[opendtv] Why you couldn't get an HDTV
- From: "Tom McMahon" <TLM@xxxxxxxxxx>
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- Date: Mon, 3 Jan 2005 19:32:44 -0800
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http://money.cnn.com/2005/01/03/news/economy/holiday_surplus/index.htm?cnn=yes
Why you couldn't get an HDTV
If there wasn't a high-def set under your tree this year, it might be
Wal-Mart's fault.
January 3, 2005: 4:28 PM EST
By <mailto:parija.bhatnagar@xxxxxxxxxx> Parija Bhatnagar, CNN/Money staff
writer
NEW YORK (CNN/Money) - The way that iPods, digital cameras, DVD players and the
Xbox supposedly flew off the shelves, you'd think
that consumer electronics had banner holiday sales.
But at least one retail outfit said it's seeing a post-season glut in gadgets
and gizmos.
Patrick Byrne, CEO of online "closeout" retailer Overstock.com
<http://money.cnn.com/quote/quote.html?shownav=true&symb=OSTK>
(Research <http://cnnfn.multexinvestor.com/Reports.aspx?ticker=OSTK> ), which
gets most of its inventory from manufacturers stuck
with overproduction, said he's been besieged with calls from retailers and
manufacturers trying to offload excess holiday inventory.
Not that he's complaining. Byrne expects Overstock.com's sales for the period
to jump by as much as 30 percent over the same period
last year.
What's the excess in?
Curiously enough, it's in an abundance of consumer electronics such as digital
cameras and TVs -- which the Consumer Electronics
Association back in November had pegged as the No. 1 desired gift item this
year.
Said Byrne, "We recently received a 10,000 block unit of digital cameras and
digital stereos. One category that we hadn't
anticipated seeing such a big surplus in was high-definition TVs. We obtained
an unusually large deal of some 2,700 HDTVs."
Byrne declined to name the TVs' suppliers, citing business confidentiality.
However, the company's Web site highlights a 40 percent
off promotion on the RCA 20-inch LCD HDTV.
Part of the problem this year, Byrne explained, was manufacturers bought into
the pre-holiday hype that electronics would be the
most sought-after gifts.
"Sometimes when everybody says they expect a product to sell very well,
manufacturers get excited and make all that they can. Then,
they overshoot the mark," he said.
Blame Wal-Mart
A bigger issue may be the world's largest retailer, Wal-Mart. It seems when
Wal-Mart delays, everybody pays.
Byrne said he first became aware of a potential industrywide supply issue in
August when a few of Overstock.com's retail customers
pointed out that the No. 1 retail chain, fearing a spending
<http://money.cnn.com/2004/11/29/news/fortune500/walmart_holidays/>
slowdown in coming months, asked its suppliers in Asia to slow down shipments
to the United States.
Ships and warehouses handling Wal-Mart cargo also handle cargoes for other
retailers. When Wal-Mart asked its suppliers and carriers
to slow down deliveries, it affected cargoes sharing the ride and facilities
with the No. 1 retailer as well.
"We definitely have taken a hit because of these overseas delays and port
problems," said one supplier of consumer electronics, who
spoke to CNN/Money on condition of anonymity
"The traffic jam caused by Wal-Mart's late shipments delayed our cargo by a
couple of weeks," he said. "Some of our retail customers
canceled their orders because we couldn't get it to them on time. We're now
offloading it to places like Overstock.com and other
channels."
Wal-Mart, which accounts for about 10 percent of total U.S imports, said it was
looking into its logistics but wouldn't immediately
comment about its shipping moves and their presumed effect on other consumer
chains. Retail watchers, though, think the scenario is
logical.
"It would make sense that Wal-Mart would be cautious about over-ordering
inventory at a time when they expected sales in coming
months to possibly be below forecasts," said Richard Hastings, an independent
retail analyst. "Wal-Mart can afford only so much
markdown without hurting the bottom line."
The snarled traffic was particularly acute at Los Angeles and Long Beach, a
port complex that handles one-third of all U.S. imports,
according to Art Wong, acting director of communications with the Port of Long
Beach, California.
Contrary to typical seasonal patterns, Wong said the Long Beach Port this year
did not see very busy August, September and October
months just ahead of the holidays. Instead, November saw a record number of
shipments.
"There were general delays overall and not only for Wal-Mart," Wong said,
"Conceivably, this could have affected other importers who
had incoming cargo on the same ships."
With ships backed up in the harbor as late as November, Wong said port workers
could not unload cargo even for those suppliers who
did get their holiday inventory on time.
"As the backlog grew, the ports as well as the railroad companies like Union
Pacific and Burlington Northern that distribute the
cargo nationwide for suppliers and retailers were struggling with labor issues
because there wasn't enough manpower to first clear
all cargo build-up from the port and then load it onto the trains," said Wong.
Attempts to reach a few of Overstock.com's competitors were unsuccessful.
Some industry watchers, however, suggested claims of excess inventory in
consumer electronics may be overblown.
"LCD and flatscreen TVs sold very well as far as I can tell, although there
always are individual items that would have performed
poorly," said Stephen Baker, analyst with NPD Techworld. "The RCA flatscreen
model that's selling on Overstock.com is a smaller
model of HDTV. That category already has numerous models and is pretty
competitive."
That may be, but Overstock.com's HDTVs aren't limited to just smaller models. A
few other choices include 32-inch Sharp LCD HDTVs
and Toshiba 42-inch HD plasma televisions.
"Even if there is an oversupply of flatscreen TVs now, demand should pick up
again ahead of the SuperBowl. So it would make sense
for suppliers to hold on to the inventory through January instead of offloading
it in a hurry," Baker added.
<http://money.cnn.com/2005/01/03/news/economy/holiday_surplus/index.htm?cnn=yes#TOP>
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