MONEY Autos

Why Apple Can’t Sell Cars Like iPhones

Apple employees prepare the newly released iPhone 6 for sale
Hannibal Hanschke—Reuters

Apple makes its money selling affordable luxury, but an Apple car would likely be luxury—period.

The Apple car! It’s Cupertino’s latest nonexistent product to drive the tech world into a frenzy. Ever since the Wall Street Journal reported that Apple has “several hundred employees” working on the production of a Tesla competitor (by 2020, no less, according to Bloomberg), pundits have been fighting over the viability of an Apple-branded automobile.

On Monday, Vox’s Matt Yglesias jumped into the fray, taking on what he saw as the prevailing argument against the Apple car: namely, that the car industry is a low margin business, and Apple needs high margins to keep making its usual hefty profits. Here’s Yglesias:

The misperception here is that Apple earns high margins because Apple operates in high margin industries. The truth is precisely the opposite. Apple earns high margins because it is efficient at manufacturing and firmly committed to a business strategy of sacrificing market share to maintain pricing power.

If Apple makes a car, it will be a high margin car because Apple only makes high margin products. If it succeeds it will succeed for the same reason iPhones and iPads and Macs succeed — people like them and are willing to buy them, even though you could get similar specs for less.

That’s sort of true, but it’s not the whole picture. To understand Apple’s business model, we need to take a step back. Apple earns high profits because it goes into high-volume industries dominated by low-margin players who sell relatively affordable products. Apple then makes a premium product, one where you can’t get similar specs for less—there is no other computer or smartphone with the software or build quality of an iPhone 6 or Macbook Air—and prices its offering a few hundred dollars more than the competition. Then it earns billions off this relatively small price increase by selling high quantities of units.

In other words, Apple makes premium versions of things everybody needs at prices most people can still afford. To quote a 2010 review of the iPad, by Daring Fireball’s John Gruber, ” ‘Affordable luxury’ is the sweet spot for mass market success today, and Apple keeps shooting bulls eyes.” A similar strategy for an Apple car then, would be to sell a premium-quality car with higher margins (Apple’s gross margin in 2014 was close to 40%) at a still-affordable price.

The problem for Apple is that it’s a lot easier to increase margins in a low-cost industry than a high-cost one. Even if an iPhone 6 costs 100% more than a cheap LG smartphone, it’s only $200. Same thing with the Macbook Air, which is twice the price of a low-end Windows laptop but still affordable at $1,000.

But trying to get similar margins in the automobile market means a price increase of thousands of dollars, not hundreds. Double the price of a $22,970 Toyota Camry, or ask for even a 50% premium, and you’re in BMW territory. (That company’s cheapest sedan costs $32,000.)

The typical Apple customer has enough disposable income to double their phone budget and buy an iPhone 6. Buy one fewer latte a week, and you’re pretty much there. Asking someone to double their car budget is a very different story. That’s not affordable luxury, that’s luxury—period.

This isn’t to say Apple won’t make an expensive high-margin car, just like BMW. The premium car market isn’t nearly as profitable as the cell phone market, but it’s not nothing. It’s also possible Apple will make a low-margin car while charging a slight premium over the likes of GM and Ford. The entire global automobile market in 2014 was about half the size of the iPhone market alone, meaning such an endeavor would be a lot of work for not much growth, but anything is possible.

But for Apple to do either of these things would be to abandon the affordable luxury strategy that has made it the most valuable company in the world. That’s worth thinking about when considering an Apple car’s chances.

TIME Gadgets

This Is the Best Blu-ray Drive You Can Buy Right Now

Blu-ray disk logo.
David Paul Morris—Getty Images Blu-ray disk logo.

The Samsung SE-506CB is thin, light, compact—and quietest

This post was done in partnership with The Wirecutter, a list of the best technology to buy. Read the full article below at TheWirecutter.com.

the wirecutter logo

The $80 Samsung SE-506CB is the best external Blu-ray drive for most people—if you need one at all. It’s the best Blu-ray drive you can get for the least amount of money, and it’s the quietest one we tested. The Samsung is well-liked by Amazon buyers, and it’s conveniently thin, light, and compact.

Who needs this?

If you have a laptop without a disc drive and want to back up music and movies from discs to your computer, or need a disc drive for work, you should pick up one of our recommendations. If you’re trying to backup or transfer files from your computer, you should use a USB hard drive or flash drive instead.

You shouldn’t buy one of these for a desktop computer that has room for an internal drive, because internal drives are generally faster and cheaper than portable ones. You also shouldn’t buy an external drive to use with a tablet.

What makes a good Blu-ray drive?

We surveyed hundreds of Wirecutter readers to find out what people care most about in an external Blu-ray player. Using this information, we came up with a set of criteria to decide which drive is best for most people.

For starters, it must read and write dual-layer DVDs and Blu-rays. 74% of those surveyed use their external drive only at home, but size and weight are still important. A lighter, more compact drive is easier to store when you’re not using it.

Note that some older laptops don’t provide enough juice to power a Blu-ray drive. It’s not necessary for most people, but for these older machines you’ll need a Y-cable that plugs into two USB ports.

How we picked and tested

We began by scouring Amazon and other retailers for best-selling and top-rated Blu-ray drives, and checked manufacturer websites for models that have been released since our previous guide, published in June of 2013. We eliminated drives that cost more than $120, didn’t read and write DVDs and Blu-rays, or had few or poor user reviews on Amazon. We also cut drives that were heavier or bulkier than the rest, and we didn’t re-test anything that we ruled out in our previous guide.

Then we chose four Blu-ray drives and one DVD-only drive to go head-to-head against our previous pick, the Samsung SE-506BB Blu-ray drive. We tested the Buffalo MediaStation BDXL, the new Samsung SE-506CB Blu-ray drive, the Pioneer BDR-XD05, the Archgon MD-3107S, and the Samsung SE-218CB DVD drive (for people who don’t care about Blu-rays).

Our pick

The $80 Samsung SE-506CB Slim Blu-ray Writer is the best Blu-ray drive for most people. (Some days the black version is less expensive and others the white model is the better buy, so shop wisely.) The other Blu-ray drives we tested cost about $40 more for similar performance.

Our pick was the quietest drive we tested, and it’s conveniently thin and light for storage or portable use. The Samsung was the fastest to rip a Blu-ray to an MKV file. It was a few minutes slower than the competition in our other tests, but all the drives we tested (except the pricier Pioneer) take more than an hour to rip and burn Blu-rays.

The Samsung comes with the CyberLink Media Suite for playing DVDs and Blu-rays. This software works only on Windows, though.

Flaws but not dealbreakers

The Samsung’s biggest flaw is that it’s a little bit slower at burning and ripping DVDs and Blu-rays and the other drives we tested. However, it was within five minutes of the competition in almost all our tests, which take over an hour each.

Our pick doesn’t come with a Y-cable, but not everyone needs one—only people with older computers that don’t provide enough power to one USB port. If you need one, you can get a Y-cable or a longer USB cord on Amazon.

A faster (but louder) upgrade

If speed and size are your biggest concerns and you don’t mind paying more and putting up with a noisy drive, we recommend the Pioneer BDR-XD05 Slim Blu-ray Writer. It was the fastest in nearly all of our tests, is the smallest, lightest, and thinnest, and comes with a USB 3.0 Y-cable.

The Pioneer is difficult to find for a good price; the black version costs $130 and comes bundled with CyberLink software, and the white version costs $95 but does not come with any software. The Pioneer’s small size and top-loading clamshell design are particularly convenient for a portable drive.

A DVD-only pick

If you don’t need a drive that can read and write Blu-rays, you should save money and get the $38 Samsung SE-218CB External DVD Writer instead.

Playing DVDs and Blu-rays

Because of movie studios’ piracy concerns, it’s much more of a hassle to play Blu-rays on a computer than on a dedicated Blu-ray player. In order to play Blu-rays legally on a Mac or Windows PC, you’ll need to purchase software that licenses the required codecs.

Wrapping it up

Nearly all of the Blu-ray drives we tested are great options, but the $80 Samsung SE-506CB (black or white) is the best one for most people. It’s inexpensive, fast enough, and the quietest drive we tested. It doesn’t come with a Y-cable, but most people don’t need one anyway. The Samsung also comes bundled with Windows software. It’s the best external Blu-ray burner for people who still need to use an optical drive sometimes.

This guide may have been updated. To see the current recommendation please go to The Wirecutter.com.

TIME electronics

This Is the Best $500 Television You Can Buy

A Vizio E-Series flat panel television.
U.S. Consumer Product Safety Commission—ASSOCIATED PRESS A Vizio E-Series flat panel television.

It's the Vizio E500i-B1

This post was done in partnership with The Wirecutter, a list of the best technology to buy. Read the full article below at TheWirecutter.com.

the-wirecutter-logo

If I were looking for a good, inexpensive, 50-inch TV, I’d get the Vizio E500i-B1. It has above-average picture quality—better than many more expensive models—with impressively dark blacks (a rarity in this price range of LCD), bright whites, decent motion resolution, and reasonably accurate colors. It also consistently gets top marks from the best TV reviewers on the web.

If the Vizio is sold out, or otherwise unavailable, the Panasonic 50AS530U offers almost as good picture quality but costs a bit more money ($600 as of this writing). Its contrast ratio isn’t quite as good as the Vizio, but the motion resolution is decent.

Who should get this TV?

If your TV is dying, has died, or you’re looking for something larger, this TV offers pretty good performance for a low price.

In terms of picture quality, this TV is generally better than most LCDs in this price range. Upgrading to more expensive models will result in better motion resolution, better contrast ratios, and more accurate colors. (In other words, these qualities makes a more lifelike, realistic picture.)

Keep in mind, though, that for around $500, when it comes to a 50-inch TV, there is no clear winner in terms of picture quality. All have strengths and weaknesses. And stepping down slightly in size doesn’t get you enough of an increase in picture quality to offset the loss in size. So even a great-looking 40-inch TV doesn’t look enough better than the Vizio to make up for how much smaller it is.

If the best picture quality possible is your goal, check out our Best TV guide.

How we picked

$500 can get you pretty great picture quality. According to our research, spending a bit more for this size doesn’t yield much (if any) improvement in picture quality.

I also eliminated most smaller screen sizes in the same price range: 48 inches was okay, 47 was pushing it, and 46 would have to be pretty amazing to make up for its smaller size.

Off-brand TVs aren’t going to offer better picture quality than one of the major brands. Unlike many categories we cover at the Wirecutter, good TVs don’t just “happen.” There isn’t going to be a surprise no-name brand that looks better than the big names. Not this year, anyway. Maybe someday.

After making this shortlist, I queried the opinions of TV reviewers I trust. The E-series was consistently among the most positively reviewed, but only by a small amount. To be honest, the TVs in this range are “good,” but none are “great.” That’s just the nature of this part of the market.

Our Pick

The Vizio E-series wins out for having impressively dark black levels (again, a rarity in this price range of LCD), but still having a bright image. The motion resolution is OK, as is the color accuracy. Neither of the last two are standouts, but neither are “bad.” Overall the image is “very good,” which, when you consider the price, is excellent.

Input lag, important to gamers, is excellent: under 30 ms. Average for TVs is around 55 ms.

Though it seems an odd aspect to praise, no reviewer seemed to dislike the E-series. For an inexpensive LCD, that’s actually pretty impressive.

CNET liked the E-series the best, giving it a 4/5 stars and an 8/10 for performance. They concluded, “With picture quality that outdoes that of numerous more-expensive TVs, Vizio’s E series likely represents the best value of 2014.”

Digital Trends liked the E-series, as did Sound & Vision and Rtings.com.

Consumer Reports liked the E-series the least of the major review sites (paywall), giving the 50-inch a 57/100. Their highest rating in this size is 69/100, our runner up. They felt it had “Very Good” image quality overall, praising the detail and black levels, but found the color accuracy and viewing angle to be below average (more on the latter in the Flaws section.

Flaws but not dealbreakers

Like all LCDs, the E-series has some picture quality drawbacks, most notably, motion blur and off-axis viewing. Motion blur is when the image blurs when something on screen moves (or the entire image movies, like a camera pan). The E-series uses a method to reduce motion blur called black frame insertion. CNET said this reduced blur “slightly,” but they “ended up turning off MBR because it tended to introduce flicker in some areas, particularly white fields.”

To get better motion resolution and otherwise decent picture quality, you’ll have to spend a lot more.

The other issue is off-axis viewing. The color saturation and overall picture quality decreases the further away you are from dead center. If you have a big couch, or tend to have people (you like) that sit off to the sides of a TV, consider the similarly priced 49-inch Vizio M-series. This TV doesn’t look as good straight on, but will look better than the E-series off to the side.

Lastly: sound. No TV in this range has good sound quality. In fact, with very few exceptions, no TV has good sound quality. We highly recommend checking out an inexpensive soundbar, which will sound radically better than any TV. OK, almost any TV.

Reported issues

There are reports on the E-series TVs shutting down randomly. It’s hard (if not impossible) to judge how many units are truly affected by this issue. We go into depth about this in the full guide but the short version is, from what we can tell from Amazon reviews, approximately 4 percent of people have this problem. According to Consumer Reports, LCD TVs in general have a 3-5 percent problem rate, so this is in that range.

The Vizio’s satisfaction ratio is a bit lower than the top competition, which isn’t ideal, but all are fairly close. 76 percent (4 and 5 stars) are happy with their E-series. No TV is perfect.

If you run into these issues, Amazon has a 30-day return policy. Costco gives 90 days to members. Best Buy’s policy is 15 days. Vizio’s warranty is 1 year on parts and labor.

For now the E-series remains the pick, but if these potential issues concern you, check out our runner-up pick.

Runner-up

The Panasonic 50AS530U was liked by some reviewers more than Vizio’s E-series and by other reviewers less so. The difference was so close that it wasn’t quite enough to offset the $50 (9%) difference in price. The contrast ratio isn’t quite as good; the color accuracy is similar, as is the motion resolution. The off-axis performance is a little better.

Competition

For a full list of the TVs we considered, but didn’t pick, check out the full article.

Is now the best time to buy?

A bevy of new TVs were announced at the yearly Consumer Electronics Show in early January. It’s too soon to tell which might be our pick for 2015, but we know they’re coming. We expect to start seeing reviews and tests of the new models this summer. Will the new models be better than the Vizio? We honestly don’t know. Most new models are better than the ones they replace, but not always. For now, the E-series is a great TV.

Wrapping it up

The Vizio E500i-B1 is a great $500(ish) 50-inch TV. It has above-average picture quality, with dark black levels and a bright image. Its color accuracy and motion resolution are only okay, but that’s not too different from other TVs in this price range. In short, it’s a decent, inexpensive 50-inch TV.

This guide may have been updated. To see the current recommendation please go to The Wirecutter.com.

TIME Smartphones

LG Pins Smartphone Hopes on Second-Generation ‘Self-Healing’ Curved G Flex

US-LIFESTYLE-IT-ELECTRONICS-CES
Robyn Beck—AFP/Getty Images Frank Lee, head of brand marketing for LG Electronic MobileComm USA, introduces the new LG G Flex 2 smartphone at the 2015 Consumer Electronics Show in Las Vegas on Jan. 5, 2015

Clumsy selfie fans will be clamoring to get their hands on the new “self-healing” smartphone with a crisp front-facing camera

LG Electronics has unveiled its new G Flex 2 curved smartphone with a faster “self-healing” coat and improved performance specifications built into a smaller handset.

Introduced at the Consumer Electronics Show 2015 in Las Vegas, the new model looks like a shrunken version of the original G Flex pumped with the latest Qualcomm 810 processor, the BBC reports.

Tech fans were divided over the smaller 5.5-in. device, with some impressed with its improved features but others generally underwhelmed.

The smartphone’s “self-healing” coating has been upgraded to quickly patch up any scratches it suffers in around 10 seconds, shaming its predecessor, which took minutes to do the same.

The phone also features a 13.1-megapixel camera on the rear of the handset and a 2.1-megapixel front-facing camera.

The electronics company has not released any sale dates nor said how much the G Flex 2 will cost.

[BBC]

MONEY Tech

What the Girl Scouts Are Doing at the 2015 Consumer Electronics Show

Girl Scouts mark the start of National Girl Scout Cookie Weekend in Vanderbilt Hall in Grand Central Terminal in New York.
Richard Levine—Alamy Get ready for Digital Cookie.

Attendees of the annual CES in Las Vegas expect to be overloaded with new gadgets and hi-tech wizardry. Skechers, AARP, and old-fashioned cookies are more of a surprise.

The Consumer Electronics Show, which kicks off in Las Vegas on January 6, is undeniably a big deal. The latest tech trends and exciting new gadgets aren’t the only things featured at the show; a broad spectrum of celebrities ranging from 50 Cent to Dr. Phil will also make appearances. In 2014, more than 160,000 people attended the conference (including more than 50,000 exhibitors), and 20,000+ new products were introduced to the public. The 2015 version of the World’s Largest Trade Show, as Bloomberg News put it, will feature two miles of floor space, and attendance should again surpass the total number of hotel rooms available in Las Vegas.

This year’s list of exhibitors at the CES is 125 pages long, and includes 32 separate entries alone that start with name Guangzhou, the third-largest city in China. The event draws the attention of such a vast global audience—via the media, not just in terms of actual attendance—that many organizations with seemingly nothing to do with tech and electronics feel compelled to run booths alongside, you know, actual electronics companies. Here are three surprising examples.

The Girl Scouts of the USA
This one makes more sense than you might at first think. It was recently announced that Girl Scout cookies will soon be available for sale online for the first time, and the organization is attending the 2015 Consumer Electronics Show to showcase Digital Cookie, the new program that will enable girls to sell cookies online while learning about business and tech. “Digital Cookie will introduce vital 21st-century lessons about online marketing, app usage, and ecommerce to more than one million excited Girl Scouts who will be in the driver’s seat of their own Digital Cookie businesses,” a Girl Scouts press release explains.

What’s more, venturing into online sales and attending the CES are in line with the Girl Scouts’ overarching push to keep up with the times. The organization has recently demonstrated an interest in trying to keep up with foodie trends. A gluten-free cookie was introduced in early 2014, and three new cookies go on sale in 2015: Toffee-tastic (a toffee butter cookie that’s gluten-free), Trios (peanut butter and chocolate chip, also gluten-free), and Rah Rah Raisin (oatmeal raisin with chunks of Greek yogurt—which has been a hot food trend too).

Skechers
The “innovation” that Skechers is probably best known for is the “toning shoe,” a product that supposedly helped wearers get in shape and lose weight simply by walking around in them. Those claims have since been shown to be unfounded, and in a settlement with the Federal Trade Commission Skechers agreed to issue refunds worth $40 million to customers who bought the Kardashian-endorsed sneakers.

So what’s Skechers doing at the CES in 2015? The answer has nothing to do with more dubious ideas about how wearing a sneaker will tone your legs and butt. Instead, according to Gizmodo, Skechers will be showcasing kids’ sneakers that are a “wearable version of Simon,” the classic musical memory game. Called Game Kicks, the sneakers have colored buttons that light up and make sounds, and are meant to keep kids entertained while testing their memory. Mercifully for parents, there is a mute button so kids can play silently. They’re expected to retail for $65 when they go on sale in early 2015.

AARP
For the second year in a row, the AARP (formerly the American Association of Retired Persons—now just AARP to include everyone 50 and older) has announced it will “unleash 50 tech-savvy seniors” to roam the CES in Las Vegas to test the latest tech and see just how practical and user-friendly (or not) the innovations are for older consumers. The seniors, who will wear AARP T-shirts featuring the hashtag #DisruptAging, will be sharing their thoughts and observations in a CES panel discussion.

The point, AARP senior vice president of thought leadership Jody Holtzman said in a press release, is that tech and electronics companies should be paying more attention to the needs of older Americans: “AARP is committed to showing the tech industry that people over 50+ make up a powerful longevity economy, representing 106 million people responsible for at least $7.1 trillion in annual economic activity, a group that successful businesses won’t want to ignore.”

MONEY online shopping

Believe it or Not, Amazon Isn’t the King of Cheap Holiday Prices

mouse on top of present
Junos—Getty Images

Amazon is losing its edge as the lowest-cost retailer.

This is shaping up to be the year all the rules of shopping were broken. First came the bombshell revelation from NerdWallet showing that Black Friday goods may not be quite the deals retailers claim, as many were selling year-old items at the same prices as last year’s Black Friday. And if the newest report from ShopSavvy is correct, the decade-long maxim that Amazon.com AMAZON.COM INC. AMZN -1.21% has the lowest prices could be wrong as well.

For those unaware of the company, ShopSavvy’s purpose is to help would-be shoppers find the best deal on products by providing retailer information through its website and its barcode-scanning mobile app on Android and iOS. And if its recent ShopSavvy Showdown (say that three times fast) is correct, both Amazon and Best Buy BEST BUY BBY 1.46% offer higher prices on overlapping items than the undisputed King of Retail: Wal-Mart WAL-MART STORES INC. WMT 0.16% .

The survey says …

This survey is not the first showing that Amazon is losing its edge as the lowest-cost retailer. Earlier this year, a report from Wells Fargo and online price-tracking company 360pi found Amazon had higher prices overall when compared to Wal-Mart and Target in four critical areas: shoes, electronics, housewares, and health products. However, the report found that Amazon typically offered the lowest prices when it came to “like-to-like” items. Essentially, when a specific item was on both sites Amazon still had the lowest price.

However, this newest data finds the exact opposite. The survey, based only on the same products for sale at Walmart, Amazon, and Best Buy, finds that “Wal-Mart has the cheaper option on over 50% more products than Amazon and Best Buy across the categories analyzed.” In addition, the survey notes Wal-Mart’s online price match policy, in which the company specifically agrees to match prices from Amazon and Best Buy.

The survey results were rather shocking when compared with Amazon. In the heavily trafficked categories of electronics and TVs (the survey distinguishes between the two), Wal-Mart was cheaper on 66% and 85% of total products, respectively. The average percentage difference of price was 28% and 23%, again, respectively. Essentially, this survey finds that shopping at Wal-Mart, and not Amazon, for TVs and electronics will save you nearly a quarter of your money.

So I should go to Wal-Mart right now, right?

If these results are correct, you should go directly to Wal-Mart and not worry about shopping around online, right? Well, not so fast. As the survey clearly shows, Wal-Mart didn’t always have the lowest price, although it was a good bet they did. In addition, the survey didn’t go into a lot of detail about the product selection. Without that critical piece of information, it’s hard to know whether these goods are representative of a true head-to-head comparison or whether these items are merely a good selection for Wal-Mart.

In addition, the data presentation concerns me. Although there were three retailers chosen for the survey, the data was only presented as Wal-Mart versus Amazon and Wal-Mart versus Best Buy. Without the third head-to-head comparison, Amazon versus Best Buy, the survey can come across as less of an unbiased comparison and more of a pro-Wal-Mart piece.

Finally, competition between megaretailers is rather intense. In many cases, retailers consider prices of 3%-5% lower as being worthy of running commercials specifically outlining these differences. The closest ShopSavvy comparison between Wal-Mart and the other retailers was in the TV category, with Wal-Mart being “only” 15% cheaper than Best Buy on average. When matched up against Amazon in the Kids category, ShopSavvy reports that Wal-Mart is a massive 45% cheaper on average.

Overall, this doesn’t mean that ShopSavvy’s data is wrong, but this should be considered only one data point in your holiday deal-hunting comparison. One shopping rule that will never be broken is to continue to shop around for the best deal; you’ll be thankful you do.

MONEY deals

Black Friday Is Already Here

A "Black Friday" advertisement for Walmart is seen on an iPad in Annapolis, Maryland November 16, 2014.
Jim Watson—AFP/Getty Images A "Black Friday" advertisement for Walmart is seen on an iPad in Annapolis, Maryland November 16, 2014. "Black Friday" is coming early this year to retailers.

Based on the big discounts already in effect at Walmart, Target, Amazon, Gap, Staples, and plenty of other retailers, it looks like Black Friday sales are well underway.

Many people are upset that dozens of national retailers have decided to launch Black Friday sales on Thanksgiving, thereby ruining the holiday for workers who can’t spend the day with their families—and also ruining the day for families whose shopping-crazed relatives will ditch them for the chance to score cheap tablets, TVs, and fast fashion at the mall. (According to surveys, millennials are particularly likely to go shopping on Thanksgiving rather than continue hanging out at home once dinner is done.)

But based on the proliferation of broad, often substantial discounts that invoke the phrase “Black Friday” days or even a full week before the actual day arrives, it appears as if Black Friday sales are in effect right now. Deal-tracking sites such as TheBlackFriday.com have rounded up long lists of retailers that have already tried to grab shoppers’ attention by launching big holiday sales under names like “Pre-Black Friday Deals,” “Black Friday All Week Long Sale,” and “Cyber Monday Now.”

One week before Black Friday, Amazon kicked off its Black Friday Deals Week, throughout the course of which the world’s largest e-retailer is adding new deals as often as every 10 minutes. Likewise, Walmart launched a “Pre-Black Friday Event” on Friday, November 21, with lots of prices that seem on par with Black Friday’s best bargains: LED TVs for under $150, tablets starting at $40, two-packs of women’s fleece pants for $8, and so on. Similarly, Staples is trying to woo shoppers early with 50% off select merchandise and an array of quirky coupons (a flat $100 off many tablets, laptops, and desk-tops), and Target, Lowes, Sears, and many others are advertising some variation of “Pre-Black Friday” or “Black Friday Now” deals.

Some across-the-board online discounts—the kind normally offered on Cyber Monday—have also surfaced this week, such as 30% off everything at Lands’ End, on top of another 40% off shoes and slippers. On Monday, Gap introduced a sale on denim and cords for $25 and under (normally priced up to $70), on the heels of a 50% off all online purchases (for Gap card members) on Sunday.

The early sales shouldn’t come as a surprise considering the overarching trend of retailers attempting to expand the holiday shopping season and grab consumers’ limited gift-purchasing dollars before their competitors can. Kmart launched its first holiday ad in September, and many studies show that the best deals aren’t on Black Friday necessarily, but can appear weeks before or after Thanksgiving weekend, thanks to retailers’ strategic efforts to boost sales during lulls.

An Adweek story quotes several retail experts of the opinion that “Black Friday” basically occupies all of November nowadays, or at least that Black Friday-type sales appear on the scene earlier and earlier each year:

“We definitely see retailers pushing Black Friday earlier than ever,” said Sara Al-Tukhaim, director of retail insights for Kantar Retail. “This concept of Black Friday is just getting stretched out more” and becoming “more blurry.”

Bear in mind that not all of these early deals are worth getting excited about. The Disney Store rolled out what it’s calling its Black Magical Friday Sale on Friday, November 21, with discounts “up to 40% off,” but most of the deals—16″ dolls for $20 (originally $24.95), play sets from Star Wars, Monsters University, and Toy Story for $10 (originally $12.95)—seem like run-of-the-mill sales, not can’t-pass-up bargains. What’s more, some of the best early Black Friday deals seem all but impossible to buy. For example, Walmart advertised the Skylanders Trap Team Starter Kit for Wii U over the weekend priced at $37 (full price around $75), but it has been out of stock for online orders and isn’t available at most stores either.

To sum up, right now many stores have some genuinely terrific, Black Friday-esque bargains. But many of the advertised deals aren’t all that impressive, and the biggest discounts generally apply only to select merchandise and may not actually be available for purchase. In other words, retailers are already using amazing discounts and other tricks to get shoppers into stores—where the hope is that they’ll buy plenty of lightly-discounted or full-price items while they’re browsing. This is the gist of how and why retailers use Black Friday as a sales-boosting tactic in the first place, and it’s a strategy that is indeed well underway.

MONEY Tech

Best Buy Is Finally Making a Comeback

Best Buy employee with box
David Paul Morris—Bloomberg via Getty Images

The company appears to have found an in-store strategy.

On Thursday, Best Buy BEST BUY BBY 1.46% delighted fans and investors by reporting a blowout fiscal third quarter. The results, reported before the bell, were non-GAAP diluted EPS at $0.32 per share versus analyst expectations of $0.25 per share. And while total revenue growth was still sluggish at 0.6% over last year’s quarter, that figure also beat analyst expectations by coming in at $9.38 billion versus $9.11 billion.

More importantly, the company appears to have found an in-store strategy. Domestic comparable sales increased 2.4% ex reclassifications, signaling it’s finding a way to use its stores as an advantage against online retailers. And speaking of online retailers, Best Buy increased its domestic online revenue an outstanding 21.6% over the same quarter a year ago. Although online is still a small portion of the total revenue haul, it is encouraging to see Best Buy growing this segment instead of conceding this channel to other retailers.

Great quarter, but is it sustainable?

Over the last five years, Best Buy has had a tough time. The company found itself a victim of the macroeconomic environment and suffered during the recession. However, unlike other retailers, the company never recovered post-recession. The chart below will give you proper context of Best Buy’s struggles versus the greater S&P 500.

1ff8df8a4fc27e17a11ac44fe57ee35a

Two issues for Best Buy

The company faces two problems: aggressive pricing competition and the discretionary nature of their products. Due to Best Buy’s large store footprint (read: costs), the company would find itself losing a pricing war to online retailers — mostly Amazon.com. The trend of shoppers coming into Best Buy stores to test products then buy them from online retailers was so prevalent it inspired its own name: showrooming. CEO Hubert Joly has instituted price-matching strategies and improvements to counteract this trend and it appears to be paying off.

The second issue is the discretionary nature of Best Buy’s products. Unlike a grocer or a discount retailer like Target, consumers generally can postpone electronics purchases until they are more comfortable about the overall economy and their personal finance situation. And although the recession is over, wage growth is still harder to come by. Many were left scarred by the recession and have closed their pocketbooks. In addition, the recession has been tough for technology savvy millennials that are a natural fit for Best Buy’s brand.

Are better times ahead?

However, more recently, price drops in oil and slowing healthcare inflation have given many Americans a stealth pay increase. The consumer confidence index is sharply up and generally portends more discretionary spending, which is good news for Best Buy going into its seasonally heavy fourth fiscal quarter.

There’s been a host of positive economic news — GDP grew at a 3.5%-plus annualized rate the past two quarters, there have been nine straight months of 200,000 jobs created, and an unemployment rate below 6% — that will eventually lead to more discretionary spending. And when that happens, a leaner, better-ran Best Buy will be in a position to benefit from it.

MONEY online shopping

Believe it or Not, Amazon Is Not the King of Cheap Online Prices

Amazon logo
Lionel Bonaventure—AFP/Getty Images

A new report suggests that Amazon’s edge is not as strong as people think.

As far as conventional wisdom goes, Amazon.com AMAZON.COM INC. AMZN -1.21% is the king of low-cost goods bought online; the Wal-Mart WAL-MART STORES INC. WMT 0.16% of the Internet, so to speak.

And that’s largely true.

In its rise from a humble online peddler of books into the most feared, and dominant, name in online commerce, Amazon has used its willingness to undercut the competition to send more companies than I can fit in this space the way of the dodo (RIP Borders, et al). However, a recently released report suggests that Amazon’s supposed edge when it comes to low prices might not be as strong as some believe.

Inside the battle for e-commerce

Earlier this month, Wells Fargo and online sales tracking firm 360pi unveiled their findings from a full-year analysis of the various online pricing habits of the world’s largest e-commerce companies across over 100 commonly offered stock-keeping units. And as you’ve hopefully gleaned by now, the findings came with their fair share of surprises.

Perhaps the biggest single bombshell was that Amazon.com has lost a sales edge in four important categories to the likes of Wal-Mart and Target TARGET CORP. TGT -0.09% . According to the report, both big-box retailers generally offered lower prices online than Amazon in the clothing and shoes, electronics, housewares, and health and cosmetics categories. However, the report also notes that Amazon typically offered the lowest prices when it came to “like-to-like” specifics goods.

This comes as a surprise for longtime followers of Amazon and implies that online pricing software used by Wal-Mart and Target, which scans competitors’ prices and adjusts accordingly, has grown sophisticated enough to compete against Amazon’s own pricing bots. Specifically, the reports says Wal-Mart’s pricing in the four categories sat an astounding 10% lower than Amazon’s as of August and that Target enjoyed a 5% pricing advantage as well. The report acknowledges that the pricing survey didn’t account for the cost of shipping and taxes, areas where Amazon enjoys advantages with its Prime shipping service and its notorious state tax policies.

Either way, this new report certainly calls into question the conventional wisdom that it’s simply Amazon and then everyone else in the online retail space these days.

The bigger e-commerce picture

Still, I think this report misses the point to a large extent by painting Amazon in a negative light on pricing without discussing the overall profit opportunity online.

As Amazon.com and its online peers have been around for a generation now, it’s easy to fall into the trap of categorizing e-commerce as a whole as a somewhat mature business. In fact, the opposite is true. When viewed in the broader context of the entire U.S. economy, online retail sales represent a veritable drop in the bucket. See for yourself.

Source: U.S. Census Bureau.

With online sales in the U.S. consistently setting fresh all-time highs, it’s also important to understand just how paltry a percentage of total retail transactions they really represent: just 6.2% in the first quarter of the year. And this only reflects the new record figure in a technologically advanced market. Viewed globally, this figure is almost assuredly smaller and it represents a large opportunity for all e-commerce retailers.

There’s no question that the stakes are extremely high in online retail. As I’ve mentioned before, the only free lunch you get in broad-based retail sales are economies of scale. As the global e-commerce boom progresses over the next generation, the companies that control the greatest share of the proverbial pie will have the strongest hand. And both Amazon and Wal-Mart excel in online retail.

Foolish thoughts

Historically, Amazon has always outflanked other online retail outlets. However, owing to the stakes and its well-documented tenacity, it was probably never realistic for the media or investing community to expect a company like Wal-Mart to go quietly into that good night. So while this storyline gives Amazon’s dominance in the growing battle for online sales supremacy, it’s by no means the end of the story, and that is certainly worth noting.

Andrew Tonner has no position in any stocks mentioned. The Motley Fool recommends Amazon.com. The Motley Fool owns shares of Amazon.com. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Related links

Your browser, Internet Explorer 8 or below, is out of date. It has known security flaws and may not display all features of this and other websites.

Learn how to update your browser