and has more responsibility.

Circuit City no longer pays commision as of 2003; www.stereophile.com/news/11569/
February 9, 2003 — The continuing recession is hitting Circuit City hard.

In early February, North America's second largest electronics retailer announced sweeping cutbacks of its workforce, including the dismissal of approximately 3900 commissioned salespeople and the shuttering of 10 repair centers. Circuit City's sales force will move to an hourly wage, a measure that CEO Alan McCollough (now former CEO) said will save the company about $130 million in payroll costs this year. (Apparently not enough to save the additional 3,400 this year).


RE: Sign of the times
By BMFPitt on 3/29/2007 12:32:31 PM , Rating: 3
Yep, firing a bunch of commissioned salespeople will save a ton on payroll. So would changing store hours to 9am-5pm. Both will cause them to lose far more money than they save in the long run.

If I (directly) owned any CC stock, I'd be selling right now.


RE: Sign of the times
By jon1003 on 3/29/2007 11:32:15 AM , Rating: 5
quote:
I would consider firing people for being good salesmen to be outstandingly bad business practice.
Compusa did the same thing(fired best salespeople). You see where they are. You need to base commission off of the contribution margin of the product(profit), and sales people who convince someone to buy something instead of just standing there and letting them walk out of the store should be retained. Circuit city needs to go back to business school and learn the basics.


RE: Sign of the times
By xphile on 3/29/2007 9:21:23 PM , Rating: 5
As someone in business I would just comment that its really just a simple matter of asking yourself "What is it we do?"

If you are a sales outlet then selling is actually your most important task. If you are a service outlet then it is servicing etc. In order for a large group of salesman to do what they do you do obviously need management to organize other things, but where it all goes wrong in these big companies is that management all see themselves as the most important people doing the most important jobs.

The reality is that no matter how big you are and how many manager you need to support the huge number of sales staff you might have, your primary function is still sales and the staff performing that primary function are your most important asset.

If paying them based on commission sees someone earning more than the CEO then put your hands in the air and praise your god, because to get that commission they have sold an incredibly huge amount of stock and made an incredible impact to your profitability and stock value.

The manager that says you cant earn more than me - you're fired, or you earn more than X, you're fired, is the biggest idiot out there with the fastest failing business. When all the good salesmen get fired and there is no more money coming in, all the managers can hold a tea party and try and figure out where their salary is going to come from because none of them actual performs any task which directly financially assists a sales oriented business.

On a footnote, I know an IBM salesperson who regularly takes home more than her boss, and more than his boss in turn as as well. Its no problem for IBM, they know full well how a successful business needs to work. You achieve you get rewarded, everyone wins.


RE: Sign of the times
By Googer on 4/4/2007 3:24:26 AM , Rating: 2
quote:
I would consider firing people for being good salesmen to be outstandingly bad business practice.


quote:
Compusa did the same thing(fired best salespeople). You see where they are. You need to base commission off of the contribution margin of the product(profit), and sales people who convince someone to buy something instead of just standing there and letting them walk out of the store should be retained. Circuit city needs to go back to business school and learn the basics.


They should take a lesson from Jack Welch aka the Former CEO of General Electric (GE) and fire the Bottom 10% every year. But no, Were Circuit City and We do things diferantly and fire the best 10% every year.

No wonder their employees are so clueless as to try to convince me that Sony and Onkyo are the same company..... Idiots! It's like reverse Darwinism..


RE: Sign of the times
By Chaser on 3/29/07, Rating: 0
RE: Sign of the times
By darkpaw on 3/29/2007 1:05:38 PM , Rating: 2
Not if they generate 200,000+ a year in GP(gross profit).

I worked for a small computer wholesaler when I was in college. The highest paid guy at the company was not the owner, it was one of the sales people. Why? Because that single person accounted for a huge % of the companies total GP. It doesn't matter if the sales person makes more then management if they are doing their job well and they deliver *satisfied, repeat* customers. Salesman that do well because they screw over their customers are another story all together. They may show good numbers in a given period, but if their customers don't come back then in the long run they hurt the company more.

Most of these types of sales people end up in the single shot sales businesses like high end jewlery or cars. They don't really care about long term purchase commitments, but for many companies (especially wholesalers, parts houses) its all about the long term relationship and doing numerous sales over years instead of giant deals once every few years.


RE: Sign of the times
By rcc on 3/29/2007 1:33:42 PM , Rating: 2
quote:
I would say paying someone who works the sales floor $100,000 a year salary would be a pretty self destructive business practice too.


Absolutely not! If, of course, (and this is a big if) your commission structure is set up right. If it is, and your salesman sold enough product to get $100,000 worth of salary and commission it is a win-win situation, because the store benefits from the high sales.

Problem with stores like Circuit City, Fry's, Best Buy, CompUSA, etc. is that margin's tend to be low, and variable. And the commission structure is hardly ever geared properly.


RE: Sign of the times
By masher2 (blog) on 3/29/2007 9:50:11 AM , Rating: 3
> "I think they at the least should have offered them a choice of take the max allowed pay or loose your job..."

There are regulatory issues in many states with forcing a paycut on people. I'm sure that, without this hurdle to cross, Circuit City would have been glad to do such.


RE: Sign of the times
By johnsonx on 3/29/2007 11:39:27 AM , Rating: 3
Good thing the government saved these poor workers from being offered a pay cut!


RE: Sign of the times
By rtrski on 3/29/2007 1:19:03 PM , Rating: 2
Not that I know of, so long as they're being paid above minimum wage. But I freely admit my knowledge here isn't global.

In any right to work state, where you can be fired w/out justification (you're not under any sort of employment contract), they can also cut your pay for no reason. Happened to some people I know in very high ranking positions of a high-tech software job (my former employer), and the company didn't even bother to inform them...they found out only after getting their first reduced paycheck and calling up to ask 'what the heck...?' They weren't even told they were doing a bad job...just told 'under the new corporate structure we thought you were overcompensated. Suck it up.' (not a direct quote)

Cowardly as hell, and sends a really piss-poor message to the employees effected as well as all the others (look what we can do to you), but not illegal unless someone could try to prove it was retaliatory or discriminatory in nature. A cut can't be made retroactive (cut pay for hours already worked) and I think civil servants have specific pay retention rules, but unless you've got some sort of employment contract with a commercial employer, I don't know what law would be violated.


RE: Sign of the times
By rtrski on 3/29/2007 1:21:01 PM , Rating: 2
...oh, forgot to mention union protection of course as another preventative to pay cuts. But again, that doesn't apply here.


RE: Sign of the times
By masher2 (blog) on 3/29/2007 2:03:49 PM , Rating: 2
> "the company didn't even bother to inform them...they found out only after getting their first reduced paycheck and calling up to ask 'what the heck...?"

I call BS on this one. It's not even an issue with federal wage law; its a civil violation. If you've agreed to pay a certain rate, you can't change that agreement without prior notice. That notice can be so short as to be immediate...but you can't find out about it after you've already accrued under the new rate. I'm guessing your friends simply missed the notice, or exaggerated for effect.

Many states have much stricter laws. For example, in Missouri, a 30-day written advance notice is required before changing salaries or hourly rates.


RE: Sign of the times
By rtrski on 3/29/2007 4:32:49 PM , Rating: 2
As you said, notice can even be 'zero' in most states (you cite Missouri, which is one of the rare exceptions requiring an advance notice interval), so if you're on salary and paid in advance for each pay period, the paycheck itself constitutes notice of said reduction. At most the employee could argue to get the adjustment for ONE pay period, but that's it. There's no law preventing employers from lowering your pay any time they want - in advance of your 'accruing' labor, as you say - aside from the expectation you'll leave and they'll not be able to find new suckers.

Bottom line though, you original statement that regulatory issues make forcing a paycut 'harder' than just laying off overpaid employees is just plain wrong, so long as the paycut doesn't dip below minimum wage. Now you've just said all they have to do is give advanced notice...the article says everyone being laid off got a month's severance...how would forcing the paycut be harder?


RE: Sign of the times
By masher2 (blog) on 3/30/2007 3:38:27 AM , Rating: 1
> "how would forcing the paycut be [legally] harder?"

Because a forced paycut can be adjudged a "constructive lockout". And in a non right-to-work state, a lockout can be considered an unfair labor practice. Admittedly, Circuit City could have made state-by-state exemptions, but one can hardly blame them for taking the safer and simpler route.

> "so if you're on salary and paid in advance for each pay period, the paycheck itself constitutes notice of said reduction"

In that particular case, yes. But if anyone is working for a company generous enough to pay you for before you actually done the work, I certainly wouldn't complain about short notice for a pay cut.


RE: Sign of the times
By rtrski on 3/30/2007 1:36:04 PM , Rating: 1
Constructive lockouts - or in fact any form of lock-out - apply during labor negotiations by represented employees. Not at-will. And if the Circuit City employees were protected by a union's group negotiation agreements, the firing of the highest-paid as a cost management tactic wouldn't have been an available option, either.

Sorry, you're still not convincing me that the company would have offered employees to say on at lower pay had it not been a bigger 'burden', legally, to do so. The only burden of a pay cut is avoiding minimum wage, and appropriate notice, both of which can vary by state.

And I'm sure if I got a pay cut from a company that paid me in advance for my salary on a 2 week basis, I'd be just so overjoyed by their generosity that I, too, wouldn't gripe at all. As if the notice period is the important part of the issue, not the pay cut. :eyeroll: Even if I wasn't paid in advance, the company's only exposure is for the delta pay for the one pay period in question. No law prevents the paycut itself unless the company is stupid enough to try and claim its because someone is too old, too fat, the wrong flavor of sapiens, etc.


RE: Sign of the times
By masher2 (blog) on 3/30/2007 2:20:58 PM , Rating: 2
> "Constructive lockouts - or in fact any form of lock-out - apply during labor negotiations by represented employees. Not at-will"

I'm sorry, but this isn't correct. A lockout is defined as any work stoppage initiated by the employer, rather than the employees. While its true that nearly all lockouts occur while in a labor dispute with an organized union, this isn't a prerequisite.

Here's a site that will explain it if you still refuse to believe me. The site is Canadian, but US law is similar in many non-right-to-work states...and Circuit City operates several hundred stores in Canada anyway:

quote:
a "lockout" includes the closing of a place of employment, a suspension of work by an employer or a refusal by an employer to continue to employ a number of his employees, done to compel his employees, or to aid another employer to compel his employees, to agree to terms or conditions of employment.

A strike or lockout is unlawful, at any time, if there is no union , or where there is a union and the requirements of the Code in acquiring the right to lockout or strike have not been met
http://www.cirb-ccri.gc.ca/faq/index_e.asp


RE: Sign of the times
By jskirwin on 3/29/2007 10:07:39 AM , Rating: 3
quote:
It's not a bad thing to be a good salesman but when your supervisor makes $35-40,000, is full-time, and has more responsibility, thats a problem.


You clearly don't understand sales. I'm not a salesman, but have gotten work because of them and I hire them whenever I can.

If a salesman closes a million dollars in sales, should he make a $100k? How about if he closes $2 million? What's wrong with paying him $200k?

If he makes more than his manager, so what? How much business did his manager bring in? I don't care if the salesman rakes in more than me as long as he brings in the business.

Yours is exactly the kind of "thinking" that leads to companies firing their top performers only to bring in drool monkeys to replace them - then wondering why their sales have fallen through the floor.

That's okay with me; Good sales people are like gold. If you don't want them, someone else will.


RE: Sign of the times
By drebo on 3/29/2007 10:38:53 AM , Rating: 2
It has to do with more than just how much sales a salesman can bring in and how business they bring in. Most people who go into a place like Circuit City already know what they want and are already committed to spending X amount of money on something.

It's the repeat business that's important. I do corporate sales for an independent IT company in California. My primary goal is not to maximize my margin and revenues at all costs, it's to get repeat business. So, when a company comes to me and tells me they want to redo their office, I have to weigh the immediate gratification I get from a large sale against how much I'll probably get later if I give them a fair deal on the large sale and be able to convince them to use us for all of their future service and hardware needs. A repeat customer is far, far more valuable than a one-time buyer, no matter how large.

So I can understand about Circuit City firing someone who made $100k in commission at the cost of making every customer hate the buying experience and never returning. A loyal customer is worth much more than that single purchase, because a loyal customer will come back when he needs to buy extra parts, movies, cables, etc...all of those things have a much higher margin than the computer itself.


RE: Sign of the times
By jskirwin on 3/29/2007 12:41:46 PM , Rating: 2
quote:
Most people who go into a place like Circuit City already know what they want and are already committed to spending X amount of money on something.


That's true. And I agree that a well-paid sales force would not be the best one to have in such a case.

The problem for CC then becomes: If I already know what I want, and I'm committed to spending X amount of money, what's going to stop me from spending it at Newegg or another online retailer?

For me the answer is obvious because I do most of my purchases online right now anyway. However, how long before more people get over their shopping online fears and discover places like Fry's or Newegg?

I understand that CC is trying to survive and cut costs, but so is their competition. They have to ask: What sets them apart from Best Buy and especially the online retailers? If they can't answer that, and are forced to rely upon internet-phobic or uneducated buyers for their revenue, then it won't take long before they end up like CompUSA and be forced to shutter half their stores.


RE: Sign of the times
By vanka on 3/29/2007 3:43:10 PM , Rating: 2
quote:
Most people who go into a place like Circuit City already know what they want and are already committed to spending X amount of money on something.


This isn't exactly true. Say I want to buy a 40"+ HDTV and I walk into a CC. Now if I'm just a regular consumer, I probably know about how much I want to spend - but I don't know anything about the different technologies. Should I get an LCD or plasma TV? What the heck is the difference anyway? If the salesperson is good; he may convince me to spend the extra dough for a 1080p TV to future proof my investment. If I see that the salesperson was knowledgeable, presented all the options, and warned me about possible pitfalls (think HDMI, HDCP, etc) I sure as heck will come back to the store. Would you say the salesperson deserves a commission when I buy something there? I say he does because even though I was planning on dropping major cash on an HDTV, he kept my business in his store. Had I not received the level of service that I wanted, I would have taken my business elsewhere.


RE: Sign of the times
By alcalde on 3/31/2007 8:17:37 PM , Rating: 2
I'll never forget the time several years ago that I accompanied the owner of the company I was working for at the time to a CompUSA to help him pick out a new LCD monitor for his home PC (he knew very little about tech).

After looking at some of the available choices, one seemed interesting, but there was very little info about it on the little display placard next to it. The man I was with stopped a saleswoman and asked her what she could tell us about this monitor. I kid you not - she reached over to the shelf, picked up the little placard, and stood there READING IT TO US. When she was done, he thanked her and she left. He then asked me if he gave off the appearance of being functionally illiterate. It was hard to reply as I was laughing uncontrollably at this point. :-) We walked out of the store, went somewhere else to make a purchase, and never did any personal or commercial business at that store again. A knowledgeable sales staff is vitally important (and the principal reason many people choose to shop in a physical store rather than online).


RE: Sign of the times
By kalak on 4/2/2007 2:55:01 PM , Rating: 2
quote:
A knowledgeable sales staff is vitally important (and the principal reason many people choose to shop in a physical store rather than online).


THAT'S the point here. People. A good Salesman will ever be a FRIEND of your costumers. There's only a single reason to buy in a Physical Store, and that is human relationships !


RE: Sign of the times
By masher2 (blog) on 4/2/2007 5:42:53 PM , Rating: 1
> "There's only a single reason to buy in a Physical Store, and that is human relationships ! "

So you think Circuit City shouldn't base their business model around pricing or selection, ...but just bet on people being lonely, and going shopping to meet a new friend?


RE: Sign of the times
By FITCamaro on 3/29/2007 10:41:34 AM , Rating: 2
Yes but in a retail environment, the idea is that if you work there long enough, you'll eventually be promoted. And they want people who've been there a while and know how things work to be in those higher positions. Who in their right mind is going to go from being a salesman with no responsibility making $100,000 a year to a supervisor with more responsibility making $40,000 a year? No one. Thats the kind of thing they were afraid of.

Now I'm not saying in all environments it has to be like this and that all good salesmen should be fired if they're making more than their supervisors. I'm sure the supervisor at that store didn't care either. I was working in a Circuit City as a Sprint rep in college when they went hourly. I knew several people who got fired from it and I knew several people who were promoted for it but would be making less money.

The issue I was bringing out is that my belief of it is that more responsibility should equal higher pay. Especially in a retail environment. And really when you think about it, people are already coming to the store to buy things. So the salesman just has to be nice and convince the person to close the deal either that day or come back to them. As a Sprint rep in a Circuit City I had to work so much harder than when I was in Best Buy because for cell phones, people bought them at Best Buy due to better prices and deals. The few times I got to work in Best Buy I made way more money with far less effort solely because people came in looking to buy, not just look.

High sales doesn't always mean you're a good salesman. You just might get the customer's who are ready to buy and you close the deal. On a TV where the margins were high, that translated into big commissions. That also created animosity between the employees who were put into computers where the margins are far lower except on accessories which many people don't want to buy. I worked for Best Buy too in college in computers and selling the computer was easy. Selling the extra stuff was the challenge and many people had the attitude that the manufacturer's warranty would cover everything so things like UPS's, extended warranties, power strips, etc weren't needed.

All that being said, the issue now though is that they're doing poorly and are trying to cut costs.


RE: Sign of the times
By alcalde on 3/31/2007 8:21:22 PM , Rating: 2
"The issue I was bringing out is that my belief of it is that more responsibility should equal higher pay. Especially in a retail environment. "

Then you should offer the $100,000 salesman $150-200,000 to become the new manager. It would still be a bargain. This is the fellow who's then going to use his expertise to recruit and train a whole new army of $100K salespeople for you. After that, double his salary and make his a regional manager. If you don't, someone's going to come along and make him that offer.


RE: Sign of the times
By Chaser on 3/29/2007 12:45:27 PM , Rating: 1
You clearly don't understand the sales floor of a Circuit City store and the skill set necessary for that job.

And I'm sorry but no C.C. sales jock is going to single handedly be pulling in 2 million in sales. If one ever did he'd be given the keys to the Corporate executive wash room.

If you think $100,000 salary for an entry level positon with less responsibility than that store's manager then you should ask Anand for a $250,000 salary for your clueless posts.


RE: Sign of the times
By Leper Messiah on 3/29/2007 8:07:30 PM , Rating: 3
You sure about that? I work at compusa, and we have a few people on our retail sales floor who do $150K + a month in sales. Thats pretty close to $2 million a year. They sure as hell don't make $100K though, $50K would be more correct.


RE: Sign of the times
By chucky2 on 3/29/2007 4:28:29 PM , Rating: 2
My cousing used to work for CC and was like an assist store manager or something like that. He eventually quit to start his own company, but he told me that he lost all respect for CC when they did the 2003 firings. What they did was take all the top salespeople in the company and get rid of them because they made to much money.

So the only thing left are the normal droids they kept on, and the droids they hired to replace them.

Just idiotic business practices to fire your top salespeople. Renogitiate with them, redo the pay scale, but why in gods name would you get rid of your best people, the ones who actually make significant sales????

What's even more insane is decisions like this are made at the top, buy folks pulling down way more money than the people their cutting....of course, the people their cutting actually lend something to the business and customer, where the Execs just lend rediculous salaries to themselves for wacko decisions like this.

CC just plain deserves to go out of business at this point...their Leadership is not competant enough to keep the company running.

Chuck


RE: Sign of the times
By Belard on 3/29/2007 5:08:31 PM , Rating: 2
quote:
understood when CC fired people when they went to hourly because with the commissioned pay there, the floor employees were at times making twice what their full time managers made. There was one guy in Tampa I heard about who was making $100,000 a year because he was a good salesman. It's not a bad thing to be a good salesman but when your supervisor makes $35-40,000, is full-time,


er, no. If the salesman is generating that much in sales - then he is doing HIS JOB (hopefully honestly) especailly if he's selling $5k~$15 entertainment systems - he could easily make that kind of money.

I, as a educated buyer don't need such a salesperson - but understand how business is. When I buy from such stores - it doesn't bother me if they get a commision... if they don't BS me. On certain stores - I know when someone is BSing me or telling me somthing useful. And I go back and have them give me sales service again. I've had them give me discounts - that are generally not possible with hourly sales.

When it comes to selling a $5,000 TV set - an experinced sales person will do a better job to get the sale and make the custoemr happy (within the requirements of the company) vs. some kid who gets paid $7 per hour who could care less and not know what they have on the floor. Time like that, I have to move product around to SEE what features it has.

CC saved money in NOT paying commision sales... but they LOST money in overall sales because of lower quality staff.

In which case - might as well buy from WalMart or online.


RE: Sign of the times
By alcalde on 3/31/2007 7:56:25 PM , Rating: 2
"There was one guy in Tampa I heard about who was making $100,000 a year because he was a good salesman. It's not a bad thing to be a good salesman but when your supervisor makes $35-40,000, is full-time, and has more responsibility, thats a problem."

I think the problem is this... exactly what is the "supervisor" contributing to the bottom line, as opposed to the salesman? If a salesman's generating that much in commission, I don't think he needs to be supervised. If anything, that salesman ought to be the one training new hires, as well as evaluating potential new hires.


RE: Sign of the times
By Schadenfroh on 3/29/2007 2:54:59 PM , Rating: 2
Well, had to buy a PSU from BB once because one failed (an Antec of all brands) and I needed access to the files on that system (could not wait 2 days for one to come in).

They have a reason for existance, but they are overpriced.


RE: Sign of the times
By Locutus465 on 3/29/2007 11:29:27 PM , Rating: 2
I got my Geforce 7800GT at best buy... but mainly because I had my Athlon64 X2, 1GB memory PCI-X motherboard in at the time... Didn't want to wait for the card to ship. That's about the only reason.


RE: Sign of the times
By Milliamp on 3/31/2007 3:32:00 PM , Rating: 2
I have never heard of Costco before now, do you mean you go to their brick and mortar stores or shop their online?


RE: Sign of the times
By abhaxus on 3/29/07, Rating: 0
RE: Sign of the times
By SeanMI on 3/29/2007 7:23:37 AM , Rating: 4
The prices of similar products may not come out much cheaper, but the fact that there is a much larger selection from an online specialty shop means I can opt to buy a cheaper product.

Example: I needed to get a wireless card for my computer. Cheapest one at my local Best Buy was $50 (D-Link). I found a no name wireless card (which has worked flawlessly) for $20 on newegg. Will I report it on my taxes? Yep. Did I pay shipping? Yep. Did it still come out cheaper than Best Buy? Yep...by over $20.


RE: Sign of the times
By theapparition on 3/29/2007 7:27:43 AM , Rating: 2
I completely agree except about the 10-15% price difference. I don't expect local retailers to beat online prices, I do expect them to come close, though. How much depends on the product, but usually around 5% is fair. I'd much rather support local stores (esp. mom-and-pop stores) than some warehouse in indonesia.


RE: Sign of the times
By masher2 (blog) on 3/29/2007 9:03:00 AM , Rating: 2
> "How much depends on the product, but usually around 5% is fair."

Define the word "fair" in this context.


RE: Sign of the times
By theapparition on 3/29/2007 10:20:20 AM , Rating: 3
quote:
Define the word "fair" in this context.

I'd be happy to. Fair means that the retailer makes a profit, yet not as large as they want. Fair also means the consumer pays a little more than they would if they bought online and supports their local store. Somewhere when the two curves intersect a "fair" deal is made. That seems pretty clear to me.

In reguards to an exact percentage, I just gave a ballpark. If your willing to work with your local stores (Im not talking about large corporate retailers), you will find that that they are quite willing to work on price. For instance, a TV sold online and at BestBuy was a little more at a local store. However, they offered a 5year extended warranty for $100, where as BestBuy was $550 for a 4year. I typically do not buy extended warranties, but on this product I wanted it. They also knew what the internet prices were, and after a little haggling, we got the price down. The total price was about the same, plus I dealt with a place where they were all AV experts, not some high schooler looking to hook up with the hottie in aisle 12, or a phone operator using prewritten scripts to answer questions.


RE: Sign of the times
By masher2 (blog) on 3/29/2007 10:31:10 AM , Rating: 4
> "Fair means that the retailer makes a profit, yet not as large as they want."

An interesting definition...but you've just contradicted yourself. A B&M retailer who charges only 5% more than the lowest-cost online vendor will not make a profit, nowhere close to it.

The fact is, even with "unfair" prices on their merchandise (which, for some items can be double or more the online price) Circuit City still LOSES money. Your concept of "fairness" would bankrupt them in a month, and put all 45,000 workers out on the streets.


RE: Sign of the times
By theapparition on 3/29/2007 2:41:15 PM , Rating: 2
quote:
A B&M retailer who charges only 5% more than the lowest-cost online vendor will not make a profit, nowhere close to it.

There are several B&M stores that remain competitive with online offerings. Keep in mind, that I am talking about out of pocket costs (is there any other?), so if a local store is charging 15% more, but 10% of that is taken up in shipping/handling charges from the online store, and the net effect is a 5% difference, I'd probably support the local B&M. Tax is a wash since your legally obligated to pay tax to your state. Once again, the 5% is just a ballpark number. Put it this way, I know a good deal when I see it, so I'll stand by my original comments.

quote:
The fact is, even with "unfair" prices on their merchandise (which, for some items can be double or more the online price) Circuit City still LOSES money.

Yes that is a fact, however, your argument could be circular. Did Circuit City lose that money because their prices were too high to begin with? Is it better to make 10 sales with a small profit, or 1 sale with a large profit? But one thing is certain, if they charge (as you assert) double the online price, they will lose sales. That turns the store into a browsing playground. The only way that can turn those browsers into customers is to now have experienced salespeople who can convince that the extra cost is worth the knowledge and support. They have just laid off their best hope.

quote:
Your concept of "fairness" would bankrupt them in a month, and put all 45,000 workers out on the streets.

I think you give me too much credit. It's not "MY" concept of fairness, its the consumers. Consumers are the ones who vote with their wallets. B&M stores must find their own "sweet spot", where the convienence, knowledge, support, and service can offset the online stores' offerings.

Just another thing to think about, many of the "low price" stores on amazon (or anywhere else) are themselves local mom & pop B&M stores that now sell online. Take a look at all the online listings for camera stores. Many are local businesses in NYC, that continually undercut one another for business. Are you asserting that none of them make a profit?


RE: Sign of the times
By masher2 (blog) on 3/29/07, Rating: 0
RE: Sign of the times
By theapparition on 3/29/2007 11:19:25 PM , Rating: 2
quote:
Sorry, false. There isn't a single B&M retailer......

Wow, you must truely be amazing. You know the financials of every single retailer in this country. I'm stunned!

I know of one retailer that has a 30+ store chain that also sells online. They sell same price online as they do in their stores. There stores are quite profitable, so much so, I was in serious talks about purchasing a franchise from them. They are not in the consumer electronics field, which I think everyone gets caught up thinking about here. As a matter of fact, I just purchased an item at a local retailer that was a full $20 cheaper than ANY online store that I looked at. So don't say it's false. I just did it. If you want, I'll tell you the item. If you can find it online (shipped) cheaper than my local store, I'll issue a complete retraction. If not, you'd have to admit your wrong. So I'm calling you out, time to put-up or shut-up...........then well see about that credit :)


RE: Sign of the times
By masher2 (blog) on 3/30/2007 3:45:58 AM , Rating: 1
> "Wow, you must truely be amazing. You know the financials of every single retailer in this country. I'm stunned!"

Translation: you can't name a single counterexample to contradict me, so you'll substitute a little sarcasm and hope it passes for a logical argument?

Sorry, it doesn't fly. I don't need to know detailed financials to understand that the cost of running a B&M store is larger than a 5% markup.

> "As a matter of fact, I just purchased an item at a local retailer that was a full $20 cheaper than ANY online store that I looked at. So don't say it's false. I just did it. "

Can you not read? Of course you can find individual items that are at price parity. In the case of a markdown, closeout, or other special case, you can even find isolated cases of a lower price. But that proves nothing. It's the average price that matters...and as I already said, no B&M vendor can hold an average price structure anywhere near within 5% of the lowest price online vendors.

That item you bought for a "full $20 cheaper" than any online merchant...if you honestly believe the vendor made a profit on it, you're mistaken. They may not have even made a gross profit on it, and certainly not a net profit.


RE: Sign of the times
By theapparition on 3/30/2007 9:31:20 AM , Rating: 2
quote:
Translation: you can't name a single counterexample to contradict me,

I did name counter examples. See my quote below
quote:
Just another thing to think about, many of the "low price" stores on amazon (or anywhere else) are themselves local mom & pop B&M stores that now sell online. Take a look at all the online listings for camera stores. Many are local businesses in NYC, that continually undercut one another for business. Are you asserting that none of them make a profit?

Now for your quote
quote:
Can you not read?

I not going to be quite as condecending, since I'm certain that you can read, I'll only ask if you comprehend that which you read :)

quote:
so you'll substitute a little sarcasm and hope it passes for a logical argument?

While admittedly a cheap shot, I felt that sarcasm was more effective to counter an asinine assumption on your part. You do not know every industry, nor do you know their markup and profit margins.

quote:
if you honestly believe the vendor made a profit on it, you're mistaken.
So tell me, if I want to buy a $25 item, that weighs 100lbs, the lowest online shipped price is $45. Yes its $5 cheaper online, but the $25 shipping more than makes up for it. So without any sort of basis for conclusion, you've made the assertion that the retailer couldn't make a profit on that item. Logistically, some purchases don't make sense online.

Overall, I understand the point you are trying to make. Online stores generally have lower overhead. My intent, was to never assert that a B&M could sell at an average price below online retailers. My original post was that if I challenged them on price, they would come close. I've been very successful at getting local retailers to a price that I think is fair above online prices. That's my original post, and I stand by it.


RE: Sign of the times
By masher2 (blog) on 3/30/2007 9:46:35 AM , Rating: 1
> "I did name counter examples..."

Err, no you didn't. Your example wasn't a B&M store. It was a vendor who simultaneously operated both a B&M storefront and an online operation. That's a whole different proposition entirely. I'm surprised you don't see that yourself. The more profit a business receives from online operations, the less it requires from the storefront itself.

> "You do not know every industry, nor do you know their markup and profit margins."

Well, the original assumption was consumer electronics (what Circuit City sells-- see?) But I think the statement is generally true for all consumer products. If you wish to disprove it, name a counterexample. Sarcasm doesn't work...data does.

> "My intent, was to never assert that a B&M could sell at an average price below online retailers"

No, your original assertation that a B&M which sold any product for more than 5% over the lowest online price was being "unfair".


RE: Sign of the times
By theapparition on 4/1/2007 11:45:26 AM , Rating: 2
quote:
It was a vendor who simultaneously operated both a B&M storefront and an online operation. That's a whole different proposition entirely. I'm surprised you don't see that yourself.

Are you serious? Let's take any local small B&M retailer. They have a store front with fixed overhead (and in my New York store examples, not the lowest possible overhead by far). That store now decides to sell its products online. To sell online, they have to be price competitive with the online prices. Now for your assertion.....
quote:
A B&M retailer who charges only 5% more than the lowest-cost online vendor will not make a profit, nowhere close to it.

By taking their operations online, their fixed costs havn't changed. They still have the same employees, same building, same inventory, same burden costs. (In fact, their overhead has probably increased for online sales, but lets say it stays the same for sake of argument.) So, if they sell that product at 5% more than competive offering, they're lose money according to your assertion. So, a local store that starts off as a B&M has NO incentive (according to your accusations) to begin online operations, since each sale loses money. But then you also assert that......
quote:
The more profit a business receives from online operations, the less it requires from the storefront itself.

Which is it? Does that company make a profit by selling online, or are they losing money for each online sale. Please let me know which one of your contradictions you'd like to support further.

So my previous examples were perfectly relevent. Store that started off as local retailers, then decided to sell their products online to increase sales AND profits.

quote:
Sarcasm doesn't work...data does.

Good thing I've provided both :) You, however, have provided none. Your entire argument is based on your "gut" feeling rather than hard facts. Like this quote.........
quote:
I don't need to know detailed financials to understand that the cost of running a B&M store is larger than a 5% markup.


I've been talking the whole time about small locally owned businesses. Alas, they are not public, so I can't provide a link to their latest 10K. I can only offer the myriad of business out there that have been in business for a long time and operate a storefront, and sell their products competitively with online-only retailers. I strongly disagree with your assertion that they are isolated, or do not make a profit. Look at all the ebay stores, as another example of locally owned retailers who now have expanded into online sales. If your assertion was correct, that a 5% markup (which, BTW, I never "demanded") was in fact losing money for them, there would never be a push for online sales. However, we can see that the market is booming. So, I'd have to conclude that my original examples, and assertion, are correct.

To alcalde:
I was primarily referring to locally owned retailers, but you have provided a good example of a large nationwide chain that is effective at selling products competitively online. Economy of scale, coupled with effective supply management and store placement could certainly make that happen.


RE: Sign of the times
By masher2 (blog) on 4/1/07, Rating: 0
RE: Sign of the times
By theapparition on 4/1/2007 6:21:05 PM , Rating: 2
quote:
What nonsense is this? I never said anything of the sort.

See below.......
quote:
A B&M retailer who charges only 5% more than the lowest-cost online vendor will not make a profit, nowhere close to it.

and
quote:
That item you bought for a "full $20 cheaper" than any online merchant...if you honestly believe the vendor made a profit on it, you're mistaken. They may not have even made a gross profit on it, and certainly not a net profit.


How long is this thread kept open? :)

quote:
Whups, you're confused again. The original statement (made by you actually, and challenged by me) referred to a 5% price difference between two vendors. Not a 5% markup, which is a wholly different thing.

Actually, it was you who asserted that incorrectly first...
quote:
Sorry, it doesn't fly. I don't need to know detailed financials to understand that the cost of running a B&M store is larger than a 5% markup.


quote:
I'm still waiting for an example of an B&M retailer able to show a profit while maintaining an average price base within 5% of the cheapest online vendors. Just one example will do.

Go to your local landscape supplier, and then see if you can get the same products shipped to your door for 5% less. I'd love to see you get a $3 bag of mulch shipped to your door for less than $3. There's your example, but I'm sure somehow, you'll make an argument that it doesn't apply, or it's an isolated incident.<sigh> For some markets, online sales are not a factor. In other markets, you can find deals that are better than what is offered online.

Despite how you have tried to twist the argument, I've never once stated the "average" sale price at a B&M could be lower than 5% of online price. I've stated from the beginning, that local retailers are willing to work with you on price and can be competitive. I've stated before the example about my local TV retailer. Out-the-door price including warranty was lower than anything I could do online. This retailer has been in business for many years, and has no online presence.

Once again, going back to my original post, I stated I could usually get a price on an item I was looking for for around 5% above online price. I'm not sure how you've construed that as average price on everything in the store. You are so kean on supporting your 5% average number that you seem to gloss over other parts of my posts, such as.......
quote:
There are several B&M stores that remain competitive with online offerings. Keep in mind, that I am talking about out of pocket costs (is there any other?), so if a local store is charging 15% more, but 10% of that is taken up in shipping/handling charges from the online store, and the net effect is a 5% difference, I'd probably support the local B&M. Tax is a wash since your legally obligated to pay tax to your state. Once again, the 5% is just a ballpark number. Put it this way, I know a good deal when I see it, so I'll stand by my original comments.

Local B&M's are not fools, and can support prices below market on prime products by charging rediculous markups on accessories. The sale price gets the customer in the door, and then the hard sell is on to purchase overprice accessories. This is often called an attach rate, or indirect sale. (Side note: I personally call this the Monster Cable scenario, but have also heard it called the ink cartridge fiasco). They are banking on customers to get those accessories to subsidize the cost of the prime purchase. This has been an effective form of sales and marketing for generations. Most online stores also do the same thing as well.

To put it another way, if you take the average price of everything sold online, vs those same products at a local B&M, I'd pretty much guarantee that the online prices would be lower. I'm sure we can agree on that. But on an individual item basis, if your willing to deal with your local retailers, you'll find that many of them will come down signifigantly in price. You said it yourself, that a small profit online sale, from a local B&M increases profits to offset local overhead. Giving that same deal in store is no different. Better to make a small profit than lose a sale. So once again, I've stated from the beginning that local retailers, when all factors are considered, can be competitive with online offerings.


RE: Sign of the times
By masher2 (blog) on 4/1/07, Rating: 0
RE: Sign of the times
By theapparition on 4/1/2007 11:16:18 PM , Rating: 2
Actually, I was refering to the use of the word "markup", which you incorrectly used first.

Once again, you seem fixated on that 5% number (of which I said "usually" in my original post, which is not binding arbitration, nor a "demand"). I've also stated that when there is a 15% price differential, where 10% is taken up in shipping/handling costs from the online vendor (leaving a net 5% price differential), my preference was to support the local store. You seem to completely ignore those sections of my comments. So how about this, don't fixate on average store sales price, but average price out of your bank account per item.

As to being "unfair", that is such a relative term. So many things in life are unfair, from a certain point of view. Is it fair that the government is now using our tax money to subsidize digital cable boxes? I guess it depends on which side your on. I certainly don't like it.

quote:
Afterwards, you admitted the 5% figure was pure nonsense...

No, I said it was a ballpark figure. That means that number could be higher or lower. Completely different meanings.

Some things, I can get a better deal locally than any price online. Other things, I work with stores, and they are happy to get my business, and never once cried "unfair". And other times, I just buy online. Depends on the item, my timeframe, and a myriad of other factors. It was intended to be a simple off-the-cuff remark that you somehow took as a hard rule 5% average price everything in the store. It was also made in response to Circuit City in particular, where I could usually get a better price from a vendor like New Egg, but the convienence and/or necessity of picking the item up right away was worth a small extra amount.

So to clarify, any local retailer who doesn't sell at a price competitively to online prices, is not being unfair. They are just running a business. However, paying a signifigant extra amount is not fair by my standards, so they will not be getting my business unless they come close. If the market continues to support that local store with the higher price, then they will stay in business. Otherwise.........


RE: Sign of the times
By alcalde on 3/31/2007 8:45:55 PM , Rating: 1
Masher, masher, masher... a legal expert earlier, a retail expert now, and I still remember when you were trying to convince me that you could launch a ROCK into space from a fixed position and cause it to hit any spot on earth with GPS accuracy. And you're just as obnoxious, rude and belligerant towards those who disagree with you as I remember.

I for one HAVE been employed at the corporate HQ of a nationwide retailer, and I'll submit them as an example you're looking for: Bed Bath & Beyond. And as I, unlike you, had access to their actual product cost as well as sale price, please don't try claiming that they're losing money on their prices.

To theapparition:

"My intent, was to never assert that a B&M could sell at an average price below online retailers"

It can, if it's large enough to get better prices for its merchandise, and its supply chain is superior. In addition, large B&M chains often do more business by virtue of customers being more aware of them (e.g. having an outlet in a busy shopping mall, etc.). Bed Bath & Beyond, for instance, also does very little advertising, relying on tactics like honoring competitor's coupons and word of mouth. Finally, the BB&B shopping experience exposes the shopper to helpful, KNOWLEDGEABLE sales staff who make it their point to be as helpful as humanly possible. Combine this with aggressively promoting from within (even the current CEO started as a corporate lawyer, and most store/department managers are also recruited from within) and a practice where EVERY employee, even Directors making six-digit salaries, have to spend time (from a few days to a few weeks) in a store doing all the jobs there to understand that the stores are the source of all revenue, and this combines to produce an experience that attracts and retains customers and gives them something unique. This translates to VOLUME of sales, something masher didn't include in his argument.


RE: Sign of the times
By masher2 (blog) on 4/1/07, Rating: 0
RE: Sign of the times
By drebo on 3/29/2007 10:59:24 AM , Rating: 2
This makes no sense what so ever. It's also a totally and completely unrealistic expectation.

You don't have any idea how much a particular component is going to cost the store to buy. Independent stores also have much higher overhead than online shops, the same as big brand stores, like Best Buy. If I were to sell you a $200 item with only a 5% markup, after my commission, we'd be LOSING money on the item. Yes, I often negotiate on price, but there is a point after which I don't back down. I need to make enough margin to pay for things like shipping, my inventory personnel, my receptionist, my self, etc.

Not only that, but often my costs on some items can be nearly the same as what Newegg shows as its list. For instance, I use Ingram Micro as one of my vendors. Newegg also uses Ingram Micro as a vendor. Yet, due to Newegg's volume, they're on a price teir I could never hope to reach, simply because I don't get the volume. As a result, sometimes I end up paying what Newegg sells things for. (This isn't true for all of my items or all of my vendors, but for many of them it is). How am I supposed to sell for 5% over that and still expect to make money? Oh, wait. You don't expect me to make money. You expect me to give things to you for free.

Sorry, bud. That's not the way things work. If it was, there wouldn't be any independent shops left.


RE: Sign of the times
By theapparition on 3/29/2007 11:31:17 AM , Rating: 2
First off, everyone get off the 5% ballpark number I just threw out. It was just an off the cuff remark, where I intetnded to convey that for SOME items, I was not willing to pay a 15% increase in price to purchase from the local store.

I stated in my reply there was two curves, one at which you are willing to sell an item, one at which a customer is willing to pay. If they intersect, you have a deal that is fair for both parties. If your not willing to back down too far on price, that's great, but you have also lost a sale. Granted, that sale may be unrealistic, and you may have lost money on the transaction. So it was good to turn down the lower offer. However, if you continually lose sales because of price points, you will be out of business. You have to offer something that will bring value to the higher price of the transaction. That was my intent of posting.


RE: Sign of the times
By rcc on 3/29/2007 3:06:03 PM , Rating: 2
A B&M offers several things that online stores can't. Whether it is worth it depends on the customer. They offer information, advice, help selecting the right products. A good store/salesman/etc. not only sells you product, he fixes your problem.

Now, to a computer whiz that's no big deal. To the general public it can/should be very important. They may pay a bit more, but they are getting service that is equivalent.

Unfortunately, many of these people listen to their friends, or read reviews, and order online or at a large chain. They end up with the wrong computer, or parts they can't make work and either spend even more getting it sorted out, or join that group of computer haters.

On the flip side, one of the banes of the small computer shop, is the guy that comes in and picks their brains for 2 hours, then leaves and orders online with the information gained. These folks are one of the reasons that shop owners can be a bit "short" if you walk in and start asking specific questions about hardware.


RE: Sign of the times
By drebo on 3/30/2007 2:08:38 AM , Rating: 2
My absolute least favorite people to sell to, right after people who don't speak English, are elderly people. There are just some things that they plain do not understand, and most of them refuse to trust me that I'm not trying to rip them off.

I had one elderly lady come in and inquire about purchasing a new computer, but saying she didn't want to buy one because she was afraid I was going to lock her out of it. It was absolutely ridiculous. This same lady had gone to a Circuit City to look for 24" LCD monitors and some guy there had told her she needed a 512mb video card in order to run it. I tried to explain to her that it had absolutely nothing to do with that, but she would not listen. I ended up having to quote her a video card that was three times as expensive as what she actually needed, because she just plain wouldn't take my advice.

Arg! I just hate it!


RE: Sign of the times
By masher2 (blog) on 3/30/2007 3:53:38 AM , Rating: 2
> "First off, everyone get off the 5% ballpark number I just threw out..."

If you're finally admitting you just "threw it out" and it has no basis in reality, then we'll get off the subject.

> "If [the two curves] intersect, you have a deal that is fair for both parties. "

Every single item sold at Circuit City (or any other item at any vendor anywhere in the world) is a case of those two curves intersecting. People bought because they were willing to buy.

Thus, by your own admission, the price was 'fair'. And so you've just contradicted yourself yet again.


RE: Sign of the times
By gramboh on 3/29/2007 12:33:17 PM , Rating: 2
In Canada at least, the 5% seems realistic (this may be because online vendors do not have the same volume as the US giants ilke Newegg).

For example, the common online vendors here are Directcanada.com NCIX.com and Tigerdirect.com - my local independent vendor is Memoryexpress.com (who have several brick and mortar stores in two cities as well as they do ship online sales). The price difference on many items is 0-5% and sometimes 10% over what you pay from the online outfits. The reason I buy locally from them is because you get a 7 day return/exchange policy which is a lot easier to do than shipping/RMAing stuff back and waiting around for a replacement.

Given how busy it is in their retail stores when I'm there (always a lineup of people) I'd say they are profitable. I suspect they make small margins off most of the parts/hardware but make up for it in service costs/corporate clients.


RE: Sign of the times
By FITCamaro on 3/29/2007 9:04:35 AM , Rating: 2
Yeah I agree. If a 500GB hard drive was $150 at Best Buy and $140 on newegg, I'd buy it from Best Buy. But a 500GB hard drive at Best Buy is around $200. So I'm going to buy it from newegg. Sure sometimes there's rebates that bring the price down to a reasonable one, but I'd rather not wait 2 months for the savings.

You know last I heard Best Buy said they were completely eliminating mail in rebates by a certain year. I wonder when that was.


RE: Sign of the times
By PWNettle on 3/29/2007 3:12:47 PM , Rating: 2
Yeah, I buy most of my stuff online too.

I have a Fry's Electronics a few miles from my house but usually they have less selection at significantly higher prices for the things I'll want to buy. Occassionally something might only cost slightly more or roughly equal to a NewEgg item after shipping.

I love Fry's and have spent a ton there but I don't enjoy overpaying and often not being able to get exactly what I want.

Not to mention that waiting a few days to get the exact item I want shipped to my front door for less money beats the heck out of the inevitable 20 minute minimum wait in line at Fry's - that place is always rockin and there's always a sick line. I hate waiting in an unreasonably long line to spend money!


RE: Sign of the times
By shoRunner on 3/29/2007 4:23:52 PM , Rating: 2
they already have eliminated 99% of mail in rebates.


RE: Sign of the times
By abhaxus on 3/29/2007 5:01:16 PM , Rating: 2
I should have clarified that my 10-15% increase was total out the door (retail+tax on an item in a local store vs retail+shipping+tax on an online item). Also, I should point out that when I buy online I usually pay for expedited shipping (not overnight, but usually fedex 2 day).

I'm sad that I got modded down for making a true statement. It's infuriating as a salesperson to have a customer come in and say "well i can buy this tv for about the same price online after shipping, but there's no tax." There IS tax. You're breaking the law by not paying it! It's true in every state that I've ever heard of.


RE: Sign of the times
By emarston on 3/29/2007 7:41:11 AM , Rating: 3
"If you factor in that it is actually illegal to not self-report the sales tax on the things you buy online, the prices online don't come out that much cheaper."

Wouldn't that depend on the state or local government? Without spending time researching right now I recall that what you are saying is not true in all states. I know some have made new laws to prevent this loophole, but this blanket statement is not completely true. I'm positive AK has no form of sales tax and that the Federal government does not either(they get us all via our paychecks).


RE: Sign of the times
By darkpaw on 3/29/2007 9:16:49 AM , Rating: 2
Yes, it completely depends on where you live. I moved from AZ to VA last year and was completely surprised when I got to the section on the VA tax form to report online purchases. I've never had to do that anywhere else I lived.


RE: Sign of the times
By Targon on 3/29/2007 9:35:30 AM , Rating: 2
New York does it too. Washington state from what I understand doesn't have an income tax as such, and gets all their money from sales.

The real issue is how bloated the state government is, and how much waste there is when it comes to sales taxes. In some states there is no sales tax, but there is a higher income tax.


RE: Sign of the times
By MrBungle123 on 3/29/2007 11:19:57 AM , Rating: 2
yes, out here in oregon we have no sales tax, our income tax however, leaves something to be desired.

As soon as you get above the poverty line the state government bends you over the counter and lets you have it with 40 gritt sandpaper condoms with lemon juice lube every chance they get.


RE: Sign of the times
By Spivonious on 3/29/2007 10:44:31 AM , Rating: 2
And what sales tax would I be reporting? Let's say the item I purchase is in Delaware (no sales tax). I live in Pennsylvania (6% sales tax).

The whole idea behind shopping online is that there is no sales tax unless you're buying from a company located in your own state.


RE: Sign of the times
By bhieb on 3/29/2007 11:45:33 AM , Rating: 2
I am not sure about PA, but you may want to check as you may be mistaken. In TX the law appears to exclude items bought out of state, however the law does not say that. The sales tax law is the responsibility of the buyer to pay not the seller (they only collect it). But the law also says that if your business is out of state you do not have to collect the sales tax, however that does not mean that it is not due. It is still the responsibility of the buyer to pay the state the tax.


RE: Sign of the times
By mm2587 on 3/29/2007 12:28:29 PM , Rating: 2
In Pa you only pay sales tax on instate purchases. So anything purchased online from out of state is tax free. That is unless that has changed recently.


RE: Sign of the times
By Spivonious on 3/29/2007 12:40:18 PM , Rating: 2
I did a quick Google search and came up with this:

http://www.revenue.state.pa.us/revenue/lib/revenue...

Apparently PA does want to collect on all out-of-state transactions. A PA-1 Form is supposed to be filed on or before the 20th day of the month after the purchase. Do I know anyone who does this? No. Have I ever heard of this form before doing this search? No. Does PA enforce this tax? No.

Even more so, if I drive to Maryland, buy an item there and consume it/use it in PA, I must submit the 1% difference.

This is a completely unenforceable tax. I'm curious, does anyone on here submit these PA-1 forms whenever they buy a book from Amazon, a guitar from eBay, or a computer part from Newegg? Or how about if I buy a soda at a rest stop in Delaware and haven't finished drinking it by the time I'm back in PA? Do I have to pay the full purchase price? Or a pro-rated amount for the quantity of soda left?


RE: Sign of the times
By Spivonious on 3/29/2007 12:41:59 PM , Rating: 2
Ooh, I thought of more.

What if I buy something in New York? They have 7% tax. Do I get 1% back if I only use it in PA? You can't do one way without the other.


RE: Sign of the times
By abhaxus on 3/29/2007 4:56:52 PM , Rating: 2
You pay the sales tax of the locality where the purchase is made, not where the seller is located. So if you are in PA, you are most likely required by law to pay 6% on an online purchase whether the online retailer is based in NY or DE or TN or wherever.

In Tennessee (where I live) it is even more of a hassle to self-report because you don't pay income tax in this state. So paying sales tax for online purchases requires a completely new set of paperwork that I don't feel like filling out. Hence why I buy everything online from newegg, who has a distribution center in Memphis and thus sends my sales tax along to the gov't for me.


RE: Sign of the times
By theapparition on 3/29/2007 11:38:39 PM , Rating: 2
abhaxus is correct. You're supposed to pay the tax on the item based on where you live. In the previous examples, if you purchased an item from DE to PA, no tax is charged on the purchase but you are leagally obligated to pay that tax when doing state taxes. Same thing, might I add if you take the drive to DE, and purchase something there, you have to pay PA tax. There are many logistical nightmares with retailers trying to collect out of state taxes, so unless they have a physical presence in the state, no tax is collected. You still have to pay it though.

To sum it up, the sales tax rate you pay is whatever the tax rate is in your municipality.


RE: Sign of the times
By Spivonious on 4/2/2007 1:18:02 PM , Rating: 2
Actually, looking at the pamphlet I found explaining PA's way of doing this, you're wrong.

I buy an item in DE and consume it in PA. I owe 6% tax.

I buy an item in MD and consume it in PA. I owe 1% tax, since 5% was already collected in MD.

I buy an item in NY and consume it in PA. I should get 1% of my tax back, since 7% was already collected in NY.

It has nothing to do with where I live, nor is it collected on the state income tax form. I must report the purchase by the 20th day of the month following the month the purchase was made in.


RE: Sign of the times
By encryptkeeper on 3/29/2007 10:12:41 AM , Rating: 2
"Loyalty gets you nothing,"

Ha. Truer words were never spoken. But I hate to tell you, they'll be perfectly happy letting this guy go and bringing in some kid right out of college with no experience and pay him less than someone who's been in the same position for 10 years getting raises every year but not producing more for the company. It's typical business practice. Also, they probably see plenty of employees that are there for several years, pissing and moaning about not getting promoted, or maybe just that they keep getting raises every year but don't produce anything extra for the company. Maybe this guy wasn't like that, but the bottom line is the owner of Circuit didn't survey all the employees he fired to find out who was still busting their ass on the job. Thats what you have to expect in retail. You want loyal employees after 3 or 5 years in retail? Cap their pay, but pay commissions on extra sales to give them incentive to make more money for the company. Sure it's hard to track...but if you find yourself in retail you'd better either keep your head down or keep working yourself up the ladder if you don't want to get fired.


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