Best Buy Accuses Walmart of Misleading iPhone 5 Sale, Other Retailers Complain Too

[Phillip Swanson]

Best Buy and Toys R Us have filed complaints accusing Walmart of misleading advertising regarding the iPhone 5 and other products during the holiday season.

A number of regional supermarket chains, along with Best Buy and Toys R Us, are accusing Walmart of inaccurate prices and false advertisements during the Holiday season, according to The Wall Street Journal.

Best Buy, specifically cited a Walmart sale that featured Apple’s 16GB iPhone 5 for $150. Best Buy claims the Walmart sale cost Best Buy $65,000 in profit the day Walmart advertised the promotion on Facebook as Best Buy was forced to match prices even though Walmart did not have enough inventory to meet demand. Walmart claims their stores were 98 percent in stock of the iPhone when the promotion ran.

Best Buy had problems with another Walmart ad featuring Dell laptops. In the ad Best Buy claims Walmart showed what consumers were lead to believe were two identical laptops with Best Buy charging $251 more at their stores. However, Best Buy claims that the model associated with their store was in fact a higher-end, more expensive model.

Even if Best Buy and other retailers can convince state attorney generals to go after Walmart, the massive retailer isn't likely to care. Their massive market share, lower margins and massive sales volume allow them to engage in “loss-leader” promotions that Best Buy and other retailers can’t afford. Which is precisely Walmart’s goal, to push competitors into situations they can’t afford.

Of course, this all pretty hilarious considering Best Buy is now running their own $50 instant rebate on any iPhone 5 purchased with a two year contract.

Sources: The Wall Street Journal [via AppleInsider]

[Colin9001]

Money money money..

[Evaded]

As much as I hate Walmart, I'd go there before that crap hole Best Buy. In California I don't have to pay the sales tax on full retail like I would have to at Best Buy.

[Norb]

Oh Walmart great prices and great people. Once in a while I'll step into Walmart but rarely does it make me want to go back. I rather spend a little extra somewhere else and walk out with my sanity.

[Ambi_Valence]

As much as I hate Walmart, I'd go there before that crap hole Best Buy. In California I don't have to pay the sales tax on full retail like I would have to at Best Buy.

That sales tax thing is odd. To a non american anyway.

[unison999]

That sales tax thing is odd. To a non american anyway.

Some stores will charge sales tax before the sale/discount. For an example AT&T will charge tax on the full retail price ($650?) for iPhone 5, which comes out to around $50 in taxes in California, which comes out to paying $250 under 2 year contract.
Some stores will charge based on the advertised sale price $200, the tax charged is $15.50 = $215.50. Pretty big difference.

[Ambi_Valence]

Some stores will charge sales tax before the sale/discount, for an example AT&T will charge tax on the full retail price ($650?) for iPhone 5 which comes out to around $50 in taxes in California.
Some stores will charge based on the advertised sale price $200, which bring the tax charged down quite a bit.

Don't mean to sound like I'm looking down or anything but isn't a set rate of tax, (dependent on the goods of course), applied everywhere easier? Zero % is not an option.

[thevmax]

In Wisconsin, I believe you pay tax on the amount you actually pay.
It doesn't make sense that you would have to pay tax on an a retail price you didn't pay.
I paid $399.95 for my Iphone 5 under contract, and tax was applied to that amount.

[Jacobh4]

In Wisconsin, I believe you pay tax on the amount you actually pay.
It doesn't make sense that you would have to pay tax on an a retail price you didn't pay.
I paid $399.95 for my Iphone 5 under contract, and tax was applied to that amount.

It's like that in Mobile too. Tax is 10% of the price you pay.

[Orby]

Don't mean to sound like I'm looking down or anything but isn't a set rate of tax, (dependent on the goods of course), applied everywhere easier? Zero % is not an option.

That is the way it's applied in almost every jurisdiction across the U.S.A., in practicality at least.

Now here's where it gets tricky.

California state regulations (along with Massachusetts and Rhode Island, maybe others as well) require collection of sales tax on wireless communications devices at their unbundled price (i.e., the price of the device were it purchased without service or carrier subsidy).

So at a rate of 8.25%, your phone is taxed at $650, not $200 (meaning sales tax comes to $63.53 instead of $16.50).

OT: Of course Best Buy is frustrated and trying to argue about this. Personally, I think that Wal-Mart probably had sufficient inventory at the corporate level, but divvied it up by store so that particular stores were running out rather quickly.

Note Best Buy (and by logical extension, Wal-Mart) did not complain about taking a ~$65,000 loss, but rather a ~$65,000 loss of profit. This verbiage leads me to believe that the companies were still collecting profit at $127, just not as much as they would like.

Welcome to capitalism.

[GeoffS4]

That's rich. While I agree complaints should be made by whomever finds them, to hear Best Buy complaining about false advertising is amusing.

Does it loose it's punch if Al-Queda complains about terror attacks in the world? 'Cause that's kinda what Best Buy sounds like right now.

That's rich. While I agree complaints should be made by whomever finds them, to hear Best Buy complaining about false advertising is amusing.

Does it loose it's punch if Al-Queda complains about terror attacks in the world, 'cause that's kinda what Best Buy sounds like right now.

Oops...old browser, apparently, causing inability to edit...hence the double entry....

[Truckerbear]

Bought two iPhone 5 16gb Verizon phones and paid 127.00 a piece at Wal*Mart. I seen this sale in three different states. OH, PA and TN. Couldn't beat it since at the Apple store the 4S was 99 dollars. 30 bucks more got us the newest phone.

[cmwade77]

I don't know anymore, as I refuse to shop at Best Buy since they now require ID on ALL returns, which has been leading to an increase in identity theft, but it used to be that the product had to be in stock at a store within 15 miles of the store for them to price match.

Given that this is the case, then I don't see how they can complain about any loss. Additionally, this is from people who may not have purchased at Best Buy, meaning that they made extra money, not lost it.