Many of my corporate customers want to buy usb flashdrives (memory sticks) as corporate gifts (a great gift) but the amount of price variance in the market is confusing. Here are 4 reasons why:
Firstly, retail buyers buy in HUGE volumes (100,000 units for a 400 store chain) and they are buying generic flashdrives meaning they don’t need a custom logo like a company does. Most companies that buy flashdrives will order 100 to 1000 flashdrives. Any order larger than 1000 units would be unusual. So, this is the first issue that makes corporate flashdrives more expensive than retail.
Secondly, electronic retailers treat flashdrives as a loss-leader meaning they will sell them at BELOW their cost just to get you in the computer department. It’s the same way in the Golf industry golfballs are sold at a loss just to get you into the store and trying out shoes, clubs and the rest of the high-margin product.
Thirdly, the flashdrives most corporate buyers request are Grade A quality which means they have less than a 1% failure rate and contain Samsung or Hynix brand memory chips. Grade B flashdrives are no name brand and have 10% or higher failure rate. Grade C flashdrives are sold by the pound and have 30-40% failure rate. Lastly, Grade D chips fakes or knock-offs and could be of any quality. I only sell Grade A flashdrives (full guarantee, etc) and they happen to be more expensive.
Lastly, memory chips are a commodity and pricing fluctuates weekly depending on volume demand. If Apple is manufacturing new iPhones and digital music players this month for Christmas 2009 delivery then demand will be high for memory chips hence pricing will go up.
To find out more about Flashdrives don’t hesitate to contact myself or Jen Haralson at jen@pattersonbrands.com