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RE: Saving the economy by decreasing marketing margins
In the past 25 years that I've owned retail businesses (bicycles and food supplements), The margins have consistently been between 40% (the bottom line) and 60% (about as much as we can get away with before another retailer will undercut us).
Any retailer that does big mark ups is going to get slaughtered, as Ali Express is doing to Amazon, and as China is doing to America in general.
I know it sounds harsh and selfserving but that is one slaughtering i don't mind seeing. Afterall if the big mark ups deminish to say 20% the home (USA, EU) manufacturers will again become more competitive and thus eventually again favoured by the end consumer. And this is what i'm hoping for as it'd stimulate R&D.
If i understand correctly you are saying that 40% of your retail price is profit? Which'd mean a factor of 1.8 from the whole sale price. I have been observing for a while now that many things are cheaper in USA than in EU, but i didn't realize it has been so for 25 years.
Jeepers no - I'm saying that with an average 50% mark up a well run business rakes in 20% after expenses like wages, rent, taxes, and a bunch of stuff like power, phone, internet, stationery etc.
Keep in mind that is not on top of wages paid to the owner - that is the owners only income. If the average mark up drops below about 50% a retail business is screwed, which is why something like 80% of new businesses go bust in the first five years...
Ok, 20% is insanely low... Does that even create any cushion for possible ''crashes''?
I'm currently working on a physical product and am aiming for 30% profit - from the wholesale price - and the retail store would have a market factor of 3-4 (prior to shipping, etc.).
May i ask in which sector (toys, food, appliances, etc.) is your retail store?
20% is pretty OK, most business make less. No it doesn't create much cushion though!
We had a bike shop from 1991 to 2000 and it was the only bike shop in Wellington to avoid going bust - http://www.frot.co.nz/cs/cycle_services.htm#history
Now we have an online business selling food supplements - http://www.naturefoods.co.nz/
Oh NZ! I hear import taxes are murtherous.
Congratulations on being the last man standing :) did you then sell the shop for larg summs?
I went the AM route a few months ago (because my budget was too low to start selling my own products retail - but that project is still pending).
Your online shop is nicely organized and looks tidy. How's CTR and conversion?
I must say i love dark themes and have used a darker theme for a while but was later told light themes ''inspire'' more thrust. Did you do any testing on that? I haven't had the chance yet but will try it in the future as i'd preffer to use a dark theme.