The Big Box TV Conspiracy Theory

James

DTVUSA Member
#1
James Layton

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Creative Commons Genista

Have you ever wondered how the big box giants are able to sell name brand electronics for less than other retailers? Is that low-priced flat screen TV at Walmart the same TV selling for more at a local shop or online? Why are the part numbers different? For years people have asked this same question. A quick search on the internet produces hundreds of conflicting answers. Some consumers paint the Big Box sellers as completely evil. Others say the televisions sold at the big chains are exactly the same as you’ll find in other stores. What is strange is that I found no one who actually knew for sure what they were talking about. The comments were mostly based on feelings and faulty logic. Today I will tell you the truth based on actual experience. I have designed products that are sold in places like Walmart. I have met with top executives from many large chains to discuss product development. I also know repair shops that work on electronics and other equipment sold through these big retailers. But first, we need to understand why some consumers believe there is a difference between products sold at Big Box and regular retailers.

How I heard About "The Deception"
I was first alerted to the different build qualities theory while talking to a home theater retailer. His shop sold and repaired televisions. He explained that when people brought in broken TVs purchased from the Big Box stores, he found some of the parts were different even though the model was the same as those he sold. Parts would have to be special ordered because the standard repair parts he had in stock would not fit. This made customers angry because he was an authorized service center stocked with factory parts. Just not the parts used in the Big Box televisions. At first I thought the story was just bitterness about being undercut by the big guys down the street. But I later heard other accounts about this same thing. This seemed to be the start the whole conspiracy theory about marketing a look alike television with low quality components. A few years later a friend who owned a lawnmower shop told me not to buy a name brand mower sold at a big lawn and garden center, because it was “junk." I pressed for more explanation. He said the parts used on the low-end mowers were not the same quality used on “regular” models the dealers sold. Here was another story about big name brands using different quality specifications. I did not tell him that I had already bought the “junk” mower. But was the mower really junk? Did the Big Box stores have a plan to deceive the consumer, take our money and run? The truth may disappoint conspiracy theorists. The answer is no. The real story is pretty interesting, however.

Do Big Box Chains Sell Inferior Products?
As I mentioned, I have developed products that are sold in small retail shops, on-line and through the big chains. None of the big players have ever, EVER asked for or even hinted at wanting to sell a product that was deceptive, ineffective or poor quality. Yes, there are secretive planning offices (really) where new products are discussed but there are no fat cats lighting cigars with wads of cash, scheming how to rip us off. The Big Box retailers do want our money but they also want to offer quality products at a good value. So how do they do it? I cannot speak for every manufacturer who has partnered with Big Box retailers. I can only relate from my many experiences as a manufacturer and supplier. Here is what I know.

How Big Box Chains Sell At Low Prices
All of the big chains asked for and insisted on high quality goods. The products had to perform to certain specifications. The corporate buyers reviewed all of our specs before approval. The next requirement was price. They needed the product to cost a certain amount and no more. We could either “adjust” our product to reach their target or we could sell our existing product for less money. If we adjusted the product to cut costs, it still had to match performance specs and meet consumer expectations. In some cases we made cost-cutting adjustments but never supplied an inferior product. The decision on the final product design is mostly in the hands of the manufacturer, not the big chain. The corporate buyers trust the selected manufacturers based on reputation and assurance of quality. Often we would give the product a slightly different part number. This helped us track our production scheduling, raw materials acquisition, and warehouse management. Imagine this example. My company makes famous brand lawn mowers. A Lawn Depot knows its customers want a good mower but at a reduced cost. Lawn Depot asks me to build them a mower at a certain price range. I design a good mower with my name on it, but I reduce costs by using a slightly thinner metal deck and swap in a lower cost engine. This translates into a good mower with a warranty, wearing my brand, at a lower cost. This model is only sold through Lawn Depot. As a manufacturer I can afford to do this because Lawn Depot will order thousands of this special product. I sell more mowers than ever and the consumer has another price point option. Plus my top line products are reserved for my independent retailers. This is a simplified explanation of how it works for many manufactures.

Do Big Box TVs Fail More Often?
What about the theory that manufacturers are making cheap Big Box televisions with a high failure rate? I’ve even read one comment claiming a certain discount club buys old defective stock and sells it to their members. This is nonsense. The big chains meticulously track every supplier’s performance, including product failure rates. Why would a retailer knowing sell products prone to fail and be returned? Want to know what would happen if the products I manufactured had a lot of returns? ALL unsold products would all be returned to me. I would have to eat the loss. Does anyone really believe manufacturers or retailers knowingly run their operation like this? It is a completely unsustainable business model.

Use Your Head When Shopping!
Regardless of how you feel about the big retailers, they do not have a plan to deceive you with cheap look-alike products. The differences in chain versus specialty shop televisions may have been significant twenty years ago. But today not so much. The quality of flat screen televisions are simply based on brand reliability, features and performance specifications. Will a $3000 display look better than a $400 model? I would expect so. Today’s smart shopper can research features, price and warranties online before making a purchase. Reliability ratings can be found on every retailer’s website. Independent discussion forums are filled with valuable information. You should be able to look up an item's part number on the manufacturer's website. No matter where you shop, it has never been easier to get real-world reviews and up to the minute deals on televisions. No foil hats needed! Oh...that "junk" mower I bought a couple of years ago...it still starts with one pull.
 

MrPogi

Moderator, , Webmaster of Cache Free TV
Staff member
#3
This little trick is also how they avoid price matching - it may be the same brand and model, but since it has a different model number the store says it can't honor their price matching guarantee.
 
#4
I'm a big fan of Walmart. When I'm looking for a product, I often look at Walmart to see which models/brands they offer. I take it as an endorsement if they sell widget123 from XYZ.

I haven't run the numbers to the penny, but I'm confident I save over 20% on groceries by shopping at one of their super stores, compared to the next lowest competitor. Comes to at least $500 a year. You look at the ingredients for their house brands. Exact same ingredients as well known brands at half the price. 2 liter bottles of soda for 69 cents every day -- not on special -- no coupons. COME ON!

I'm no friend of Sam Walton, and I don't even like his politics.

Rick
 

MrPogi

Moderator, , Webmaster of Cache Free TV
Staff member
#5
I shop at Walmart, but I do think they should pay their employees more. Taxpayers end up subsidizing Walmart due to their low wages.
 
#6
Taxpayers end up subsidizing Walmart due to their low wages.
I don't understand how that can happen. In Rickideemus-land, there would be NO subsidies, no how no way, for anyone with a full time job at minimum wage. Minimum wage in our country makes you filthy rich compared to 90% of the world's population.

You can't argue "Oh, how heartless. We have to do it." You have to argue from the ideal -- which is Rickideemus-land -- not from the corruption, which is all we have now.

R.
 

MrPogi

Moderator, , Webmaster of Cache Free TV
Staff member
#7
If a full time job at Walmart wages allows Walmart employees to qualify for food stamps, medical benefits, etc, then they are being subsidized by taxes. Walmart has lots of lawyers making sure its not Walmart paying those taxes.

Having traveled abroad, I agree that min. wage in the USA is a lot compared to what third world countries get. With all the government help available here, nobody starves. You may go hungry, but you aren't starving. But don't forget the USA cost of living is high. And really, are we happy to compare the US to third world nations?
 
#8
I admit I was shocked to discover the minimum wage is still $7.25 . I thought it was surely up to $10 an hour by now. I can see why someone making $14,500 a year would need a few extra bucks to put food on the table -- but believe me, a single person isn't going to get a heckovalot in food stamps at that level. And there's no way to ensure everyone with dependents will make enough to keep 'em all fat and happy.

But how crazy is it for the government to set the minimum wage so low, and then make up the difference with food stamps, and whatever else they hand out?? It's planned dependency, with the object of buying low income votes. There's no other possible explanation. Walmart has to play the hand they're dealt. They have competitors that will make mince meat of 'em if they pay more than the market will bear.

Nobody forces anyone to work at Walmart at the point of a gun, and if they underpaid, their business would suffer since employees would develop attitude problems and drive away customers. The free market "works" in that sense. By definition, new employees are overpaid for the first few months, because of minimum wage. At that point, you don't know for sure if you've got a druggie, or a psychopath, or WHAT. I just think minimum wage is a minor tweak that slightly improves on the free market ideal. Nature provides "rough justice," and all tweaks should keep that in line-of-sight. It's never wise to stray too far from mother Nature.
 

dkreichen1968

Moderator
Staff member
#9
My friends that are living off the grid in Tennessee are feeding and housing their family of 7 (going on 8) on about $400 a month. Cost of living is relative to our expectations. I don't think they have ever made $14,000 a year in their lives.
 
#10
I lived on $5,000 one year. But that was something like '71 or '72. Minimum wage was around $2 an hour, so I was making more than min.

How much you wanna bet your friends are on the "food stamp grid," and they don't count that as income. Unless they're farmers. They better stay healthy though. They must be converting work directly into food and shelter with no help from the economy at large. Are they Amish?
 

dkreichen1968

Moderator
Staff member
#11
Rickideemus;bt1967 said:
I lived on $5,000 one year. But that was something like '71 or '72. Minimum wage was around $2 an hour, so I was making more than min.

How much you wanna bet your friends are on the "food stamp grid," and they don't count that as income. Unless they're farmers. They better stay healthy though. They must be converting work directly into food and shelter with no help from the economy at large. Are they Amish?
They moved to Tennessee so that they wouldn't have to be Food Stamps. They didn't make enough to live in Colorado Springs and not be. Obamacare forced them onto Medicaid. They went to Tennessee because it was warm, wet, and land was relatively inexpensive. And yes, they are living off the land. Land is the only real wealth, everything else of real value (fiat money has no real value) comes from land (food, fiber, and minerals).

Back growing up on the ranch, we always had a "poverty line" income and a fairly high standard of living. You grow vegetables in the garden, milk the cow, and gather the eggs. You only need money for the things you can't produce yourself.

My friends in Tennessee don't have a house payment, don't have an electric bill, don't have a water, or sewer bill. They have cheap, no contract cell phones. Just figure out how much that would save you.
 

James

DTVUSA Member
#12
It sounds like full-time survival mode. I think some love that lifestyle. I guess it takes dedication and a strong mindset to stick with it and enjoy it at the same time.
 
#13
Here's a statistic for ya. Straight from John Stossel. 5% of the world's population -- a little more than the population of the United States -- lives on less than 1 dollar a day. But that's actually great news. When Stossel graduated from college it was 25% (I'm guessing in today's dollars ... not going to look it up).

Rick
 
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