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Old 03 February 2009, 04:17 AM
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GalateaDancer GalateaDancer is offline
 
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Default Name brand electronics at Wal-Mart are made differently?

One of DH's co-workers made a claim I hadn't heard before. He says that electronic companies like Sony, HP, etc. make products that are specially designed to be sold at Wal-Mart. These Wal-Mart versions are apparently made with crappier components than the same item bought at say, Best Buy or online at Amazon, and that's why Wal-Mart can sell them so cheap.

Is there any truth to this?
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  #2  
Old 03 February 2009, 04:24 AM
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J swore the same thing when he worked in Walmart's electronic department, but given that we couldn't afford to conduct any sort of product testing to confirm/disprove this notion, I just ignored him.
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Old 03 February 2009, 04:34 AM
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I could be way wrong, but I would think that the costs of separate manufacturing plants and logistics/inventory costs would more than compensate for saving a few cents per item in parts costs. Even if you use the same manufacturing plants and interrupt production to do the cheaper ones every so often, there is still a cost associated with having the production line for a time to re-jig it to use the cheaper parts.

me
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Old 03 February 2009, 06:09 AM
Troberg Troberg is offline
 
 
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It's common in Sweden for the big chains to have special models. The reason is that it allows them to not fulfill their "lowest price guarantee". If I go to, say, Elgiganten (no relation to the wrestler) and point at, say, a big screen TV called Sony BFTV2000EG and show that the same TV at a competing chain, say OnOff, is 1000 kr cheaper, they'll point at the name and say "But thats a BFTV2000OO, not a BFTV2000EG. It's not the same model, so we are still cheaper.", even though they are exactly the same, apart from the name. It's easy to have a "lowest prices guarantee" when you are the only one selling the product.

There has been some discussion about this in media, and the consumer-ombudsman (despite the name, this is a government organisation) has looked into it, but apparently, they somehow managed to convince them that it's somehow beneficial for the customer. I suspect some money changed hands under the table while they discussed the issue...
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Old 03 February 2009, 07:07 AM
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Quote:
Originally Posted by me, no really View Post
I could be way wrong, but I would think that the costs of separate manufacturing plants and logistics/inventory costs would more than compensate for saving a few cents per item in parts costs. Even if you use the same manufacturing plants and interrupt production to do the cheaper ones every so often, there is still a cost associated with having the production line for a time to re-jig it to use the cheaper parts.

me
I agree. I used to work on a line making circuit boards for cars. Each finished board contained anything from 10 up to about 250 other bits such as diodes, capacitors etc.
Then the finished unit was sold to the car manufacturers for as little as 5 Euro (call it 10 dollars).
Even if a few of these parts were cheaper, it is only a small part of a huge puzzle.
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Old 03 February 2009, 11:00 AM
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Quote:
Originally Posted by me, no really View Post
I could be way wrong, but I would think that the costs of separate manufacturing plants and logistics/inventory costs would more than compensate for saving a few cents per item in parts costs. Even if you use the same manufacturing plants and interrupt production to do the cheaper ones every so often, there is still a cost associated with having the production line for a time to re-jig it to use the cheaper parts.

me
Those cost could be greatly reduced by subcontracting.

Basically, I offer another manufacturer, who already makes the cheaper product, some cash to make the product for me and I simply put the electronics into one of my chassis
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  #7  
Old 03 February 2009, 12:32 PM
kismet kismet is offline
 
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My understanding from one of my professors (sorry, I know 3-year-old class notes aren't a useful site) is that most electronics companies have tiers of products. It's not that they make a product JUST for one store necessarily. But high-end stores sell the top tier of electronics, mid-range sell a lower tier and discount places sell the bottom tier. The differences will tend to be small, like the expensive one has a timer and lit screen, mid-range has lit screen, bottom tier has neither. Cases may be made of a slightly lower graqde of plastic. None of those changes will drastically change production methods or cost. This is why you may see a cd player cheaper at Wal-mart than Best Buy, but if you go to get the price match deal, it is never the exact same product number and they won't match.

Now, Wal-mart may have their own tier if they do enough volume at a manufacturer. A fellow student who worked in retail said that Wal-mart is famous for demanding that manufacturers give them costs low enough to threaten the company's profit. The company is left choosing between missing out on that volume and name presence or taking a huge profit drop and meeting the demanded cost-cut.
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Old 03 February 2009, 12:43 PM
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Quote:
Originally Posted by GalateaDancer View Post
One of DH's co-workers made a claim I hadn't heard before. He says that electronic companies like Sony, HP, etc. make products that are specially designed to be sold at Wal-Mart. These Wal-Mart versions are apparently made with crappier components than the same item bought at say, Best Buy or online at Amazon, and that's why Wal-Mart can sell them so cheap.
Don't know if it's true, either, but I was told something a little like that:

Some computer/electronics items are "lookalikes" specially made for big sales (like the day after Thanksgiving). They're still the name brands and not of poor quality, but the specs will be a little lower than the standard item (i.e., company's standard item might sell for $600 and one of its specs is 600x; the sale item sells for $200 or $300 but the same spec might be 400x).

Thanks.

Bill
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  #9  
Old 03 February 2009, 01:29 PM
CenTex CenTex is offline
 
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Not quite electronics but I was visiting with a John Deere dealer and he said that the John Deere branded lawn mowers you cna buy at Home Depot are not the same as the ones you buy from a dealer (and the price reflects that). The dealer one will have a Honda engine, the Home depot one a Briggs Engine.
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  #10  
Old 03 February 2009, 01:32 PM
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Il-Mari Il-Mari is offline
 
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Quote:
Originally Posted by kismet View Post
My understanding from one of my professors (sorry, I know 3-year-old class notes aren't a useful site) is that most electronics companies have tiers of products. It's not that they make a product JUST for one store necessarily. But high-end stores sell the top tier of electronics, mid-range sell a lower tier and discount places sell the bottom tier. The differences will tend to be small, like the expensive one has a timer and lit screen, mid-range has lit screen, bottom tier has neither. Cases may be made of a slightly lower graqde of plastic. None of those changes will drastically change production methods or cost. This is why you may see a cd player cheaper at Wal-mart than Best Buy, but if you go to get the price match deal, it is never the exact same product number and they won't match.
Yeah, it's usually not worth it to make completely different products from different components, but it's been shown that giving customers a choice of tiers tends to get the most sales (and people to opt into paying for features features they didn't really want or need due to perceptions of increased quality).

Another typical trick, besides adding unnecessary features, is to intentionally cripple the lower-tiered products (this is often the case with electronics or software). The classic example for this is making printers that can print 30 pages a minute, then putting a chip into a portion that limits the speed to 10 PPM and marketing it as an entry level one - and then selling the default one as being a deluxe 'professional' or enterprise model. What makes this interesting is that more effort and resources go into making the 'entry level' ones (because they need to be toned down from the default), yet they're sold for less to up the perceived value of the upper tiers.

A great practical example is Windows Vista, since through it's multiple versions it shows both strategies (needless extras and intentional crippling), along with a host of other lesser ones.

- Il-Mari
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  #11  
Old 03 February 2009, 01:46 PM
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A Cat Named Easter A Cat Named Easter is offline
 
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I would think it would be fairly straight forward to compare model numbers and prices at the different stores. Most of the manufacturing companies I've worked for have made several variants of each product. In those cases, each variant gets a model number to identify it.
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  #12  
Old 03 February 2009, 02:06 PM
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AnglRdr AnglRdr is offline
 
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Quote:
Originally Posted by A Cat Named Easter View Post
I would think it would be fairly straight forward to compare model numbers and prices at the different stores. Most of the manufacturing companies I've worked for have made several variants of each product. In those cases, each variant gets a model number to identify it.
This is just what I was thinking. It is possible (and perhaps likely) that computers manufactured for Wal*Mart are exclusive models to W*M, as well, which, due to potential sales volume, could be be worthwhile to manufacturers (or W*M forced it upon the manufacturers; see also Vlasic pickles in the gallon jars).
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Old 03 February 2009, 02:18 PM
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I agree that having to set up a line to run a cheaper version in most cases is cost prohibitive. While a Contract Manufacturer could be cheaper I don't think a company would sell a cheaper version with the same branding. After all it their name at risk not neccessarliy WalMart's. I have purchased a Panasonic CD player and saw one visually the same with RCA badges.

Some store brands are actually the same as some of the name brands with different packaging so stuff like that happens but typically seems to be with food items rather than consumer electronics.
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  #14  
Old 03 February 2009, 02:29 PM
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AnglRdr AnglRdr is offline
 
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Quote:
Originally Posted by Mr.Dabble View Post
Some store brands are actually the same as some of the name brands with different packaging
This depends greatly on the product. For example, Wal*Mart's dog food is manufactured by the same company as Pedigree, but they are different formulas.
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  #15  
Old 03 February 2009, 02:46 PM
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This is all so interesting! Thanks so much for all the extra information!
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  #16  
Old 03 February 2009, 03:09 PM
blucanary blucanary is offline
 
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My sister got a camera for my niece for Christmas and the lens stopped coming out while she was visiting my mom. Mom called the support number and the recording said that if you were calling about a lens issue from a camera bought at Wal Mart then you should take it back to Wal Mart. It made us wonder why only the Wal Mart cameras were having issues with the lens.
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Old 03 February 2009, 04:41 PM
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Quote:
Originally Posted by AnglRdr View Post
This is just what I was thinking. It is possible (and perhaps likely) that computers manufactured for Wal*Mart are exclusive models to W*M, as well, which, due to potential sales volume, could be be worthwhile to manufacturers (or W*M forced it upon the manufacturers; see also Vlasic pickles in the gallon jars).
I know one of the PCs they sold had the initials "WM" in the part number on the box. We bought a Toshiba laptop last summer for $400 on sale at WM, not found elsewhere, last part of the model was "0000". Not sure where that came from, but it was an unbeatable price.
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  #18  
Old 03 February 2009, 05:53 PM
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Quote:
Originally Posted by Mr.Dabble View Post
Some store brands are actually the same as some of the name brands with different packaging so stuff like that happens but typically seems to be with food items rather than consumer electronics.
I have (rarely) seen it with consumer electronics (the same item with the big name brand and an apparently identical item with the Sears brand).

And I've also seen a top-flight model with the big brand name and a store brand, clearly made by the same company, but with fewer features, selling for less.

Thanks.

Bill
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  #19  
Old 03 February 2009, 06:13 PM
FullMetal FullMetal is offline
 
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having supported HP, I can say this...

the walmart computers made for Black Friday were made the exact same way (same manufacturing subcontractor) with the exact same parts as the other models made at the same subscontractor, they were generally made a little cheaper, 128 mb ram instead of 256, slower processor.. all of which were clearly labeled. looking under the hood, the parts were exactly the same, same motherboard model as other models, same cpu, same memory... now there was a lot of complaints about the speed of the computers... try running xp on 128 mb of ram and let me know how well it works... but that doesn't mean they used inferior components, just cut corners.
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  #20  
Old 03 February 2009, 11:01 PM
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It's not uncommon at all for manufacturers to have "cheapified" lines of their regular products specifically for sale to high-volume discount stores like walmart. In one of the last walmart threads we had here I linked to an article that chronicled, for example, how Levis developed their dumbed down cheaper "signature" line especially for their walmart contract. I've investigated this a lot in regard to power tools, and know that the version of the same tool for sale in walmart or HD is different than what you would get in a specialized store, and often this is not indicated in any way -- the only way you would know is the price. Someone asked if it would not be more trouble than it's worth to make specialised lines, and the answer is that no, it's not. In general, they use the same plans and production jigs, they just substitute cheaper parts. Thus, for example, in power drills it is common to substitute plastic gears for metal ones. The plastic is much cheaper, and will eventually wear out, but probably not within the lifespan of the use it will receive from the average homeowner. This the plastic-metal substitution is an easy way to make the drill much cheaper, but since the plastic part is shaped identically to the metal, the same production machinery can be used. You see this a lot in the dewalt brand name. They do not indicate at all which drills have the cheap plastic gears and which are good metal gears: the only difference is price. With other electronics, it is simply a matter of substituting other cheaper parts in the production process. Using those cheaper capacitors, for example, from that discount capicitor factory that has less stringent quality control. No re-jigging of the production line would be necessary to switch to the cheaper capacitor, it would simply be a matter of loading the cheaper ones rather than the better ones into the machine.

All in all, it's another example of the same principle snopes & barbara keep hitting on in their debunking of "bill gates will pay you money if you forward this email" rumours. People want to get something for nothing, and if they can't get that, then they want to get a lot for a little. But in the end, you usually only get what you pay for.
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