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September 15, 2013
News - Summer of Tariffs
about 3 years ago
Thanks for the clearly stated FACTS. Appreciate it.
Do you really think this? With the extremely cheap prices of electronics you think a parent is going to look at a $12.50 kit and say, whew, if only that were $10 I might consider getting it for little Jimmy. But no, I just can't drop that kind of dough right now.
Oops, gotta a call coming in on my $800 smart phone with $40 data plan per month and it looks like my sister wants to have a $4 starbucks 5 miles across town so I gotta run over their in my SUV quick (using $3 in gas).
Hold on. Your business getting a business tax cut is one thing. The sales tax (payable by your customers) is a separate thing, no? They really aren't related relevant to Ken5's question I think. IOW, the sales tax topic isn't germain to his question. But you combine them in your answer, as if not yet knowing the answer related to the sales tax makes it difficult to write about the first. I see.
LOL. Well said.
"There is always the option of letting Sparkfun have their opinion and accept their explanation, without assigning some type of profit based ulterior motive."
"..accepting their explanation", yes, some people nod and say ok, I believe you but when the explanation doesn't pass muster it is a problem for some people (myself included). It has to make sense!
Also, I don't read Jakezilla's line of questioning as some attack on them trying to make a profit (ulterior motive that you stated) but instead he is using facts to question their statements as the facts don't add up is all with the dire message of the article.
The bias is veiled I think so as not to be polarizing and risk loss of business of current administration supporters IMO. Because the way I see it, an unbiased approach would be them simply stating in a banner on the web site "Prices on some products will increase at some point after July 6th due to increased tariffs on Chinese imports". That's a factual statement with no underlying bias.
But instead this article is an attempt to describe how this 25% tariff on chinese components is going to be bad for them and bad for their customers and to describe all of the challenges they need to overcome, losses to keep to a minimum, and how much turmoil exists because of these tariffs:
-"managing uncertainty, and doing everything we can to keep losses to a minimum".
-"the short term: the three or six or nine months it will take for our business to fully transition to a massive increase on our cost of goods."
-Extreme difficulty and opportunity cost of projecting the increase of and calculating the cost of 2,400 storefront items based on 4000 components.
-For the tariff increase: "the challenge we face is how much, when and who".
-For the how much question the article states it to be "a big, hairy, intricate problem to solve with seemingly infinite dependencies."
-"huge task of managing the chain of uncertainty imposed by these new tariffs"
Note the word "massive" used in the 2nd quote. The dictionary says "exceptionally large" with synonyms "huge, enormous, vast, immense, large, big, mighty, great, colossal, tremendous, prodigious, gigantic, gargantuan, mammoth, monstrous, monumental, giant, towering, elephantine, mountainous, titanic".
All this talk sounds pretty scary, huh? IOW, these "massive" increases are coming for you all and huge challenges for Sparkfun to navigate through this all. Takeaway is that this sucks. It's overblown verbiage so therefore I don't read it as "neutral" or "factual".
The hint of the bias is the use of the word "massive" to describe the tariff's effect on their cost of goods. That's a hint at what this article is really about along with all the other above quotes that are extreme in nature because their issue is with the Trump administration, not this tariff, because none of their major problems seem to be major problems.
The only other real problem other than the Trump tariffs seems to me to be that they don't have software that manages their sku's and what components go into them. They must instead, normally, just set a price when the sku first is created and rely on any component changes to be minor enough to not matter (with their markup being set high enough to not make a difference). But because of these tariffs they have to decide what might need to be repriced and how much since the kits are made up of only some things that are impacted.
The normal past insignificant price changes are now not in the single digit percents so they don't want to eat the 25% themselves but hmm, they think, it's not an entire 25% of the kit price because only some parts of some kit items have went up but if the original pricing was marked up a bunch maybe we could eat it all but wait, that would mean less profits for us for what the Donald did!!! Grrr!!! And because of the likely extreme hate toward him, that is really hard to swallow.
So, they are faced with losing some profits or spending lots of time/money on a system that they really should have that can accurately tell them the true cost of their sku's are and adjust them properly when their purchase price goes up. So it's a problem with their business, not the tariffs.
So my simple, personal answers to the seemingly difficult "challenges" of how much, when, and who would be
2) when you next order a batch of the higher priced components
3) huh, not sure what the question of "who" is about - I guess who pays for the increase and that could be the customer or you (since if your markup really is 200X maybe you feel you can eat some of the increase).
And the lamenting about the tariff process I just don't buy. ...about them having to spend a lot of time dealing with proper classification of components, I quote: "Occasionally, our suppliers don’t include the right classification for the goods they ship to us. When that happens, a customs agent calls our shipper, who then calls us at SparkFun to either verify the classification or provide a new one." Then later they say, "For SparkFun, this means a significant increase in the time spent checking supplier classification of goods."
So I am to believe that something that happens "occasionally" results in "significant increase in the time" spent?
This is just more of the same over the top crying as the "massive" increase where a 0.25 component now is massively increased to 0.31, a $1 item massively increased to $1.25. But customers buy several things I know, so $15 of stuff will now cost $18.75 (if all items are individual components where the applicable tariff applies).
So they tried to write this article politically neutral but their affiliation crept in. But I thank them for the article as it reveals important information to me that helps me understand Sparkfun (along with the other comments here) and is useful for my buying decisions. ;-)
Here's a closing quote: "The problem for small businesses like SparkFun isn’t necessarily an increase in tariffs, it’s managing the uncertainty around it and not only keeping our losses to a minimum, but being able to confidently quantify those losses in the first place."
So it is true - they don't have inventory software that can adjust prices of items when their input costs change so please bear with them and they attempt to indirectly blame it on tariffs.
No public wish lists :(