An ethics Question

[jrm]

this is what I was originally thinking in my post.  some companies gladly would clear inventory that otherwise would move very little.  inventory takes space which is money.  they could use that space for other product that would turn profit or better serve them.  no retail store big or small holds onto something that's not selling.  unless you're going behind the companies back and breaking what rules they had in place it's not going against ethics.

 

 

Let's say a store buys widgets wholesale at $5 each.

They retail for $9 each ($4 profit to the store).

They offer employees a discount at a cost of $6 each ($1 profit to the store).

 

The employee buys one or more widgets at $6 each and sells them to friends at $7 each ($1 profit for employee).

 

This is a product which is a slow-mover and where the retailer would like to reduce inventory.

 

Are you suggesting that a retailer would consider is a better idea to hope employees will use their discount to turn a profit with friends? Or is it more likely a retailer will simply run a sale (or "new blowout price!") on the product with a retail of $7 each? I suggest that the sale price of $7 (which gets the retailer $2/each profit) makes more sense and would move considerable more product. If they were really desperate, they could encourage employees to tell their friends and even offer a commission if they need to move the product that bad. Not only does it sell more units, but it gets the retailer a higher profit margin, generates more foot traffic in-store and raises the potential for additional sales on other items when the shopper comes in. That's retailing 101. It's hard to imagine a retailer reducing stock by hoping items fly out the back door.

 

Selling to a friend (with or without markup) steals a sale from the retailer (taking money out of his pocket) and denies him a customer in the store.

 

 

Sure, some companies may allow this practice, either formally or informally. The best way to find out is to ask the owner or manager. Tell them you intend to buy one or more items at your discount and then resell to friends at a personal profit. Just about any situation I can imagine where the answer is "great idea! go for it!" involves a pretty dumb retailer.

 

Of course, if you do it after you receive the "absolutely not" answer, it is obviously unethical at that point.

[phade]

Let's say a store buys widgets wholesale at $5 each.

They retail for $9 each ($4 profit to the store).

They offer employees a discount at a cost of $6 each ($1 profit to the store).

 

The employee buys one or more widgets at $6 each and sells them to friends at $7 each ($1 profit for employee).

 

This is a product which is a slow-mover and where the retailer would like to reduce inventory.

 

Are you suggesting that a retailer would consider is a better idea to hope employees will use their discount to turn a profit with friends? Or is it more likely a retailer will simply run a sale (or "new blowout price!") on the product with a retail of $7 each? I suggest that the sale price of $7 (which gets the retailer $2/each profit) makes more sense and would move considerable more product. If they were really desperate, they could encourage employees to tell their friends and even offer a commission if they need to move the product that bad. Not only does it sell more units, but it gets the retailer a higher profit margin, generates more foot traffic in-store and raises the potential for additional sales on other items when the shopper comes in. That's retailing 101. It's hard to imagine a retailer reducing stock by hoping items fly out the back door.

 

Selling to a friend (with or without markup) steals a sale from the retailer (taking money out of his pocket) and denies him a customer in the store.

 

 

Sure, some companies may allow this practice, either formally or informally. The best way to find out is to ask the owner or manager. Tell them you intend to buy one or more items at your discount and then resell to friends at a personal profit. Just about any situation I can imagine where the answer is "great idea! go for it!" involves a pretty dumb retailer.

 

Of course, if you do it after you receive the "absolutely not" answer, it is obviously unethical at that point.

 

This is why JIT is so popular and places like DKS and Cabelas use it. 

 

If employee discounts are any material issue, the company makes adjustments pretty quickly. 

[Paula]

Now i am starting to see this in a different way :-)

Edited August 10, 2015 by Paula

[dbHunterNY]

Let's say a store buys widgets wholesale at $5 each.

They retail for $9 each ($4 profit to the store).

They offer employees a discount at a cost of $6 each ($1 profit to the store).

 

The employee buys one or more widgets at $6 each and sells them to friends at $7 each ($1 profit for employee).

 

This is a product which is a slow-mover and where the retailer would like to reduce inventory.

 

Are you suggesting that a retailer would consider is a better idea to hope employees will use their discount to turn a profit with friends? Or is it more likely a retailer will simply run a sale (or "new blowout price!") on the product with a retail of $7 each? I suggest that the sale price of $7 (which gets the retailer $2/each profit) makes more sense and would move considerable more product. If they were really desperate, they could encourage employees to tell their friends and even offer a commission if they need to move the product that bad. Not only does it sell more units, but it gets the retailer a higher profit margin, generates more foot traffic in-store and raises the potential for additional sales on other items when the shopper comes in. That's retailing 101. It's hard to imagine a retailer reducing stock by hoping items fly out the back door.

 

Selling to a friend (with or without markup) steals a sale from the retailer (taking money out of his pocket) and denies him a customer in the store.

 

 

Sure, some companies may allow this practice, either formally or informally. The best way to find out is to ask the owner or manager. Tell them you intend to buy one or more items at your discount and then resell to friends at a personal profit. Just about any situation I can imagine where the answer is "great idea! go for it!" involves a pretty dumb retailer.

 

Of course, if you do it after you receive the "absolutely not" answer, it is obviously unethical at that point.

 

first this isn't meant to argue... my post isn't in reference to massive amounts of product but probably a surplus of product at a location.  chances are it'd take place before the "blow out sale" is put into consideration.  there's a point before then where things just get marked down and sit.  so now are you factoring in the cost in man hours to produce the ad/marketing material to get people to the store, in-store materials and moving it to a better location within the store, or even the time vested by upper management in pondering whether or not the item is to go on sale?  with friend word of mouth there is none.   no retailer would allow this to an extent someone would make a significant portion of a living off of.  "traffic" also works both ways.  most people shop around for a product either online or in the store.  friend connection might eliminate feeling the need to shop around and therefore there's less of a chance the consumer will come make an additional purchase with some other place.  your store is the one at the front of their mind and probably the first to consider when they need something else.  again my whole premise of what i've said is in agreement with you... yes doing it not against management wishes.  any response is most likely "fine, sure, or i don't care" not "great idea! go for it!".  pretty sure big retailers like Cabelas and others aren't dumb and i think it's something that's part of their business model but not something they build around.

[jrm]

No argument inferred. It's all good. I think this is an interesting discussion.

 

I only posted the widget example in response to someone else's example. I see your point about a retailer letting it happen, although I can't see anyone letting it happen as a way to deplete inventory. The potential amount of product moved by employees selling to friends in negligible. It would easier (and smarter) to mark it down to the employee price and tell the employees to have their friends come in and buy it.

 

Any large retailer with an employee discount program certainly counts non-legitimate employee discounts into their business model. Except they don't list is as a sales tool. They list it as a lost sale - along with shoplifting and any other activity which reduces profit. As was noted in another post, they monitor it and if it gets out of hand, they change the policy. Acknowledging the difficulty of enforcement (or lack of enforcement) does not make the practice ethical.

 

You note the hassle of checking with management to put the product on sale. Do you think these same managers call the VP of sales to ask if employees can purchase items to re-sell at a profit? I doubt any store manager is dumb enough to do that.

 

There are many companies which have a liberal policy on employee discounts. I have benefited from such policies through relatives (although it was manufacturers, not retailers. Big difference). It was all above board and allowed by the company (full warranty, etc.). Other companies have a stricter policy on such activites.

 

The act of re-selling at a profit is a different beast. That puts you in competition with the retailer. You can justify it by claiming "one sale won't hurt the big company," but that doesn't make it ethical. I work with many companies and my clients work with many major retailers... I'm pretty sure that no retailer would be okay with employees buying at their discount and re-selling at a profit.

 

I am not judging anyone. As long as you aren't doing it to me it is not my concern. I don't feel that doing something like this occasionally make anyone a "bad" person. Still, no matter how you look to justify it, it is not ethical - regardless of scale. Someone mentioned it is a lousy thing to do to your employer (and I agree). I also think it is a really lousy thing to do to your friend! 

 

Here's a scenario for you...

 

You buy items at Home Depot at an employee discount. Sell it to your friend at a markup which is still below retail. Your friend now returns the items to Home Depot for a refund. Without the receipt, he can still get a gift card.

 

You paid $5, friend paid you $6 and ended up with an $8 store credit. Now he can sell that gift card for $7 on eBay. Everyone wins, right? (Just making up numbers as an example and I have no idea if HD offers an employee discount). Sure, HD can absorb the $3 "loss" - it's already been budgeted for. That doesn't make it ethical.

 

At the same time, if there wasn't "inventory shrinkage" by items moving out the back door, we would all be paying a little less for everything moving out the front door and the employee discount would be more generous. Someone has to pay for it.

 

 

 

 

 

 

[ants]

Unethical.

[Five Seasons]

It's not ethical, and kind of a DB thing to do IMO. Those discounts are a perk of the job, with the employer offing you deals to make the company a better place to work. Incentive so to speak.

If I owned a store/company and an employee did this to me, I would fire them on the spot. I would consider it theft.

It shouldn't matter the size of a company, wrong is wrong.

If you owned a store/company and caught an employee stealing what would you do? 

 

how is it theft? Can I not ever sell something I rightfully buy? Keeping in mind I pay taxes on the income.

 

I sold knives for cutco for a few weeks. You buy a cheap salesman set. They tell you if you resell them you loose your job. Fair enough. After I quit I sold them on ebay and made maybe $60. They contacted me because they watch ebay and let me know I was no longer allowed to sell their knives, which is fine because I had quit. To me that was all fair.

 

[jrm]

how is it theft? Can I not ever sell something I rightfully buy? Keeping in mind I pay taxes on the income.

 

Interesting to bring taxes into it. Did you pay sales tax on the original purchase? Did you collect sales tax when you sold it? Did you declare the profit on your income tax form? If yes to all, then you are a retailer. Depending on the situation of how you acquired the product and the terms of the sale to you, resale may or may not be ethical. If you didn't collect/remit all sales and income taxes, then there is a separate ethical issue to consider.

 

I sold knives for cutco for a few weeks. You buy a cheap salesman set. They tell you if you resell them you loose your job. Fair enough. After I quit I sold them on ebay and made maybe $60. They contacted me because they watch ebay and let me know I was no longer allowed to sell their knives, which is fine because I had quit. To me that was all fair.

Strictly speaking, that situation wouldn't be theft. I am guessing the company policy wasn't "you are free to resell those knives, only you will lose your job." I suspect it was more the knives were not for resale and you purchased them with that understanding. When you resold them you broke that agreement. Unethical (albeit a gray area if the company doesn't have a buyback policy for sales kits).

The original question revolved around reselling while still working for a retailer. If you were working for the company and bought extra sets then sold them to others at a profit, it would be both against company policy and unethical. If you bought several sets while you were employed with the intent of selling them at a profit after you quit, that would also be unethical. If the company's only stated recourse was termination, they obviously can do nothing about it after you quit. That is separate from the underlying ethical issue.

Edited August 11, 2015 by jrm

[Five Seasons]

 

Strictly speaking, that situation wouldn't be theft. I am guessing the company policy wasn't "you are free to resell those knives, only you will lose your job." I suspect it was more the knives were not for resale and you purchased them with that understanding. When you resold them you broke that agreement. Unethical (albeit a gray area if the company doesn't have a buyback policy for sales kits).

The original question revolved around reselling while still working for a retailer. If you were working for the company and bought extra sets then sold them to others at a profit, it would be both against company policy and unethical. If you bought several sets while you were employed with the intent of selling them at a profit after you quit, that would also be unethical. If the company's only stated recourse was termination, they obviously can do nothing about it after you quit. That is separate from the underlying ethical issue.

 

I believe the overall point of this thread is that he can legally do it, but shouldn't be surprised if he's terminated. It is amazing when we term people where I work though. They're just so shocked. always.

[ants]

how is it theft? Can I not ever sell something I rightfully buy? Keeping in mind I pay taxes on the income.

 

I sold knives for cutco for a few weeks. You buy a cheap salesman set. They tell you if you resell them you loose your job. Fair enough. After I quit I sold them on ebay and made maybe $60. They contacted me because they watch ebay and let me know I was no longer allowed to sell their knives, which is fine because I had quit. To me that was all fair.

 

No..That was selfish and unethical…IMHO. Say you had a shotgun that you knew was worth at least $500. A friend of yours, who had done you a favor, really wanted the gun. You let him have it for $300. You find out that the next day he sold it for $500. Ethical??? Really?  You're not pissed and no longer trust this person?????   Okay.

[fasteddie]

The OP wasn't about reducing inventory . It was about getting an employee discount and selling to make a profit . If it was my store and someone did that , they would be looking for a new job . Unethical !

 

[Five Seasons]

Still don't see the ethical issue. It's a risk that almost always results in loss of employment. To me an ethics issue is one where someone is hurt without any consequences or violating an unwritten rule.

Here there are well documented rules and clear punishment for them. Making a few bucks off of dicks does not harm anyone. If you think it does you've never worked for a major corporation or do not understand business.

[gfdeputy2]

 OP states "As an employee, you are afforded a generous discount on gear"

it does not state he can purchase for anyone else so this is what I am going by

to me  reselling it for profit or even using your discount for someone is not ethical.

If the company does not have a problem with it then yes it would be ethical but I can only go by the way it was written by the OP

 

Of, relating to, or dealing with ethics: an ethical treatise. 2. Being in accordance with the accepted principles of right and wrong that govern the conduct of a profession: an ethical act.

[fasteddie]

If Joe Shopper bought something at the store that was on clearance and sold it for a profit .... fine .

But if a store employee was given an employee discount and sold for a profit , I would consider that unethical .

[dbHunterNY]

lol... I think there's a struggle with the OP being so open ended.  basically if you're going against the stores wishes then it's unethical.  if you intend to buy large quantities of gear at the discounted rate with sole intentions of selling it to make a profit then it's not ethical.  if you happen to buy stuff to try it out, then find something better, don't want it, or some similar situation.  then someone wants it so you sell it to them and they're willing to pay you more for it then what you got it for then so be it.  unless the store has a policy against it then they have no grounds for firing you.  normally I'd think you'd be taking a loss but we don't know how much the discount is.  it revolves around intent.

[ants]

No..That was selfish and unethical…IMHO. Say you had a shotgun that you knew was worth at least $500. A friend of yours, who had done you a favor, really wanted the gun. You let him have it for $300. You find out that the next day he sold it for $500. Ethical??? Really?  You're not pissed and no longer trust this person?????   Okay.

 

 

Belo?

[Five Seasons]

lol... I think there's a struggle with the OP being so open ended.  basically if you're going against the stores wishes then it's unethical.  if you intend to buy large quantities of gear at the discounted rate with sole intentions of selling it to make a profit then it's not ethical.  if you happen to buy stuff to try it out, then find something better, don't want it, or some similar situation.  then someone wants it so you sell it to them and they're willing to pay you more for it then what you got it for then so be it.  unless the store has a policy against it then they have no grounds for firing you.  normally I'd think you'd be taking a loss but we don't know how much the discount is.  it revolves around intent.

 

 

that's what you guys are missing. No company allows you buy vast quantities with a discount. I sold appliances for sears during college. They tracked what you bought with your discount. I've seen people get walked out and our discount wasn't even that good. They monitor it. You know this and you pay the consequences.

 

Belo?

 

My uncle did that with an old car my dad gave his nephew. I don't think my uncle was being unethical as much as he was just being a douche but he fixed up the free car and sold it. My dad and him had their words and now my dad will probably no longer be generous. I know ethics, morals, values are all very similar. But again, to me ethics is how you handle gray laws or unwritten rules. I'm not sure this is gray and that was my point.

 

Lets take this scenario for example. Deer hunter wounds deer. Finds wounded deer and instead of putting him out of his misery has a dance around suffering deer until he eventually dies. Pretty unethical but not illegal. Why? Because the deer is suffering from the hunters actions. Who in the OPs scenario is suffering? (keeping in mind what phade mentioned about companies and their discount policies). Nobody got hurt when my uncle sold the car either, but it was a douche move. mabye it's tomato tomoto?

[ants]

Belo…….Stop reselling for a profit…. Your rationalization for doing so

tends to make me think that you  do it often.

 Its UNETHICAL..

 

Your uncle fixed up a free car that was given to him and then sold it????? A hunter dancing around a wounded deer until it dies??? WTF are you even taking about??

You yourself said that people caught buying on their employee discount and then reselling for a profit would most likely be fired. Why would the employer fire the person for that?? Do you think ethics has anything to do with it?

[Five Seasons]

Belo…….Stop reselling for a profit…. Your rationalization for doing so

tends to make me think that you do it often.

Its UNETHICAL..

Your uncle fixed up a free car that was given to him and then sold it????? A hunter dancing around a wounded deer until it dies??? WTF are you even taking about??

You yourself said that people caught buying on their employee discount and then reselling for a profit would most likely be fired. Why would the employer fire the person for that?? Do you think ethics has anything to do with it?

The car was a gift to his son... And I wish I could resell the jet engines we make. They go for millions.

[ants]

The car was a gift to his son... And I wish I could resell the jet engines we make. They go for millions.

But f your company would sell you an engine at an employee discount, you would resell it? And if your company fired you for that, why would you think you were being fired??

[jrm]

Yes, I am selectively quoting, but don't think it places anything out of context.

 

that's what you guys are missing. No company allows you buy vast quantities with a discount. I sold appliances for sears during college. They tracked what you bought with your discount. I've seen people get walked out and our discount wasn't even that good. They monitor it. You know this and you pay the consequences.

This is a given and I don't think anyone disputes it. However, it is tangential to the question/topic. Whether or not you are tracked, get fired or the discount was good - the question was "is the act ethical?"

 

Who in the OPs scenario is suffering?

You mentioned something similar in a previous post.

In the OPs example, the company is suffering. They are being denied a sale at their usual markup. Of course a Cabela's can absorb a loss of sale with a $5 margin. Of course they factor this into their budgets (by increasing prices to account for it).

It may be an infinitesimal "hurt" in the scheme of things, but it still exists.

So...

Do you believe that someone must be harmed for an act to be unethical?

Do you believe that the harm/loss must exceed some threshold for the act to be unethical?

I agree there is a big difference between selling one item and making a habit (or side-business) of it. However, both acts are still unethical. Of course, making a profit off your friend by use of an employee discount can be considered unethical in its own right.

Not arguing - just trying to understand your position.

Edited August 13, 2015 by jrm

[philoshop]

It's only unethical if you're caught. ???

Ask Hillary about that. She'll school ya'.

 

There is no "gray area' when it comes to ethics or morality, right vs wrong.

I'm not a religious person, but I've always believed in, and followed, the Golden Rule.

"Do unto others as you would have them do unto you." Pretty simple.

[moog5050]

That this has gone on for 4 pages is funny.  Whether its ethical or not is dictated by the terms of the company giving the discount.  If the store says "buy as many as you want and do what you want with them", then no ethical concerns in reselling.  If the store says "discounted items can only be purchased for personal use", then the answer is obvious.  IMO

[fasteddie]

You're Fired !

[Five Seasons]

But f your company would sell you an engine at an employee discount, you would resell it? And if your company fired you for that, why would you think you were being fired??

 

for breaking a rule. like i've said a few times, I believe ethics apply to laws sure, but they really come into question when one takes advantage of something that's not a rule. Like not putting an animal out of it's misery. That was my shitty analogy. haha.