Uncharted: The Nathan Drake Collection is available for a retail price of $350 but thanks to a glitch on the official website of Target, a lucky user was able to get the Uncharted bundle for as low as $30.
Target already paid Sony before they got the consoles. Retailers(Target) pay Manufacturers(Sony) wholesale price for products(PS4s). And then Retailers mark the price up & sell those products to consumers for their profit...Sony made their money...Target is the ones at a loss (as they should be, since it was their mistake)
Target doesn't pay Sony until later. That is how Target attempts to keep their cash outflow low until they can recoup the cost.
That is also how retailers can pressure Sony (for instance) to take back consoles or reduce prices at a later date.
That said, yes it is Target's mistake and they have to eat the cost, because Sony sells each unit at a specific price. Beyond that, it is not Sony's problem. Not a big issue for Target if it is a few off....
Simco876:
Believe me, Sony is the one afraid of Target not the other way around. Sony wants their product sold at big retailers like Target for sure.
Target can stock their shelves with Xbox One and other products.
I have no clue when Target actually signs & sends the check to Sony for the PS4s. But trust & believe they agreed to a wholesale price that Target would pay Sony before Sony shipped a single console.
"That is also how retailers can pressure Sony (for instance) to take back consoles or reduce prices at a later date." -- Wrong...That is part of the arrangement that Sony & Target agree to (along with the wholesale price) before a single console is shipped.
Major Retailers & Major Manufactures do NOT work like Consignment Shops. They do NOT wait until the consumer buys a product & then split the proceeds up. In this case Target agrees to pay Sony a wholesale price before they ever see a single console.
And for those wondering, when The Manufacturer (Sony) announced the OFFICIAL price drop Sony normally takes the difference in price out of their own pocket.
When The Retailer (Target, Walmart, etc) has a sale and temporarily drops the price That Retailer takes the difference in price out of their pocket (unless the Manufacturer calls for it: In which case it normally comes out The Manufacturer's pocket, but in rare cases The Manufacturer & Retailer(s) might spit the difference in price)
Shipped to retailers means sold to MS, Sony, Nintendo etc.
Retailers buy consoles at bulk discount, sell them for a small profit. If Target loses, sells consoles at the wrong price, what is it to Sony or MS?
They already bought the systems lol.
When I worked in retail, the only time we got any credit from a manufacturer is when it was actaully on their fault, ie their product didn't work.
WE AS RETAIL ARE BUYING THE PRODUCT, thus...if it doesn't work, its what we call in retail "RTV" or "RETURN TO VENDOR"
Target, Walmart, Gamestop etc don't work for Sony, they don't sell systems then give money to Sony and MS lol.
They work WITH Sony and MS, if Sony and MS have a bad product, they won't sell it. Simple.
Its not selling, thus the won't buy more, they won't fill their store shelves with crap that could be filled with better products.
I'm sorry but you don't have much to say against how retail works, I use to be a manger in retail and run receiving bud.
Uptownsoul is 100% correct.
If Target sold it for the wrong price, that's targets stupid fault lol.
That is like if I'm a drug kinpin and I sell huge loads of drugs to dealers......do you think I care what THEY sell it for? LMFAO! What does that actually have to do with me?
Having worked in retail (HiTech Music Gear) and placing orders with distributors, stock was not paid up front, but invoiced on a 30 day account. Bonuses where available (like an extra 5%) if the invoice was paid within seven days... However, sometimes , within the 30 days, the cost price could drop, and thus we would ask the Distributor for an updated discounted invoice, and if they were to decline, we would not pay it and organise to ship the products back.. They'd then pretty much come to the party.... Of course it can depend on the relationship between distributor/retailer.... I mean , no distributor / manufacture is going to send and invoice their goods to small fry with no business relationship, but for the large chains , I can pretty much guarantee this is the case. They are invoiced.
As for Consignment, It can happen too..... but its generally when a product isn't moving, has no vibe happening, and the distributor is sitting on a ton of product thats just not moving.... To put selling consoles in this scenario as Donthate has, is beyond ridiculous ...
And yes, Its still targets loss selling a unit at that price.
Just wanted to point out Retailers don't always Pay Upfront.
Most big retailers will have net terms. One as big as Target probably gets a Net 30 term, which means they have 30 days to pay from time of delivery. It could be longer, and it's possible for smaller companies to get similar terms, although they usually are more like 10 or 14, and you have to have remarkable credit and an established relationships/references from suppliers. Having an additional guarantor can help as well, but most distributors do not offer lines of credit to new customers.
Retailers that buy direct more often than not can decide to simply return unsold product to avoid paying for it. Usually big stores also get a rebate credit should an official price drop happen. Many bigger distributors will offer a price drop protection of varying times for smaller purchasers.
Rebates come from different contracts that are written up between the companies, and they aren't standard by any means.
Major point of all this is that once it ships, the retailer is responsible for paying it within an agreed upon time, but Target, Wal-Mart, etc, are not breaking out the check book every time they make a purchase, they get invoiced because it's easier for accounting.
In this case, Target still has to pay Sony for the agreed upon price, and it's a loss for Target.
how can agrees be so right and many comment so wrong..
You pay money to sony and sony sends you consoles.. lol :D how it can be other way around, I can imagine it only in official Sony shops they own by SONY.. :D
anyway.. what a lucky guy! :D I remember when here at my local Euronics shop someone by mistake sold G27 steering wheels half the price, it was an instant must buy for me, when I noticed! :D
I made a typo and meant to say that retailers can not simply return unsold product direct to the manufacturer. It's possible to return some items to a distributor though within a short time frame (typically 7 days), but that's pretty rare for games.
Yep Sony is happy bout any price cut that the retailers take on themselves to move units. No idea how they could sell PS4's at $30, I would of bought the whole stock to resell in what not.
@Apocalypze It generally depends on how things were negotiated, generally larger groups like Target get better deals for buying in bulk. Typically though, mark up on something like a console is about 30-40%, which puts a PS4 into a roughly $200-250 range. That said, Target is out far more than just a couple hundred bucks per console undersold this way, since that's just the price for Sony to deliver to the distribution center for Target. Target then had to ship those consoles across the country by truck and pay rent and upkeep on the building it is in. Realistically, Target is looking at a roughly $230 loss per console once everything is said and done, maybe more.
$200-250 range is extremely doubtful. Sony would be taking a big loss on every console sold. I know when PS3 launched they cost well over $800 each to manufacture and they were taking big losses nearing $300+ per console early on. I highly doubt another couple hundred per was lost to retailers. Games are where the money's made and were there's a big mark-up (compared to manufacturing costs), obviously they need to make up tens or hundreds of millions in development and advertising costs though. I know I've read about GameStop, that most of their profit are from games, with barely anything from consoles, but you need to be a one stop shop and provide everything if you want to attract as many customers as possible. So they don't make much on consoles, but then make out on the games. The point of the console is to get the hardware in people's houses so they buy your software over the coming years, that's why they can take a loss on it, knowing (or hoping) they'll make everything back and then some in the long run. Accessories too usually have insane mark-ups. As far as PS3 went, Sony also had a stake in Blu-ray winning out in the HD wars, so they took major losses to get Blu-ray players in people's homes also. The cheapest Blu-Ray players at the time were over $1000. They did a similar thing with DVD in the PS2s. Nintendo has a different strategy where they usually make cheap/outdated hardware that they profit on from the get-go.
That's a bit ranty, but yea, the retailer might make $20-30 I'd guess, if anything, but definitely nowhere near $100-150, or Sony would just cut their console price to $199 and sell like 300+ million of them. The deal with retailers is likely, "You sell our consoles too, or you won't be selling our games and accessories".
"Why would Best Buy, Wal-Mart, and Amazon do this?
If history holds true for the current generation of consoles, retailers make very little money selling them -- instead profiting on games and accessories (and perhaps incidental sales due to added store traffic). Technology website DailyTech broke down the retailer costs, retail prices, and profit margins of some of the last generation of consoles in October 2006. At the time retailers paid $237.50 for Nintendo's Wii and sold it for $249.99; Microsoft's Xbox 360's most basic version cost reailers $292.09 and sold for $299.99. That's a scant 2.6% profit margin for the retailer and 3.9% margin on the Wii.
While retailers do not generally disclose their margins on individual items, these would be very low. Essentially the stores are selling the consoles as a way to get customers to buy games and accessories, which can carry margins in excess of 50%."
Your premise is correct but actually what your describing is Consignment shops where the manufacturer & retailer agree to a price. And then agree on a percentage of the profits after sale...Which is not what Target & Sony (or any major retailer & manufacturer agree to)
Umm I'm pretty sure Sony already received their money when Target bought the units from them to put into stock, Target here is the one who lost money by selling them at that price.
That person is going to have a great time with the PS4.
This person could play 10+ bad PS4 games in a row, and still have nothing to complain about because it was a $30 investment.
Not that there are a ton of bad PS4 games, but just the fact that from this point on, no matter what happens, this persons view of the PS4 can most likely only be a positive.
Everything they experience on the PS4 is just a nice bonus from this point on.
I'm honestly really happy for this person. Congrats, you just got the best bundle deal ever.
Basically an employee in Target made a mistake and I would not like to be in their shoes when they have to explain what happened.
Whether Target legal pursue this depends on management. I do think if the guy who made the purchase kept quiet then he's got a very cheap PS4 bundle and nothing more would be said.
Now he has bragged about it and effectively made Target a laughing stock he could find that the law may not think it quite so funny. Of course nothing may happen and Target will just wear the stuff up but on the other hand it may be worth while to them to pursue the matter.
Lol I'm not tripping those coupons are common they have them for everything I mean they are real as the company computers do take them lol there no crime in using them now the people who make them well that's a different story!
you forgot that for blatant consumer fraud, the lawyer also needs to be paid. they also love going after these types of cases because no jury, nor judge, would ever give the scammer any slack.
You may not realise but using fake coupons whether made by you or someone else is "fraud" and so far you have got away with it. Of course if you use a credit or debit card on your purchase it just makes it a whole lot easier to track you down.
You probably shouldn't get your legal LMAO expertise from Phoenix Wright or Faux Noise...A store screws up a price thats 100% on the STORE NOT the customer...Hell there isn't even a reality where the store can sue someone for their screw up
I'm genuinely happy for those who managed to get a PS4 at that price. I hope the lesser off (financially) got them rather than those who are cash rich.
But this World is an upside down mess ...so unlikely serendipity /
The title of this article is misleading. "Huge Mistake", to me, would be like 1,000+ ps4's sold at that price. From what I'm reading though, this seems to be more of an isolated incident than anything.
That wouldnt work im sure the clerk would have called the store manager if you tried to buy more than one. Its like when we all were buying battlefield premium for 16 dollars when people get greedy it gets noticed and shut down fast.
I don't know how it works in America. But in Sweden, when I worked at an electronics store. The shop bought the consoles and sold them and kept the money. They did not sell them for the manufacturers, or got a wholesale deal and paid after sales. They bought them from the manufacturers and sold them to the customers. And the margins were LOW. I am not kidding you guys, the margins were between 5-40 Swedish krona, depending on the console, that is between 50 cents and up to like 5 dollars, not even that much.
The games margins were not great either. The profit was made with the accessory products, such as controllers, remotes, cameras, cables, etc. The margins on the cables were the best. A gold plated HDMI cable for like 100 dollars, the store bought it for around 15 dollars. So you do the math.
I used to think that the stores were making money of the console margins...but there is barely any. And I think that is international. They make money on the games and accessories. Believe it or not.
Why can't I ever have this happen to me. I'd buy like 5 and sell them all since I already own a PS4. Sell each for 250€-300€ on eBay. Not ever mention where I got it from.
Looks like Target is messing up again. Last year there was a price matching scandal. Sony can't be too happy with this
Lucky dude!
For $30?
better make sure the rest of them aren't going for the 30 or it'll sell out lol
That's great! I got my wii u zelda one at kmart back in 2014 just paying the tax on it with a fake coupon lol
Anybody who gets that for $30 damn lucky
Why can't I ever find these mishaps on my own