- This topic has 15 replies, 9 voices, and was last updated 10 years, 11 months ago by
.
-
Posts
-
It’s the first time I’ve bought anything from AO.com but they were the only company that stocked a telescopic cooker hood I needed in a hurry. Very slick outfit I must say and deliver on the button, no fuss.
But I now realise how they make their vast profits. Their smooth talking friendly staff try to flog a no nonsense extended warranty at every opportunity. And they don’t take no for an answer. Just bombard you with texts, emails and junk through the post.
(Only £1.50 a month for a cooker hood……..er?…..NO!……that’s N O….. NO……..AO…..let go!)
Re: AO oh no!
ordered a lot of stuff from them in fact have a machine coming in tomorrow. they have never try to sell me insurance either online or over the phone. get the occasional email but thats no prob
Dave
Re: AO oh no!
Martin wrote:But I now realise how they make their vast profits.
They just issued a profits warning and their margins suck.
They churn a lot of cash and products but don’t make very much money at all if you look at it in relative terms.
K.
Re: AO oh no!
Re: AO oh no!
Perhaps John Lewis operate the best system. Flogging white goods they don’t stock themselves but use ‘service partners’ and take a slice of their profits instead.
Re: AO oh no!
Uhm, no.
I’m afraid you don’t understand that system at all by the sounds of it Martin.
JL buy in container loads of Lux produced branded for them. Service I would expect to be included in that pricing as, JL don’t have their own.
So, it all just gets farmed out to SF as normal warranty work I’d think.
Unless you know something different of course
K.
Re: AO oh no!
I was referring to ALL white goods brands they sell in direct competition with DSG, AO, Uncle Tom Cobbly and all. They don’t have stock holdings but rather sell them using their ‘service partners’ (i.e. The various manufacturers and import agents). I wasn’t referring to their own branded goods.
Re: AO oh no!
You are sort of right Martin. JLP like a lot of retailers large and small will stock some lines they have purchased in bulk where the offer from the manufacturer was in their interest to do so.
Other lines which are not high in volume or colour options which are slow sellers dealers can order online via the manufacturers ordering systems.
This is where Tradeplace comes into it’s own. As you can see all the major players out there use this system not only for stock ordering into stores or off shore warehouses like JLP for instance. Even little old us use this valuable resource. We are effectively using the manufacturers on line live stock as our own stockroom.
DonRe: AO oh no!
Yeah and keep in mind that JL has it’s own, sizeable, distribution as well which doesn’t come cheap but, that is used for all products.
In the end though Martin I’d expect that 80{e5d1b7155a01ef1f3b9c9968eaba33524ee81600d00d4be2b4d93ac2e58cec2d} or more of what they sell they will have in stock as, otherwise, people would go elsewhere.
Both of which as an astonishing cost and investment on the part of any retailer and I’m not sure that unless it’s on a large scale whether it’s worth it and, even at that as AO kinda shows, it may not be worth it even scaled up.
In a way some of us here will have seen the same thing happen, your accountant tells you that you made £XX thousands this year but you’ve no cash in hand at the bank, it’s invested in the cost of achieving the sales to generate those profits. You made money, have the CT bill to prove it but not the cash to pay that. Not uncommon.
For large businesses like these I suspect it’s often a PR thing to show how great they’re doing so investors don’t walk away from it and customers get that warm cuddly “safe” feeling.
K.
Re: AO oh no!
Whichever way they do it they certainly seem to be on the ball, although normal household goods may be expensive their white and brown goods are very competitive. We are looking at a curved 4k Samsung TV. Cheapest places are richer sounds and john lewis
Re: AO oh no!
kwatt wrote:Yeah and keep in mind that JL has it’s own, sizeable, distribution as well which doesn’t come cheap but, that is used for all products.
K.
Not to mention most JLP stores have their own satellite warehouse which are fed from the distribution centres.
DonRe: AO oh no!
kwatt wrote:Yeah and keep in mind that JL has it’s own, sizeable, distribution as well which doesn’t come cheap but, that is used for all products.
.Sometimes not. 😉
I bought a large Sony flatscreen TV from JL in November. It was delivered by two blokes who looked like scruffy gypsies in an unmarked, fairly tatty large white van.
If I hadn’t had text confirmation of their impending arrival I would have been bolting the doors. :eeek:
Re: AO oh no!
don wrote:You are sort of right Martin.
Thank you Don, that’s where I was coming from.
Re: AO oh no!
I must apologise Martin, the vibe I got from your posts was that all these big companies were making wads of dough by screwing over the public and service agents alike. I kinda thought that’s what you were saying but, apparently not.
The cold hard fact is, nobody is (or very few are) making any money or, any decent money in the appliance industry from the manufacturers down, everyone is scrabbling about trying to find ways to make… well, something.
You see big profit posts and, in all honesty, a lot of them are hooey.
Looks great for PR but if you actually look at the numbers in relative terms and take into account the massive scale, the actual margins and the territories covered, it ain’t all that great.
But please don’t take my word for it, just look at the facts of recent times…
– Fagor, fifth largest EU producer, bust.
– GE, sold out to Lux, can’t make home appliances pay.
– Siemens, sold out the remainder to Bosch, can’t see a future in it
– Indesit the largest EU producer, sold to Whirlpool.
– Retailers, countless no longer trading.
– Distributers, remember them, you even had a choice?And, that’s just the ones I can chime off without even thinking about it.
A recent study in the US found that appliance manufacturers were working on margins of 5{e5d1b7155a01ef1f3b9c9968eaba33524ee81600d00d4be2b4d93ac2e58cec2d} or less. That’s probably a lot less than you, I or most here but as the scale is huge it looks immense when, in reality, it’s actually tiny.
Retailers like JL et all that diversify into other product areas (with them, clothing, homewares, furniture and so on) can get an overall higher margin by covering bases and that’s something that the supermarkets have (in part at least) tried to replicate but apparently to their detriment. However, for some that is a good way forward it would seem if people buy into it. If not, not so good.
In isolation though, selling appliances is not exactly a brilliant plan IMO. Highly commoditised, fiercely competitive and pretty volatile to boot. Then you have the fickle nature of consumers to layer in atop that.
I think that a lot of people look in on this and think, “wow, they make millions” not considering the cost of doing so or, the capital tied up in accomplishing that.
Some seem, as they do with service, to think that if they pass through X thousand service calls or sell Y thousand machines that they stand to make Z millions of pounds. If it were that simple, we’d all be millionaires.
The dude that set up AO did the right thing and he was shrewd/lucky/both or whatever you want to call it, he sold it out, made a personal mint and can afford to be blasé about things in general. What does he care if the company makes next to no money?
The legacy however is, even cheaper appliances.
Yeah, ’cause that helps all of us and the manufacturers to have the products even more devalued than they were already. :rolls:
But, those that are retired or on the cusp of it, I guess they don’t care much either, not their problem.
K.
- You must be logged in to reply to this topic.