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Comment by dmritard96 | Hacker News Reader

There is an important supply chain related nuance in my opinion - in the US, distribution channels are critically important - Amazon, Best Buy etc. - but in Asia, this isn't always the case, in fact a flash sale on JD or some vendors stores directly means they can play with skinny margins and sell products. If you are selling something in Best Buy, there is a good chance that there is a 50% markup in many cases which is the customer acquisition cost that Best Buy is charging amongst others (limited inventory holding, logistics etc). Because big box retail doesn't have the same kind of foothold in asia and more direct website purchasing is popular, they are able to seemingly to pull off marketplace magic but the reality is their pricing wouldn't look that different if sold in Best Buy for instance. It still might be cheaper, but it wouldn't be the insane rock bottom pricing you are used to seeing reported on TechCrunch...

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Vendors (from Samsung to even clothing companies) make agreements with retail stores to have the same price in shops and online. Otherwise online would be cheaper and retail would refuse to list more expensive SKUs. The only ways to bypass the markup of the distribution network are:

- Go "Tesla" mode: Sell directly online or manage your own distribution – Only works if you pull off a unique product, makes the pricesheet much cleaner (examples: Apple and most hardware startups).

- Use Amazon for distribution to bypass retailers and their markup: That would have worked until 2015, but on one hand it seems no seller would rely solely on Amazon for distribution (lack of foothold of Amazon?); on the other hand Amazon decided to massively dispatch counterfeited products together with merchant-originated ones, casting a doubt on the brand and tainting all their providers together.

To date, it seems like retail remains the safest way to order an item...

Can anyone comment on how Apple works with retailers? Do retailers "buy" from Apple (and pay within thirty days of delivery)? Can retailers return iPhones they can't sell without paying a premium?

Sorry I don't know anything about the market. I don't even know if best buy's margin would be public information or if we'd need to make an educated guess.

I don't know the mechanics of how apple works with retailers but honestly all rules are off for them. With respect to Best Buy's margin - its not a flat rate for anyone, its typically negotiated for each vendor based on a great number of things. In general, Apple's ability to bring customers into the store provides massive leverage to them so they can push back on Best Buy pretty hard to get a better deal.

> on the other hand Amazon decided to massively dispatch counterfeited products together with merchant-originated ones, casting a doubt on the brand and tainting all their providers together.

Does this happen even with products "shipped from and sold by Amazon"?

As far as I understand, whether it is "sold by Amazon" or by a third party, they put the same products with the same ID in the same bins. Traceability is thus broken, and whichever origin you've selected, they take it from the same bin.

Now I take the question the other way: Amazon's UI confuses the user about the third party products, which is the opposite of giving clear information about genuineness and traceability. The day it matters to them, they'll proudly say "Not a Third Party".

I don't believe that a large proportion of phones sold by Best Buy have a 50℅ retail markup. If that were the case, you'd expect those models' effective retail prices in China to be ~70℅ of the US retail prices. But they aren't. Brand-name mobile phones retail for roughly the same price in China as they do in the US. (With the exception of iPhones, which are about 20℅ more expensive in China than in the US).

I suspect that Best Buy makes insignificant margins on most cellphones, but makes it up on accessories (and I guess they sell carrier plans as well?).

You are somehow mistyping % as ℅.

Are you on a retina screen or what? Great catch.

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