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
Suppose you buy a shirt from a retailer for $20. You can think of the price you paid being split between the manufacturer of the shirt, who purchased the materials and sewed it together, and the retailer, who displayed the shirt and collected payment (costs that are just as real as the effort to actually make the shift). Maybe the manufacturer gets $15 and the retailer gets $5. Some retail agreements are explicitly set up this way – the shirt is “owned” by the manufacturer, and the retailer just collects a commission if any of them sell. In other retail agreements, the retailer purchases the shirt at the wholesale price and tries to re-sell it, though these agreements will sometimes have provisions that allow retailers to recoup some of that wholesale price if the item sells poorly.
Now, suppose we’re talking about a shirt that is very ugly and uncomfortable. Nobody wants to buy it for $20, or even for $5. The retailer could put it on a very deep discount, perhaps $1, but this loses them money. They are still paying employees to check out customers buying the shirt. They are still using shelf space on that shirt that could have been used on something more popular/profitable. Putting that shirt up for sale isn’t free, so you need to get back at least as much as it costs just to do the basic stuff that retailers do.
On top of all this, you don’t want to get a reputation as the place that regularly offers free or deeply discounted stuff. Not only is it counter to the image that many retailers are trying to project, it brings you into the orbit of the type of person who is willing to jump into a dumpster because they might get a random piece of dud merchandise.
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