how is it possible that it’s cheaper for a company to destroy/throw away inventory?

Question

My wife has been addicted to watching dumpster diving videos where people end up finding brand new expensive things thrown away by retailers. It made me remember reading somewhere that the reason they do this is because it’s cheaper for them to throw away or destroy their inventory than it is to give it away or sell at discount. HOW???

I don’t see how they could possibly save money by destroying inventory rather than putting it on extreme discount. Surely they could make more money selling at an extreme discount versus no money at all by destroying .

In: Economics

Answer 1

I run a small tech hardware company, and we regularly clear out/dump/ewaste tech gear that’s perfectly functional. There’s a few good reasons behind us prefering to dump rather than sell at a heavy discount:

– Seling at a discount encourages our customers who are otherwise happy to purchase at full price to hold off with their purchase, waiting for a discount if they know it’s going to come, in effect losing us ‘full price’ customers.

– We dump quite a considerable amount of stock, I won’t go into the specifics of what we sell, but there’s a lot more stock avaialble than there is demand for it, so trying to clear it all without dumping will flood the (local) market.

– The biggest reason for us is actually quite frustrating, it’s very difficult to reset consumer expectations to align with what the price they pay. Some of our most demanding customers are those who spend the least, we’ll have customers spend 10-20k+ and are the easiest people to work with, the sale goes through without a hitch, then as a point of comparison, where we have discounted stock down to ‘clearance/get it sold’ pricing in effect, all the Karens come out at once, expecting 10-20k service, and it’s this part that’s draws us the largest loss.

For many businesses, mine included, these practices are built up over time and experience, everyone starts off with a generous heart, as bluntly as it is, it’s the assholes that turn it cold. If there was a way to realisticially export this stock, at no cost to ourselves, to less priviledged markets, where it wouldn’t flood our own, we probably would (and I expect some of the eWaste companies do).