Why don't sites like DealExtreme sell their goods for a higher price?
April 6, 2010 11:41 AM   Subscribe

Why don't sites like DealExtreme sell their goods for a higher price?

The prices on that site are low, which is a good thing for buyers, and free shippiing is great too. I can't help but think they could get away with charging slightly higher prices and there wouldn't be any problems at all. For example, why sell something for $2 when stores are selling it normally for $10?
posted by abbat to Shopping (12 answers total) 1 user marked this as a favorite
This is just a guess on my part, but I imagine that keeping the prices low discourages returns and support calls. If I spend $2 on something and it breaks then it's "Oh Well". If I spend $10 and it breaks, then they need to expand their telephone support and return centers.
posted by syntheticfaith at 11:50 AM on April 6, 2010

I don't know what kind of stuff they usually sell at DealExtreme but upon quick perusal it appears to be largely gadgety / gimmicky. Maybe people are more likely to buy stuff they don't really need on a whim if the price is below a certain point.
posted by ghharr at 11:55 AM on April 6, 2010

They're selling incredibly cheap stuff that sucks, and have priced it accordingly?
posted by mikeh at 11:55 AM on April 6, 2010 [3 favorites]

Firstly, they're based in Hong Kong, so they have direct access to vast quantities of cheap Chinese goods without the overheads that a similar company in the US or Europe would have (i.e. having to import the stuff froim China in the first place).

Secondly, a lot of the stuff they sell is often pretty crudely constructed, with next to no quality control. I've bought cheap electronic gadgets from DealExtreme and found I had to take them apart and resolder half the components to get them working; even the most basic quality control would have picked up the fact that these items could not possibly have worked. But still, I paid perhaps a quarter of what I would have paid buying from a source in my own country, and I'm sure their business model relys on nobody ever sending stuff back. There's no way a European or US company would survive selling goods at the same level of quality.
posted by le morte de bea arthur at 12:13 PM on April 6, 2010

I think their whole business model is build around "this is so cheap that you can't lose", thus customers' expections are really low (good when it arrives and it meets those expectations). If they raised their prices, customers wouldn't be so inclined to buy their items, and may shop for a higher quality product at a higher price.
posted by meowzilla at 12:22 PM on April 6, 2010

why sell something for $2 when stores are selling it normally for $10?

Either because they're making money on each product, even at $2, or they are using it as a loss-leader to drive customers to the site, or as a marketing tool to get their name out there (just look at this question)

Econ and Business 101
posted by jckll at 12:25 PM on April 6, 2010

Mikeh hits the nail on the head.
posted by Jupiter Jones at 12:58 PM on April 6, 2010

The tautological answer is that it is what the market will bear.
posted by phrontist at 1:01 PM on April 6, 2010

I think syntheticfaith has it.

I buy from Dealextreme all the time. I've complained about and exchanged one item [a MacBook power adapter]. That item cost $35. Everything else I've bought from them has been a commodity item that has cost a couple bucks at most. If one of those things fails, I'm probably not going to bother saying anything about it [as in the case of the first DSLite SD-card adapter I bought for $6; it stopped working after a year, and I just bought a couple more to replace it and have a spare or two instead of dealing with the exchange hassle].

why sell something for $2 when stores are selling it normally for $10?

The only reason I buy anything from DealExtreme or Monoprice is the price. Take something like this. DealExtreme: $4; Amazon: $18; Apple Store: probably $40. If Dealextreme charged the same as Amazon, I'd just buy it from Amazon. That extra $14 potential profit is, as far as I'm concerned, just not available to DE, because then there's no reason for ordering from China and receiving it sometime in the next few weeks.

I imagine many if not most of DealExtreme's customers feel the same. The main reason to buy stuff from DE is because it's cheap cheap cheap.

That said, the one time I returned something they were perfectly gracious about it. It was DOA, I emailed them, they told me where to ship it, and a few days later I had a working replacement.

posted by chazlarson at 1:09 PM on April 6, 2010

I've bought stuff at Dealextreme, and I've gotten a refund once or twice (but also gotten a lot of broken junk I haven't bothered complaining about).

Once, I looked up the cost of the stamps on the envelope (from another seller), and it was more than what I had paid for the item. Explain that...
posted by alexei at 1:20 PM on April 6, 2010

If you buy a doodad for $3 and it's a piece of crap that breaks after two uses, you sigh and say oh well, and maybe continue to buy some more cheap $3 doodads from them in the future because, hey, for $3 it wasn't that much of a gamble and who knows, some $3 doodads might just last for years. If you bought that same shitty doodad for $14 you would never buy another thing from the site again, ever, after it broke.
posted by Rhomboid at 1:29 PM on April 6, 2010

posted by djb at 4:50 PM on April 6, 2010

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