Who eats a price drop regarding retail stock?

August 17, 2011 11:34 AM

Game console price drops! What happens regarding the stock retailers already have on hand?

Thinking about the recent 3DS drop and yesterday's cut for the PS3, I was just wondering how companies and retailers handle these with regard to the stock on hand. Do they get reimbursed for the difference they paid for the stock? Oftentimes these drops are announced to the public and are immediately in effect, how much warning would retailers have?

posted by yellowbinder to Shopping (3 answers total)

Just guessing here, but it's possible the retailers don't pay much up front for the goods, and then do accounting afterwards when they actually sell the unit to divvy up the revenue to the supplier. That's how it works for other industries.
posted by thewumpusisdead at 12:57 PM on August 17, 2011

In some industries, the manufacturer eats the price drop. These kinds of policies are sometimes (often?) known as "price protection". See this article (or at least the first page) or this blog post.
posted by mhum at 1:42 PM on August 17, 2011

I work in a similar market. The manufacturer gives us price protection based on the inventory we have on hand. We generally hear about price drops/new product at the same time as the general public.
posted by BryanPayne at 1:51 PM on August 17, 2011 [1 favorite]