November 26, 2005
Black Friday & The New Middlemen
Posted by Gordon Smith

In retailing, "Black Friday" refers to the day after Thanksgiving, when most retailers finally become profitable. (Best Buy and certain other retailers refer to the day as "Green Friday" because of the money generated on that day.) According to the W$J, "shoppers turned out in sometimes-frenzied droves."

After returning from an early-morning excursion to Best Buy, my wife reported that the customers who snapped up the deeply discounted Toshiba L25-S1192 laptops ("doorbusters") were mostly men in their 20s, who had camped out at the store beginning at 9:30 pm on Thanksgiving Day. Even more surprising, there was talk among this group of listing their purchases on eBay.

So I checked it out, and eBay has over 50 listings for that laptop, all posted on November 25. Best Buy's price was $379.99, and many of the listed laptops have already cleared that price. According to the NYT, many of the doorbusters are sold below cost. The volume of eBay listings doesn't seem particularly large, given the number of laptops sold by Best Buy, but I wonder whether this sort of "professional" activity will discourage shoppers like my wife from sacrificing sleep and ultimately lead to a change in the way that stores lure customers on the day after Thanksgiving.

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Comments (2)

1. Posted by Christine on November 26, 2005 @ 7:41 | Permalink

The Pottery Barn outlet in San Marcos, TX has a sign warning that quantities of merchandise will be limited precisely because too many middlemen were arbitraging geography -- traveling to the few PB outlets and selling the stuff on eBay. I'm not sure why PB is concerned about that.

However, my Creative Memories (scrapbooking) rep tells me that CM prohibits reps from selling CM products on eBay. CM reps receive certain products that are only available to the public as gifts at CM at-home parties or as other incentives. These products, as well as discontinued items, routinely show up on eBay. Here, CM has an incentive to keep the products sold through the pyramid system, where the commissions flow up.

2. Posted by geoffrey manne on November 26, 2005 @ 11:24 | Permalink

Does this strategy make sense? (That's a rhetorical question -- if it didn't I'm sure they would never do it) (that was a rhetorical statement) (sort of). I'm told by a reliable source -- a friend who arrived at Best Buy yesterday before 8 am to buy a portable DVD player for $80 -- that, as far as she could tell, everyone who made off with one of these "doorbusters" purchased said doorbuster and nothng else. In other words, the strategy is not succeeding, if it is succeeding, by getting people into the store to buy a few high margin items along with the cheapies. The NYT article suggests it's all about marketing -- spreading the word that Best Buy, for example, is a value store, with the customers' interests at heart. But do people really fall for that? I wonder if the folks who received -- and even more importantly, those who didn't receive or didn't even try to buy -- the scarce doorbusters are more likely to return to Best Buy for subsequent shopping because of the marketing. I'm not convinced. How elastic is their demand? Won't they just find the lowest prices/most convenient stores, loyalty or squishy senses of "value" be damned? My best guess would be that (the hope anyway) is that such marketing precludes some price search, as people just presume Best Buy has the lowest prices on other items, as well. But then, I'm not in the business, and I don't have access to the relevant data.

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