I decided to put Zagg’s (NASDAQ:ZAGG) CEO’s claim that Best Buy (NYSE:BBY) immediately bought millions of dollars worth of their new iPad keyboard/case, the ZAGGMate, to the test. I wrote a random function in excel to choose 80 out of the 1091 Best Buy stores in the US. I then went to bestbuy.com and searched for the ZAGGMate, pulled up the product and clicked the “Store Pickup: Check Stores” link. I searched each of those 80 store random sample to see if the stores had the ZAGGMate in stock and rechecked this morning to see if any had changed (they hadn’t).
The results were that 18 of the stores, or 22.5%, that I sampled carried the ZAGGMate. I then called the 18 stores to inquire about the ZAGGMate. I said that I had questions about iPad accessories and was transferred to the correct department. When I asked the salesperson if they carried the ZAGGMate, the answer that I got from all 18 was “What’s that?” When I asked them to check they looked on the computer and searched for the ZAGGMate and they saw that they did indeed have it in stock. I then asked “How many do you guys have in stock because I want to know if I should hurry down?” The answers ranged from 2 to 5 with the average being just under 3.5.
So let’s do the math here. I will give ZAGG a big bump up in the percentage of stores carrying the ZAGGMate to 30% and also bump up the average store inventory to 4.5. I will assume that ZAGG is getting $40 per ZAGGmate which is a very generous assumption given that this is still an accessory and Best Buy loves to mark accessories way up. 1091 stores * 30% * 4.5 * $40.00 = $58,914.00.
Robert Pedersen’s claim of Best Buy ordering millions of dollars worth of ZAGGMates is clearly untrue and he needs to be held accountable. The company will probably claim that they hadn’t manufactured millions of dollars worth, however they have been using the ZAGGMate as an excuse when concerned analysts have called questioning the huge inventory levels.
Fortunately, Los Angeles is one of the few cities that has the ZAGGMate so I went to check it out in person. I found them hanging with some random cases on the backside of the iPad display. I asked a salesperson what it was, and he said “It is a keyboard.” His confusion is understandable when you look at the picture:
ZAGGMate with keyboard? That is your description on the box? Nobody knows what a ZAGGMate is and all you see when you look at the box is a cheap looking keyboard for $100. Nobody is going to buy that product; of that I am certain. Even if some soon to be iPad owner took the time to turn over the box (the salesperson eventually did that and after a minute said, “Oh I get it, it is a case too.”) none of them would choose the ZAGGMate when they could buy the Apple keyboard/dock for $70 and a case for $30.
Were the Best Buy buyers really stupid enough to buy any of the ZAGGMates (let alone the millions of dollars that ZAGG’s CEO claimed at the Merriman conference)? If I can tell that they will not sell then certainly at the very least the buyers at Best Buy would be skeptical. My opinion is that ZAGG didn’t sell a single ZAGGMate but got it into Best Buy on consignment, but I will give the company the benefit of the doubt and assume that Best Buy bought around $60,000 dollars worth.
I am so convinced that Robert Pedersen’s claim of Best Buy ordering millions of dollars worth of ZAGGMates is untrue that I would like to offer him a challenge: Robert if you can prove to me that Best Buy ordered even $1 million worth of ZAGGMates that cannot be returned or exchanged for other products then I will immediately: 1) Cover my short. 2) Admit that I was wrong and write an apology to you and all the of ZAGG faithful. 3) Stop writing articles about ZAGG. 4) Give $10,000 to your favorite charity.
Disclosure: Author short ZAGG