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
The economy of luxury products is a bit weird because the more expensive they are, the more sought after they become (of course within their range). It’s because the luxury items function is not to bring you a good cost : value rate, it’s either self-rewarding (think of an expensive drink after a well done job), or representing.
Fast fashion clothes can afford and they do sales but luxury brands cannot because if a $1000 bag shows up at $250, then it’s a $250-bag from now on, basically retrospectively devalving each item sold previously at 1000.
So because the only role of a $1000 bag is to show that I can afford a 1000 dollars disguised as bag just hanging in my hands, once it’s known to be $250, it won’t do that job anymore. Therefore a luxury brand never can sell excess inventory for cheap, and some of them are actually meticulous about destroying.
But then why fo they make more? Because their margin is huge. Basically it costs a couple of dozen dollars to produce a 1000-buck bag. So if you overproduce by let’s say 10-15 pieces, then it costs you maybe 400, while if you cannot serve just one single customer because you made one bag too few, then it costs you a missing profit of 900 or so. Even worse, your lost customer goes to the competition. For the company it’s so much worse to have a little less items made, than a few extra, so they knowingly overproduce.
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