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Didja Ever Wonder What/Who Killed Radio Shack?

Posted By: Watchman
Date: Tuesday, 6-Sep-2016 15:11:48

For almost a century RadioShack served electronics enthusiasts as an inexpensive way to buy the goods and parts they needed, from camera accessories and headphone jacks to battery testers and spare power cords for your iPhone.

When the company went bankrupt last year, the reaction was shock mingled with a sense of nostalgic sorrow. The media offered all kinds of answers to the mystery of what or who killed Radio Shack, from a bad business model and poor management at the top, to competition from internet suppliers who also killed Circuit City and almost did the same to Best Buy.

But in this case the real online perpetrator may be China, a serial predator who’s been claiming more victims than just Radio Shack. Even worse, Congress and our own U.S. Postal Service seem to be holding the murder weapon.

To get to the bottom of this mystery, we need to remember that Radio Shack’s most loyal customers were buyers of small electronics parts for DIY projects — whether they bought them in the store or from Radio Shack’s website.

Clue: That’s the same line of business that China e-commerce specializes in, with dozens of websites for small cheap goods — including electronics.

Now, everyone loves healthy competition. But Chinese e-commerce companies get a special break, thanks to the USPS and the global cartel that oversees all international shipping by government post, the Universal Postal Union — a United Nations agency.

The UPU sets international postal rates from country to country, i.e. what a country’s postal service charges to deliver a package within that country. That rate is based that nation’s state of economic development. Category 3 country Gabon, for example, gets a bigger price break on the postage for the packages it ships to Norway, than Norway gets shipping to Gabon — or to the United States, another Category 1 country. For reasons that defy logic, China, the world’s second-biggest economy, also sits in Category 3, alongside Botswana and Cuba — and Gabon.

This means someone in China can send a package across the Pacific to the U.S. and have the USPS deliver anywhere in the 48 states, often for less than an American has to pay to send the same package within the U.S. How did this affect Radio Shack? A quick comparison of its online catalog with those of its Chinese competitors provides fresh evidence of what’s happening — and not just to Radio Shack.

For example, a standard multimeter for measuring electric voltage sells from Radio Shack for $24.99. Go to Deal Extreme, a Chinese e-commerce company, and you can buy virtually the same multimeter for $15.82. Throw in Deal Extreme’s free shipping (since the terminal dues it pays are so low) versus the $5.95 Radio Shack has to tack on, and a multimeter from Deal Extreme costs you just $15.82, while Radio Shack charges $30.94 — more than double.

Of course, that lower price does reflec...

more: http://hudson.org/research/12754-who-killed-radio-shack




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