[opendtv] News: Why you couldn't get an HDTV
- From: Craig Birkmaier <craig@xxxxxxxxx>
- To: OpenDTV Mail List <opendtv@xxxxxxxxxxxxx>
- Date: Tue, 4 Jan 2005 06:59:10 -0500
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 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
(Research), 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 industry wide supply
issue in August when a few of Overstock.com's retail customers
pointed out that the No. 1 retail chain, fearing a spending 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 off loading 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.
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