| Video Noise April 2007
What the Heck is a "Refurbished Unit,"
Anyway?
So you’re shopping for a new disc player, A/V
receiver, loudspeakers, amplifier, or other component for your system. Or maybe even a
GPS, Blackberry, or laptop. You see something you really like for $1000, but you discover
that some stores are selling the same model, "refurbished," for $600 or less.
You scratch your head and wonder if the refurbished units could possibly be as good as the
full-priced ones.
The first thing to consider is the offer’s exact
wording. If the units are identified as "B-stock" or "refurbished,"
many times they will be brand-new -- exactly the same product as the full-priced units.
Perhaps the box will be plain rather than having the fancy color printing of the packaging
of the full-priced unit, but when you open that plain box, you find a pristine product
with no fingerprints, no scratches or marks, and everything sealed or taped up just as if
it has come brand-new from the factory. Because it has.
Most high-sales-volume technical products are now made
outside the US, so it isn’t cost-effective to ship a defective unit back to the
original factory to have it repaired and repacked -- especially as repair labor is three
to four times more expensive than manufacturing labor. The returned unit must be received,
tracked, unpacked, disassembled, diagnosed, bad parts removed, good parts installed,
reassembled, tested, then packed in a new box. The manufacturer can build a half-dozen
brand-new units in the time it takes to handle and repair a single defective one -- which
is why repairs of such products almost never happen. The paperwork for a product returned
for repair that will then be resold, including inventory valuation to adhere to tax and
corporate accounting regulations, is nightmarish. For a company to repair and resell its
own products is so complex and time-consuming that few can justify the cost.
Instead, refurbished units are a way for a company to have
a second tier of sales at lower prices without upsetting their full-price dealers.
Let’s take that product that sells for $1000 at full-price authorized retail dealers.
Let’s say those dealers sell 200,000 units a year at $1000 each. But there is another
market in which the product sells for closer to $600: eBay businesses; independent
e-commerce sites; local electronics "shows" with lower-than-dealer prices on
everything; small local "tech discounters"; etc. If the manufacturer does it
right, they might be able to sell another 100,000 to 200,000 units through this
second-tier market with little or no impact on their chain of full-price dealers. The
additional volume lets the manufacturer lower their cost per unit and end up earning
considerably more money from the product than if they’d sold it only through their
full-price dealer network.
To keep the full-price dealers happy, the manufacturer must
downgrade the product when selling it through the secondary market. This is where
"factory refurbished" or "B-stock" come into play. The refurbished or
B-stock units come down the assembly line at the same time as the full-priced units and
are identical to them in every way, with the same performance and the same warranty.
However, they may be missing a rebate certificate or some freebie that comes with the
full-priced units, or have a simpler, cheaper box and packing materials. The serial-number
sequence and UPC code are usually different as well, to forever identify the B-stock
product as not qualifying for rebates or other offers.
Full-price dealers sometimes offer "price match"
guarantees in which, during some stated period of time, if you find the product on sale
elsewhere at a lower cost, the full-price dealer will refund the difference. However, they
will always issue a disclaimer that reads something like "Price match excludes
refurbished units, B-stock, factory seconds, or open-box units." This way, everybody
is happy. The full-price dealers’ customers don’t want anything but
"first-quality" gear, and the second-tier market’s customers don’t
want anything but low prices on name-brand goods. It’s a system that works for
everybody. I never fear purchasing a factory-refurbished or B-stock unit. I know it will
be just another new unit being sold at a considerable savings over the full-priced unit.
If the wording in the discount offer says "open
box" or "factory second" or something like that, these are probably
previously used demo units or dealer returns of some sort. Dealers usually have agreements
that allow them to return products with damaged boxes because they know their customers
won’t pay full price for a product in a smashed or water-stained carton. Some
manufacturers rebox these units; others sell them in the moderately damaged box at a big
discount.
On the other hand, while "open box" or
"factory second" products can be good deals, they can also be nothing but
trouble in a box. With these, it takes someone who’s technologically savvy to figure
out exactly what you’re looking at. If you’re not that savvy, you’ll
probably be safer sticking to the refurbished or B-stock products.
Not everything is available as refurbished or B-stock, but
it’s always worth looking. Some e-commerce sites specialize in refurbished products.
You can find these by using any search engine. And timing can be everything -- refurbished
products may be available for a much shorter period of time than full-priced units. If you
see something you want, keep in mind that it may be gone in a few months, weeks, or even
days, never again to be offered at such a low price.
...Doug Blackburn
db@hometheatersound.com |
