FYI - JB HIFI Financials & How We're Losing the Bargain Wars.

nomster on 23/10/2019 - 16:17
Last edited 23/10/2019 - 16:25

Following up on the recent JB Hifi deal of users signing up phone plans for a $500 gift card this got me thinking…

How much do we value a JBH gc? (It trades for about 10% discount on the OzB classifieds)

From their most recent investors presentation, their profit margin on items sold is around 22.14%

That means on average, roughly for every $100.00 product they sell, their cost to get it from:

  • China/Supplier

  • then boat/plane

  • then the Eastern Creek DC

  • then the store

is $76.73.

Then at the end of the day they need to pay for:

  • Staff,

  • Utilities

  • and Rent,

After all this, they pocket $6.38 in profit.

So on an ordinary day there are hagglers and negotiators, despite our best efforts, they still squeeze 22.14% margin off us (chumps).

After that, they pay wages and rent, they retain 6.38% for investors.

So in conclusion.. if you cant squeeze an additional 22.14% discount on top of the "best price" you can get, you're leaving money on the table.

Finally, I'd like to present a skill level grade:

  • Easy - Full Price / Catelog Sale

  • Intermediate - Price Match / Gift Card

  • Hard - Price Match with a 6.38% off their final final price & Gift Card payment. (Screw the investors & their stinkin' dividends)

  • OzBargain Degenerate - Price Match with a 22.14% off final final price & Gift Card payment (Sorry Timmy, no dinner tonight.)

Poll Options

  • 5
    Easy
  • 23
    Intermediate
  • 0
    Hard
  • 5
    Degenerate
General Discussion

Related Stores

JB Hi-Fi
JB Hi-Fi

Comments

  • EightImmortals on 23/10/2019 - 16:26
    +11

    Crikey, I wouldn't even make the effort for 22%. If you can get them to price match then fair enough but if we screw everyone too hard there wont be anyone left to screw tomorrow and your kids wont be able to find a job.

    • nomster on 23/10/2019 - 16:29

      Simple, just light the store with the TV screens.

      Don't need no fancy lights.

    • justtoreply on 23/10/2019 - 23:05
      +2

      No jb hifi?! Where will the emo kids of tomorrow work??!

      • EightImmortals on 24/10/2019 - 07:12
        +2

        Parliament?

        • Tiller76 on 24/10/2019 - 10:06

          And that is what scares me the most!

  • CyberMurning on 23/10/2019 - 16:28
    +1

    Then at the end of the day they need to pay for:

    Staff,
    Utilities
    and Rent,

    Those are too expensive

    • nomster on 23/10/2019 - 16:29
      +1

      No dinner tonight, Timmy. :(

      • [Deactivated] on 28/10/2019 - 14:14

        aww man, again?

    • Diji1 on 23/10/2019 - 16:38
      -2

      Utilities

      The ACCC head specifically pointed to privatisation of electricity and ports as severely damaging the Australian economy.

      For all the moronic Howard followers in the 90s that bought the whole "ports are inefficient and expensive" crap: ports are now severely damaging the Australian economy after their privatisation led to massive price increases which you and me are now paying.

      And the refusal of Laberal Governments to roll back privatisation after the disastrous outcome shows they they are ideologically driven loons who refuse to acknowledge that their pet economomic theory was wrong OR their intent was to severely damage the Australian economy so that businessmen could have your money.

      • orangetrain on 23/10/2019 - 17:56
        +3

        I get a warm fuzzy feeling in ruining the future for kids, so I vote Liberal

      • justtoreply on 23/10/2019 - 23:08
        +1

        Give it a break. You create an excuse for political comments too often. What a huge stretch to do it in this thread!

        • RockyRaccoon on 24/10/2019 - 04:47
          +2

          That’s the problem with greenies, they are obsessed with their own ideals and don’t give a stuff about anyone else. Don’t believe in God but act the same as a religious zealot.

        • Speckled Jim on 24/10/2019 - 10:14
          -1

          So you conveniently disregarded this in the OP?

          That means on average, roughly for every $100.00 product they sell, their cost to get it from:

          China/Supplier

then boat/plane

          Do you understand the fundamentals of global trade, or do you think containers of overseas goods simply teleport their way to retailers?

          • justtoreply on 24/10/2019 - 14:28
            +1

            @Speckled Jim: It's not the point of the thread! Still a huge stretch!

            Maybe swap phone numbers with Diji1. It'd keep OzB threads cleaner that way.

            • Speckled Jim on 25/10/2019 - 10:57

              @justtoreply: The goose that laid the golden egg — let's starve it to death. That's the point of the topic.

              I, on the other hand, recognise the value of a B&M that is local, should there be issues. When they're discounting and cheaper than online alternatives, that's a good deal IMO.

  • kahn on 23/10/2019 - 16:32
    +4

    if we screw everyone too hard there wont be anyone left to screw tomorrow

    The motto of a gigolo.

  • spackbace on 23/10/2019 - 16:33
    +10

    And? When anything is bought, there's a profit margin. Welcome to Business 101. Doesn't mean they're going to sell a product at cost price, or a loss, to earn your business, that's covered in Bad Business 101.

    • orangetrain on 23/10/2019 - 17:57

      If they sold in bulk, they can get a bigger profit margin!

      • SBOB on 23/10/2019 - 18:22
        +2

        Sell for zero profit

        'we will make it up on volume'

        • FullPrice on 23/10/2019 - 20:28
          +1

          aka Dick Smith private equity

      • spackbace on 23/10/2019 - 18:43
        +2

        Like having 2 sausages in the bun?

        • justtoreply on 23/10/2019 - 23:09
          +3

          I think there's a porn acronym for that

  • Taro Milk Tea on 23/10/2019 - 16:35

    Ok

    nerd

    • nomster on 23/10/2019 - 16:38

      😂🤑

  • p1 ama on 23/10/2019 - 16:39
    +2

    Your conclusion is wrong, given this:

    After that, they pay wages and rent, they retain 6.38% for investors.

    I don't see how you can follow on with this:

    So in conclusion.. if you cant squeeze an additional 22.14% discount on top of the "best price" you can get, you're leaving money on the table.

    It would seem that the maximum discount you can actually squeeze out would be 6.38% on top of whatever the average selling price of that particular item is.

    • nomster on 23/10/2019 - 19:39
      -1

      Why is it wrong?

      a 22% discount is selling at the same price as the cost of your goods.

      a 6% discount is selling at no profit.

      Sure you can sell for a loss, products like woolies/coles chicken are essentially loss makers.

      Uber is operating at a net loss of ballpark $4000 per customer.

      • p1 ama on 23/10/2019 - 21:36
        +1

        Sure you can sell for a loss, products like woolies/coles chicken are essentially loss makers.

        That's because they rely on the fact that you come in to their store, buy their chicken and milk at a loss, but buy 20 other grocery items at high margins.

        Other factors as well, such as staff/sales ratio is much lower at WW/Coles than it is at JB. They generally have higher sales per floor area and various other efficiencies.

        That's a completely different business model to how JB works. JB cannot really afford to have loss leaders because you're not going to walk out of the store with 20 other products which make them a profit.

        • nomster on 23/10/2019 - 21:49
          -2

          incase this wasnt obvious, this is intended to be a light hearted post, friend.

    • justtoreply on 23/10/2019 - 23:11
      +1

      You're both wrong. It's 6.38% until they've paid their overheads. Then it's all 22.14% cream on top. Moral of the story, buy in June.

      Also light hearted :p

  • profar on 23/10/2019 - 16:46

    I would love OP to do a analysis of Apple to see what crazy margins using your crazy analysis of what we are supposedly fighting against to obtain a bargain lol !

    • djones145 on 23/10/2019 - 23:19
      +1

      wasnt iphones like 250 odd to make
      but they have alot of expenses
      stores
      r and d
      marketing
      lawyers to sue everyone

  • OzCheapo on 23/10/2019 - 17:25

    So you're saying that you wouldn't pay $11 for the privilege of Consumer Guarantee because what you're saying is you'd rather wing an AliExpress without consumer protection. I'd say $22 for the privilege but it is going back to the economy.

  • Bargain80 on 23/10/2019 - 17:54
    +2

    that will be 22% overall.
    different product category / brand will have different margin

    • nomster on 23/10/2019 - 19:40

      yep, sales mix.

      HDMI cables and TVs balance each other into 22% i guess.

      iPhones and iPhone cases probably do the same.

  • dbui8743 on 23/10/2019 - 17:59
    +4

    This is the simplest generalisation of all generalisation.

    No business exists to break even so as long as they still agree to sell you something they are making good profits, barring some new and naive employees getting played by ozbargainers lol. It is all factored in to their forecast.

    For every one price savvy ozbargainers, you get 10 pensioners who just need something to work, so i actually suggest your 22% is still too low.

    I am not condoning this mindset, just being cheeky.

  • Baysew on 23/10/2019 - 18:30
    +3

    After all this, they pocket $6.38 in profit.

    The 6.38% represents EBIT - Earnings before interest and taxation.

    • dbui8743 on 23/10/2019 - 18:56

      But if there is no profit, there will be no tax lol. Assuming interest is in significant.

      Screw the ato in the process, win win.

  • SBOB on 23/10/2019 - 19:17

    Running a business consisting of over 300 stores, several thousand staff, and only making 6% profit after all expenses?

    Not exactly a company with massive profit margins

    I'd be worried if the company i worked for was only making 6% profit after expenses. Glad I dont work in retail any more

    • nomster on 23/10/2019 - 19:42

      I don't think consumer retail is particularly a high margin industry.

      If its too high they'd lose pricing edge to Harvey!

  • toomuchdogfur on 23/10/2019 - 19:44
    +2

    Oh I bet you could easily score 22% off a whole bunch of things from JB!

    HDMI cables, powerboards, extended warranties… go wild!

  • BugsBunnyAUS on 23/10/2019 - 20:30
    +3

    Of course some things are going to have a margin of 100s of %

    Some will be absolutely razor thin.

    It's a business. The suppliers and manufacturers are also running a business. If you're not keen on the prices, go elsewhere. And if no one agrees to a price you like, then you've probably got some unrealistic expectations.

  • RockyRaccoon on 24/10/2019 - 07:22
    +2

    Whats worse than an Amateur Ozbargain Legal Eagle

    And Amateur Ozbargain Business Analyst.

    Just let us know if you get a job with a listed company soon, so we can short the shares.

    Win win for both of us. You get a redundancy payout, we get the profit. (If your Analyst mind can work out how that works)

    • nomster on 24/10/2019 - 08:39

      found the jb hifi staff!

  • OzHunterNSW on 24/10/2019 - 10:22

    It doesn't hurt to pay full price some times. However, on something major, I would seek a bit of a discount, be it off the tag price or delivery. But, it does not hurt to pay full price.

  • HeWhoKnows on 24/10/2019 - 11:59

    Just for the record….
    OP's maths is totally WRONG!

    22.14% profit MARGIN means their profit is $22.14 per $100
    So Cost is $77.86 per $100

    • nomster on 24/10/2019 - 13:08

      err, thats what i said though?

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