Retailers Respond To HDD Squeeze By Limiting Purchases, Raising Prices 282
SKYMTL writes "With Thailand experiencing its worst flooding in generations, component manufacturers have been especially hard hit. The trickle down effect is having a huge impact upon hard drive manufacturers in particular. Retailers have responded by drastic price increases and even limiting hard drive purchases to 1-2 drives per person."
Re:Price discovery make distribution efficient (Score:1, Informative)
Exactly! This is just the same as how, in impoverished, underdeveloped, famine-stricken countries, the people who most need food and water simply pay a higher price for it. Those who choose not to bid a higher price obviously did not have a great need for those commodities.
Re:Price discovery make distribution efficient (Score:3, Informative)
this is artificial scarcity that you are talking about, because most of the problems in places like that are government (or whatever passes for a government) created. There are no free markets there, so there is no real price discovery, the places are used for their valuable mining resources most likely and the economies are not allowed to grow and improve because certain power brokers get their hands upon those economies by proxy and endorse various dictators and sell them cheap weapons to hold the people there hostages.
What you have here in your comment, is basic misunderstanding of economics and politics.
Re:Price Spikes (Score:5, Informative)
...since they already bought the drives they are selling now, the price hikes are gouging...
No, they're simply anticipating and spreading out the damage. This is microeconomics 101, supply & demand.
Let's say you're a big retailer who sells 10,000 drives per month, buying them for $70 each and selling for $100 each. You make $300,000 a month selling those drives. That revenue pays the salary and benefits for a couple of dozen employees.
Then the manufacturer tells you that, due to factory damage, they can only supply you with 2000 drives per month for the next few months. If all prices remained the same (which they probably won't; the manufacturer will raise your wholesale price if they can), you would lose $240,000 of your monthly revenue.
Now, your market research tells you that there is sufficient demand to sell 2000 drives/month at $200 each. You will still lose $180,000 of your revenue every month, due to lower volume, but the volume is now constrained by your supplier, not the market. Bumping the price saves you $240,000.
So you mark up the price on all of your existing stock now. And you still lose heaps of revenue until the manufacturer gets back up to speed. Might even have to fire a few employees to cut costs.
Re:Price Spikes (Score:4, Informative)
Re:Price discovery make distribution efficient (Score:3, Informative)
I'm still not seeing how this isn't screwing the poor people.
- what do you want? Confiscation and distribution of products that were created to make profit based on your idea of what is 'fair'? Why do you think poor should be able to get something they can't pay for, I don't follow?
The hard drives they need for their own 'productivity' are being redistributed to the rich.
- the supply/demand curve now meets at a higher price point, this cuts off those, who don't particularly need the drives at those prices, and it still allows those who really need the drives to be able to get them.
If prices are not raised here is what happens:
1. Anybody gets a drive at the old lower price, the stock is quickly emptied and those who need it more don't get it.
2. The stores are then making the profit for some of the time as long as the stocks last, all of a sudden there is a shortage and the stores can't get more drives. If that's the case, then you have a store that gets destroyed, which is also not an optimal situation for the distribution infrastructure. Instead the store raises the price, it collects more profit per drive, but the drives last longer in the store. If the shortage is real, the store will be able to cover the lower product turn over with higher prices and keep the store open, not have to fire people, search for lower rent, cut services, etc.
The point is that just because somebody is 'poor' doesn't mean they have the moral grounds to get some scarce resource at a cheaper price. When new plasma TVs came out the poor couldn't afford them at all! The initial prices were very high, only super rich and companies could buy plasma screens. Eventually the market sent signals that there was more demand, the efficiencies were reached, more production was brought on line, more competition, and prices fell eventually to the level where everybody could afford it.
It's the SAME situation in REVERSE. But this is a good thing that it works this way, it creates a queue, it sends signals to the manufacturers to bring up more production on line, and this eventually will result in even lower prices than originally were there.
This potentially makes them poorer, and nullifies attempts at being more productive.
- you can just take on faith that those who are richer are more productive than those who are poorer. Those who are richer generally invest into more business capacity, create more products, hire more people, etc., they are more productive just by the fact of having more savings and investments. Of-course it is desirable from every perspective that being richer should be rewarded more than being poorer.
Why? Why is it not important whether something is fair or not?
- because it's YOUR definition of fair? For example I disagree with it. You base it on some weird assumptions that poor people deserve more for some reason, I personally do not ever believe that for a second, never believed it in my life. I have good reasons to. Regardless of MY reasons - I disagree with you on what is FAIR. Do you understand that?
AFAIC the only fair outcome is the one that is NOT based on violence of gov't intervention, so it's a market based outcome, which always maximizes efficiencies and productivity, and I prefer productivity over moral indignations based on personal preferences of what 'fair' is.
I like a more efficient, more productive market. I like having access to more choices, more goods, more competition, lower prices. Productivity brings all of that about and moral indignations and gov't violence only shares one trait - poverty.
As to your last point - those economies, that have political systems that are corrupt because they are growing based on this idea, that they can distribute and enforce their idea of 'fairness' are now pretty much all bankrupt and they are only going based on the good grace of the economies that are almost unregulated and very productive. This proves my point.