Samsung is showing ads on some refrigerators that cost over $3,000. The South Korean company has confirmed that these advertisements will be shown as a test run on some "Family Hub" refrigerators that are sold in the US. Users cannot disable them.
Why aren’t there smaller companies looking to make a basic appliance without all of the BS? Call it “Basic Appliance” and sell it at Costco. Make it so it’s slightly less expensive than the Samsungs, etc. Maybe even put the Kirkland brand on it. Seems like the perfect money making operation.
It’s been a while since I worked on the US appliance market, but there are no smaller companies in the appliance space outside of some high European brands at the top end of the market.
I am not that well versed on the manufacturing side of the things, but I believe it is impossible for a smaller player to compete in the mass market due to extremely low margins (under ~5%), particularly in the “basic appliance” segment and the fact that manufacturing is extremely sensitive to scale (your per unit manufacturing cost will likely be significantly higher than Samsung, LG, Hair, Electrolux etc.).
Essentially, a smaller company will always have SKUs that will be more expensive than the comparable SKU from a major company while also being “offbrand” and having weaker distribution and ecosystem networks.
Costco only takes a 10 or 15% markup though. Assuming they’re doing the usual of doubling their costs, hopefully that would be under the cost of their competitors. Even if it was equal or slightly more expensive, I would support them.
It’s not the retailer side that’s the problem, it’s the manufacturing side. CostCo is almost certainly not going to get into the appliance market. It’s a difficult market that’s not very similar to other electronics or other home improvement segments. Not to mention that CostCo’s economies of scale with appliance manufacturing would be terrible. They would be limiting their hypothetical appliance manufacturing business to one retailer in one country (albeit a very large one). Not to mention current tariff risks. A “basic” class appliance SKU would be more sensitive to the relatively higher costs for manufacturing in the US. Appliances are manufactured in the US, but the economics would be more negative on a relative basis for a “basic” class appliance brand owned by a retailer.
I am not very knowledgeable about CostCo’s in-depth per-segment strategy, but I suspect appliances in particular are more sensitive to margin issues even on the retailer side. Appliances are big, bulky and difficult to deal with (on a relative basis).
Don’t get me wrong, I would welcome more competition, but what you’re proposing is likely not possible. You would probably need regulation considering the nature of the appliance market.
They’re already in the appliance market, they sell them. If you mean as a private label, they just put their name on other company’s products. I think they call it no-label or something like that.
I see, I didn’t know that they had a private label appliance product line (don’t remember seeing their brand in their sales data, but I probably missed it).
And they are significantly cheaper than comparable SKUs from branded products (especially the entry level brands, Frigidaire I believe is one)?
It wouldn’t be the first time something like that was done either, especially in the appliance world. I occasionally get a call for an IKEA or Kirkland Signature Appliance… They’re always just rebadged units from a major manufacturer, often Whirlpool in the cases I’ve encountered.
Why aren’t there smaller companies looking to make a basic appliance without all of the BS? Call it “Basic Appliance” and sell it at Costco. Make it so it’s slightly less expensive than the Samsungs, etc. Maybe even put the Kirkland brand on it. Seems like the perfect money making operation.
It’s been a while since I worked on the US appliance market, but there are no smaller companies in the appliance space outside of some high European brands at the top end of the market.
I am not that well versed on the manufacturing side of the things, but I believe it is impossible for a smaller player to compete in the mass market due to extremely low margins (under ~5%), particularly in the “basic appliance” segment and the fact that manufacturing is extremely sensitive to scale (your per unit manufacturing cost will likely be significantly higher than Samsung, LG, Hair, Electrolux etc.).
Essentially, a smaller company will always have SKUs that will be more expensive than the comparable SKU from a major company while also being “offbrand” and having weaker distribution and ecosystem networks.
A Chinese company could definitely pull it off, if they wanted to.
The thing is they, song with most of the world, probably wouldn’t want to start a business venture in the USA anyone soon
Costco only takes a 10 or 15% markup though. Assuming they’re doing the usual of doubling their costs, hopefully that would be under the cost of their competitors. Even if it was equal or slightly more expensive, I would support them.
It’s not the retailer side that’s the problem, it’s the manufacturing side. CostCo is almost certainly not going to get into the appliance market. It’s a difficult market that’s not very similar to other electronics or other home improvement segments. Not to mention that CostCo’s economies of scale with appliance manufacturing would be terrible. They would be limiting their hypothetical appliance manufacturing business to one retailer in one country (albeit a very large one). Not to mention current tariff risks. A “basic” class appliance SKU would be more sensitive to the relatively higher costs for manufacturing in the US. Appliances are manufactured in the US, but the economics would be more negative on a relative basis for a “basic” class appliance brand owned by a retailer.
I am not very knowledgeable about CostCo’s in-depth per-segment strategy, but I suspect appliances in particular are more sensitive to margin issues even on the retailer side. Appliances are big, bulky and difficult to deal with (on a relative basis).
Don’t get me wrong, I would welcome more competition, but what you’re proposing is likely not possible. You would probably need regulation considering the nature of the appliance market.
They’re already in the appliance market, they sell them. If you mean as a private label, they just put their name on other company’s products. I think they call it no-label or something like that.
I see, I didn’t know that they had a private label appliance product line (don’t remember seeing their brand in their sales data, but I probably missed it).
And they are significantly cheaper than comparable SKUs from branded products (especially the entry level brands, Frigidaire I believe is one)?
It wouldn’t be the first time something like that was done either, especially in the appliance world. I occasionally get a call for an IKEA or Kirkland Signature Appliance… They’re always just rebadged units from a major manufacturer, often Whirlpool in the cases I’ve encountered.