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Tablet Sales : Pulling Profits from Tablets

From traffic drivers to full solutions

April 2012 By Nancy Klosek

Wringing profits from a margin-challenged category isn't a new problem for CE dealers. It recently hit a tipping point with TVs where vendors had to institute MAP and unilateral pricing policies to stem the ticket-slide tide. Tablets are just as margin-challenged, but there is no such vendor strategy on the horizon. Dealers are left on their own to extract as much profit as they can from the category.

Some dealers, such as Rife's TV & Furniture, see merit in featuring entry-level Android tablets as traffic drivers. The single-store appliance and CE retailer Grundy, Va., currently stocks Coby's Kyros line, which range from $149 to $199. About one-fourth of the store's business is done in CE, including computers and tablets. "We stock more tablets at Christmastime, and in spring and summer, drop our inventory down," said Ricky Owens, sales manager.

While Rife's sells tablets mainly to prevent customers from shopping elsewhere, the retailer is planning to add Asus's line of Eee tablets, priced in the $399 range, to generate some margin and accessory attachment sales.

By that reasoning, none of the tablets carried by Vann's, the Montana-based retailer, along with its ON Store offshoot, sell below $349. "Providing something at a very low price point just to have it when margins are super-tight anyway doesn't make a lot of sense," said Matt Barrett, Vann's technology merchant. There is also a better selection of accessories for the higher-end models, he said.

"For a lot of the low-end tablets, there's not a lot of accessorization. You're kind of stuck with whatever they decide to give you," Barrett said. "That limits the customer experience to some extent. And that's not what we're about. As things settle out, you're seeing a little more accessorization from certain companies who realize, hey, this brand isn't likely to disappear within a month so I can actually commit some logistical resources to build an accessory mix for that particular tablet."

Online Vs. Brick & Mortar

But for some e-tailers, carrying a wide assortment is more of a blessing than a curse., for example, sells iPads and 29 Android-based tablets, with prices ranging between $149 and $599. "We're essentially able to have unlimited 'shelf space' and carry more inventory," said Bob Bellack, newegg's CEO, North America. The e-tailer's ability to use virtual fulfillment—keeping inventory housed at distribution centers as a way to maintain a high assortment with no inventory costs—provides further advantages.



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