sully1311 said:
I work in retail and checked the profit margin. It's making a loss for the retailer. |
Well then you know that the profit margin doesn't tell you the whole picture. It's not unusual for the retailer to offset the margin loss with increased marketing support (aka cash) from the supplier.
As an example from another industry - In the UK, insulation is sold to customers for a small fraction of what it costs. This is because the retailers receive subsidies greater than the actual cost of the insulation. They could give the insulation away for free and still make money. Now in this case it's due to "green" legislation enacted by government requiring energy companies to provide these subsidies, but the practice of paying retailers to sell your products is well established.
That said this may not be down to additional support from MS. It is also possible that retailers are price exploring - trying to find the sweet point at which sales pick up. The retailer will then use this evidence as leverage to negotiate future cost price reductions with their supplier - either the sales pick up and Amazon et al say, "this is the price you need to be selling at" or the sales stay unchanged and the retailers say, "we need more marketing support to offset the lack of sales, or we'll give our shelf space to more profitable products".
