Consumer electronics is a tough
An interesting play we see going on right now is Officeworks,
Here at Sprocket we try to keep abreast of the market by having strong links with manufacturers such as Apple, Samsung and Microsoft, maintaining direct contact with major distributors, as well as keeping an eye on what’s happening in the retail space.
An interesting play we see going on right now is Officeworks, who rumour has it are making a grab for market share in the consumer electronics space, in an attempt to muscle out rivals such as JB Hi-Fi, Harvey Norman and even pure online player Kogan.
Let’s take a look at a couple of examples and see what’s going on. Now, as everyone in business knows, pricing can be a tricky game to play, and the following survey was done at the end of April 2017, and if you did the same survey yourself right now, your mileage would very likely vary – even within a week we’ve seen prices fluctuate as much as 20%.
The ups and downs of Samsung Galaxy Tab A 10.1” 16GB WiFi
We noted it first with the popular Samsung Galaxy Tab A 10.1” 16GB WiFi. RRP of this tablet is $449 AUD. Almost immediately after the tablet’s release, Officeworks entered the market and pushed the price right down, offering the tablet for $398. JB-Hi Fi and Harvey Norman followed and also started selling the tablet for $398. Since then, it’s jumped around a bit, back up to near RRP, then down again, and then a little while back Officeworks went even lower again at $382.
Harvey Norman
Harvey Norman followed, and as at the time of preparing for this article (end of April) were sitting at $381.
But by the time I’m publishing this article (start of May) they’ve popped back up to $448.
JB Hi-Fi
JB Hi-Fi did not follow the others down into the $380s but nor have they followed Harvey Norman back up again, and over there it is still sitting at $398.
And what’s Officeworks Number?
As of today it’s available for $329.
That’s a whopping $120 / 27% off RRP, and $52 cheaper than the nearest competitor. That is truly unbelievable pricing, and can only be a sign they are at war with somebody.
So what about iPad?
Anybody who sells Apple products will tell you there’s practically no margin in it. This way Apple controls the pricing for the end consumer. Resellers for the most part complain bitterly about this, but as one said to me, at least you know it’s a level playing field, and Apple are not going to dud you [a hint that if you are big enough, you can squeeze Apple’s competitors down as much as you like, whereas nobody is big enough to squeeze Apple]. So what’s happening with pricing of the new “iPad”.
Apple Store
You can buy the base model 32GB WiFi from the Apple Store for $469.
Harvey Norman
Over at Harvey Norman, you will get the same price, the RRP
JB Hi-FI
What about over at JB Hi-FI? Well, as is JB’s common strategy, why not go a dollar cheaper just to be able to say you are cheaper than RRP? $468 it is.
And what about Officeworks?
Not only have they gone $10 a unit cheaper than JB Hi-Fi, but they are publically advertising a bulk buy price of $444 for 20+ Units.
Now that is really interesting. Presumably even your grandma who decides to purchase an iPad for every one of her Grandkids is unlikely to get 20+ in an order, so this can only be targeted at commercial buyers and integrators like you and me. Both JB HiFi and Harvery Norman have “Commercial” Divisions as well as their retail arm, but as far as we know, Officeworks does not. So is this advertised bulk buy price a signal that they want to play in the Enterprise arena? Might we see Officeworks Commercial soon? Watch this space…
Whatever is going on behind the scenes, this evident price war can only be a good thing for consumers, while it lasts at least. Retail tablet pricing has never been as tight. This means that integrators rolling out tablets in bulk can get access to great pricing even for a handful of units for our proofs of concept, or our retail clients just doing a few at a time can get better pricing than ever before.
If you are looking at 100+ units, it’s always going to be worthwhile shopping around and squeezing down the margins of somebody. Sprocket is here to help you with this and point you in the right direction with those kind of volume requirements. But in the meantime for smaller orders, with retail prices like these, why would you go through a complicated distributor network, or bid pricing with the manufacturer, when you can get a better price just strolling down to your local Officeworks.
Of course, like with any low margin strategy, usually it’s a play for market share, and once the market is established and people are accustomed to buying their tablet technology from Officeworks, the prices will no doubt creep back up again. But hey, why not make hay while the sun shines?
