The HDMI cable ripoff and why retail is really dying

The HDMI cable ripoff and why retail is really dying

Summary: Would you spend $100 for something when you can get it for $10? Of course not. What about $500, when you can get it for $2.50? No way. But chain retailers think you will.

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Gather 'round, boys and girls, for I have a ghost story to tell. Once upon a time, in days of yore, chain stores dotted the land. There were Best Buys and Targets and Walmarts. Even Circuit City stores had yet to find their way to the Great Mall in the Sky.

These were the days before the Internet, before the people had choices, when all the commoners in the land relied on, nay, even trusted, their local retail establishments.

But then came the Internet and online commerce, and the peasants now had choice. They weren't limited to buying just what was available within driving distance. They could, you know, surf, and they could learn.

And learn they did. The little people, peasants, commoners alike, learned that they could go online to order stuff. And they learned that the stuff was often more plentiful and often less expensive than in the chain stores. And the peasants ordered from The Online and it was good.

Except, perhaps, it wasn't so good for the chain stores, which have yet to learn their lesson. Many chain stores are destined for death. Behold, whilst I mix a metaphor and submit to the court Exhibit A: HDMI cables.

Those shmucks in retail

So, this weekend, I had a cable failure. I have a TV that's about 20 feet or so from my HDMI switcher. As it turns out, this cable often gets moved, so it eventually failed. My wife decided to take a quick run to the Walmart (at 2am, of course) to pick up a replacement cable. She didn't find a 25-footer, but she did find two 12-foot cables that could be connected together.

Total price, not counting the connector: $112 (that's $56 per 12-foot cable). In other words, holy s@#t! Fortunately, Walmart has an exceptional return policy, which is why Walmart is not likely to go the way of Circuit City and, almost undoubtedly, Best Buy.

Now, I've been buying HDMI cables for years, but I buy online and they're relatively cheap. On the other hand, family and friends often complain about how insanely expensive HDMI cables are, because they've bought cables in local chain stores. They've told me they feel they have to pay the price because they want to play their PS3s, their new HDTVs, and so forth.

This got me to thinking. What's the difference in price between retail and online for HDMI cables?

In other words, just how much is retail ripping off the local buyer?

The answer is mind-blowing.

I looked at Target, Walmart, GameStop, and Best Buy. Best Buy's prices belied the name, in that they were fully insane. But let's start with merely overpriced.

Target charges $27 for a single, 6-foot cable. Walmart charges $27, and GameStop charges $29.99 for a PS3-branded 6-foot cable. By contrast, you can get a 6-foot HDMI cable online for $3.50 from Monoprice.

In other words, the retailers charge seven times more.

I already told you about the $112 it cost to cobble together a 24-foot cable run with cables from Walmart. A 25-foot cable from Monoprice was $16.83. I actually ordered a $25-foot cable from Amazon for under $10. Again, we're looking at about seven times more expensive from the retailers.

And then we get to Best Buy. You're going to need to sit down for this. Best Buy does offer 6-foot cables for as low as $24 (when they're in stock), but check these prices out.

Best Buy sells a house-brand 3.3-foot cable for $495.99! You can get a 3-foot cable from Monoprice for $2.50. That's not a typo. Best Buy lists a cable that's almost two hundred times more expensive.

Seriously.

Yes, that's nearly $500 for a three-foot cable. Yowzah!

If you want a 65-foot cable, Best Buy wants to charge you $1,089.99. For the record, you can get a 75-foot cable from Monoprice for $53.77. Not $1,089. Nope. $53.

Do you seriously believe there are 5-star reviews for this overprice cable? Yeah, me neither. Either that, or there really is a sucker born every minute.

The sad thing is retailers are duping some good-doobie customers into these prices by claiming that these insanely overpriced cables provide higher quality signals. Many customers don't know any better and just want to get the best they can. Retailers know this, prey on customers' good intentions, and -- to be blunt -- are ripping off their customers.

HDMI retail pricing is particularly egregious in this regard.

Faced with drooping margins in home electronics, many retailers are trying to make up that profit drop through accessories. After all, why sell something for $2.50 if you can talk someone into paying almost $500 for it, right?

Most consumers don't know about Monoprice (or many of the other excellent online suppliers of electronics gear). But while most people don't know about Monoprice, almost everyone knows about Amazon.

You know what most consumers also understand really well? Getting ripped off.

Sure, Best Buy is welcome to charge whatever they want for their products, but by now, many consumers have figured out what's going on. When the local retailer sells a cable for more than a thousand bucks that you can get online for fifty, it becomes an obvious choice where to buy.

Most of us will accept a small price jump for the convenience of buying locally. We'll even accept a small price jump for the convenience of buying from Walmart at 2am.

But a small premium might be 10%. Once you start charging seven to twenty times more, 700% to 2,000% more, all bets are off. We're not going to buy retail. We'll buy online.

And, next time, before we bother to get in the car, use gas, and drive 20-minutes each way, we're going to go online first.

Retailers, you're not losing the fight with online because online is better. You're ultimately losing the fight with online because you're losing our trust.

See also: In the battle of clicks-versus-bricks, retail must transform or die

P.S. Don't believe all the hype from some of the in-store salespeople. Most HDMI cables will work just fine. You don't need to buy HDMI cables strung from the gold in Rapunzel's hair.

Topics: Hardware, Mobility, Networking, Telcos

About

David Gewirtz, Distinguished Lecturer at CBS Interactive, is an author, U.S. policy advisor, and computer scientist. He is featured in the History Channel special The President's Book of Secrets and is a member of the National Press Club.

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Talkback

229 comments
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  • Not the same

    The cables you can order online and buy in the stores are usually not really the same. That said however with digital technology there isn't really any difference between two cables as long as both of them work at least on the bare minimum level required by their respective specification. If the signal gets thru, then it doesn't matter what the signal/noise ratio will be, and that it might be for ex. 1/5 with the higher quality cable - because in the end if the ratio is still within nominal parameters, the end result will be the same: in the case of a HDMI cable you get a perfect picture, the same picture you'd get with a cable that costs 5-10-20 times more.

    On the other side one can understand that brick and mortar stores don't go for the cheap cables, because they need to somehow recover the costs associated with physical storage and display of the product - and a $3.50 cable just won't cut it in this regard, even if they're working with a 80% profit margin. They simply have no other choice, than to offer cables only at such price points, because at $3.50 it just makes no economical sense for them to offer said products.
    ff2
    • If it makes no economic sense

      Then it's time to change their business model...

      It makes even less economic sense to rip off your customers.
      NickNielsen
    • nah...

      nah, its a rip off. i used to work in retail and I saw costs vs sale prices. We would sell cables that we paid $1 or less for each (in bulk) for $20 - $50+ each. Its because retail stores have always ripped people off on cables... as since they all do it, they all keep doing it to make extra profits.
      doh123
    • I don't really believe that.

      ". . . because they need to somehow recover the costs associated with physical storage and display of the product - and a $3.50 cable just won't cut it in this regard, even if they're working with a 80% profit margin. They simply have no other choice . . ."

      Baloney. Stores sell candy and newspapers for less than a dollar. And you really don't need any sort of special display - you can use the same old shelves you've been using for years. The "display costs" are the cost of a tiny label telling you the price. And the storage costs, ditto. There's no extra cost to storing them - you just store them in the warehouse you use for everything else.
      CobraA1
      • yep ...

        ... they do sell candy and newspapers for less than a dollar ... hundreds of them a day, as compared to the maybe 10 hdmi cables a store may sell ... ergo the need to make more on each hdmi cable ...

        Ludo
        Ludovit
        • For a place that probably sells 100 TV's a day or more

          You would think the sales volume for HDMI cables is brisk too (those darn flatscreens never come with a cable!)

          Perhaps they're just capitalizing on a market they know is consistent.
          johnsmith9875
      • Display costs

        While I don't agree with the incredibly inflated costs, when they talk about display costs, what they mean are the overhead costs (rent, utilities, etc) for the space that the item takes up on the shelf.
        jlmowery@...
    • Sorry, don't buy your theory

      If a $3.50 cable at a 80% profit margin makes no economical sense, then there are literally thousands of other products carried by Target, Best Buy, Walmart, etc. that should be marked up much higher as well. But none of these other products see anywhere near the markup of HDMI cables, even though they have the same storage and display "footprint" of HDMI cables. They simply sell these products at these prices to take advantage of those without the technological literacy to know they're being gouged. The reason they don't do it on other products is because with other products, the box stores don't have the mystery of technology at their disposal to con their customers.
      TroyMcClure
    • recoup costs?

      A cable is a small item that sits in a shipping box in the back, a cable is easy to display on a peg, a cable can sit for months or even years before purchase, the consumer doesn't care.
      To claim the price of a cable has to be jacked up 1000% to recoup costs from display and storage is ludicrous.
      johnsmith9875
  • Every company/retailer/... does the same thing..

    Go to a Quiznos or Subuway and buy a small bag of chips and a pop with your sandwich...
    Stop at home depot/lowes/menards/(any name here) and get a candy from the stand next to the cash register...same thing.
    Go to a movie theater and get a drink and popcorn bucket, and you feel the pain...
    The list can go on and on and on...
    josephvba@...
    • Sure ...

      But, would you pay $495.99 for a $2.50 candy bar at Lowes or Home Depot ? Some markup is ok, but what Best Buy and others like this do with electronic accessories, is just plain ridiculous !

      I buy almost everything online. Best Buy is just a place to go look, touch and feel something. Then I buy online.
      djivan@...
      • Best Buy is OK when the price is right...

        ...like on big ticket items ON SALE.
        We bought our TV's at Best Buy and BluRay player (when the price was right) but any cables I need I look & buy on line.
        My wifes iPhone & my iPod cable & chargers I also bought online. There is a real rip off for sure, just look at the prices of Apple Accessories...
        kfengler
      • You're talking about two things at once...

        Yes, cables and other 'hang tag' goods are and always have been crazily marked up at retail. But the $500 cable (which is I'm sure also heftily marked up) isn't simply a case of Best Buy buying a $4 cable and marking it up 11,000 percent. AudioQuest is building a cable that cost them something (who knows what) to make, and then applying a bunch of marketing, pseudo-science, etc, to convince obsessive/gullible audio/videophiles to pay $500. I'm sure their cables cost a bit more than normal to make, but the manufacturer is making a ton of money, and then Best Buy is doing what retailers do, and marking it up even more.

        This is part of a trend that, as far as I know, had its genesis in Monster Cable's (evil) genius in the late 70's & early 80's. Since then various outfits like AudioQuest have taken it to ever-more ludicrous extremes. I have noticed that the retailers have taken advantage of this and launched their own house-branded snob cables too, which I can't blame them for, in a twisted way. If Monster and AudioQuest are going to do the heavy lifting and create a population of cable-crazed lunatics, why not snipe some of the profit?
        tonyberke@...
      • Popcorn and Soda

        You say "some markup is okay" while defending a movie theater? That's insanity at its finest. How much do you think the cost is on a large bucket of popcorn that you get charge $6 for? Maybe 10 cents. That large soda you paid $4.50 for? Again, about 10 cents including the cup. For the record that's 6000% markup in the case of the popcorn and 4500% markup.

        And considering you pay $2.50 when you go out to eat for that drink it's the same there. We get ripped off every day. High margin items like these are why these places are in business. Does that mean I'll fall for Monster HDMI cables? No, it's a digital signal. They had a point in the days of analog and it did make a difference. Now? Not so much.
        LiquidLearner
      • Best Buy == Fail

        If you live in an area with a Fry's and Microcenter nearby, you can get cheap cables and computer parts. (and with Fry's being a much bigger version of Best Buy with a classic Radio Shack thrown in) In fact in Dallas/Ft Worth area, only the foolish go into Best Buy. The knowledgeable go to Frys if they are shopping locally, or to Micro Center depending on what the deal is. Best Buy really hasn't improved/modernized since the 90's and they're out of their element in the modern world.

        For HDMI cables, Fry's had the HDMI 1.3a 12' cables in a 3 pack for $9.99 (back before 1.4 had happened). Haven't looked for new cables yet, since I don't need 1.4a cables yet, but I'll either Amazon Prime them for convenience or grab them from Fry's if I've made the trip for something else.
        admiraljkb
      • re: Sure ...

        I've heard it said that Best Buy is Amazon's showroom.






        :)
        none none
        • Amazon's showroom

          Blame Best Buy, because if you're looking for a product there, chances are its out of stock anyway. Even if you planned to buy they won't have it.
          What other option do you have other than Amazon, where its always in stock.
          johnsmith9875
      • Best Buy

        In my experience, Best Buy is in a class by themselves when it comes to insane retail prices. They're always more expensive except for things highly controlled by OEMs, like Apple hardware.

        Cables and printer ink cartridges are things which people may need NOW, not tomorrow or 2 days from now. Contingently captive buyers willing to pay a premium for NOW. Pity retailers if people learn patience.
        hrlngrv 
        • If Best buy was simply price competitive with NewEgg

          Their parking lots would be full 24/7. I hate mail order, seriously but I don't want to pay double what a product is really worth.
          johnsmith9875
          • New Egg

            they price match Newegg.

            http://www.bestbuy.com/site/Payment-Pricing/Best-Buy-Low-Price-Guarantee/pcmcat297300050000.c?id=pcmcat297300050000
            Tommy Benson