4 ms·

30% COGS surprised me… I always estimated it would have been around 50%. Learned something new.

edrxty 4y ago
You can do better if you're selling the stuff yourself, but that follows a bathtub curve with totally bespoke on one end and Apple on the other. It seems it becomes a struggle to keep up sales unless you're on Amazon and stacked on big box retailer shelves.
lmm 4y ago
I already knew the rule of thumb that a retail store needs 50% markup, so 30% seems reasonable in that context (indeed I'd've guessed 25%).
- fruit2020 4y ago
  So when I buy an Oled tv, does the store procure it for half the price from the distributor? Sounds like a huge margin. How about from an ecommerce store, which a lot of times have slightly less but close prices to regular stores, can the distributor force them to keep prices up not to upset the other resellers?
  - junofan 4y ago
    It’s a sheet of plastic glued to another piece of plastic. Yes.
  - wmf 4y ago
    So when I buy an OLED TV, does the store procure it for half the price from the distributor? Generally yes. can the distributor force them to keep prices up not to upset the other resellers? Retailers upsetting other retailers is called channel conflict and is often solved with minimum advertised price policies. High-end companies like Apple and Sony often have this policy which is why you see the same price everywhere.
    - tecleandor 4y ago
      Also, the margin in Apple products for retailers is quite, quite low. I'd say 10% or less. That's why lots of "Apple authorized resellers" have either closed or expanded their business to accessories and services in the last 10 years.
      - bombcar 4y ago
        Yes, the 50% "retail margin" is average, there are many things that are much more razor-thin. Commodities and valuable brands, for example.
tdeck 4y ago
There is an excellent video about designing electronic products that breaks this down in more detail: https://m.youtube.com/watch?v=UwrkfHadeQQ https://m.youtube.com/watch?v=UwrkfHadeQQ
GuB-42 4y ago
Just look at the prices on AliExpress. They are a fraction of the prices at retail stores, and it includes the sellers margins. And AliExpress products are not always counterfeits and can be acceptable in quality. A COGS of 30% is, as they say, on the upper end. For brands that have to offer a certain amount of quality in order to sell instead of going purely for ads and brand recognition. 50% is the retail store margin. I thought it was 40%, but that's probably a global rate, with electronics being higher.
- Spooky23 4y ago
  For consumer electronics? More like 15%. Less for competitive SKUs. Retailers make more money on cables and mounting brackets than a TV, for example.
  - iggldiggl 4y ago
    I bought my current digital camera when one big-box electronics retailer had a special "we're paying your VAT" offer going on – over here, VAT is 19 %, and when the shop assistant entered the rebate, the POS system popped up a warning that the sale price was less than the shop's cost price. I don't remember the exact price, but it does indeed mean that the margin must have been less than 16 %.
    - Spooky23 4y ago
      When I worked a big box retailer in the 90s, usually the stuff that had fancy displays had a more generous margin. There’s also below the line margin from paid shelf placement and other things.
- ezconnect 4y ago
  I was surprised to see that retail stores get 50%. I was looking at fake leather bags the other day and they really look very high quality and sells for 10USD. I can't imagine making that bag for 5USD and making a profit off of it.
- pclmulqdq 4y ago
HeyLaughingBoy 4y ago
Lord no. I was surprised that it was as high as 30%. I was always taught to aim for no more than 20% and that was for industrial products that sold in relatively low volumes.
junofan 4y ago
Try like 10–15%

You can do better if you're selling the stuff yourself, but that follows a bathtub curve with totally bespoke on one end and Apple on the other. It seems it becomes a struggle to keep up sales unless you're on Amazon and stacked on big box retailer shelves.

lmm 4y ago

I already knew the rule of thumb that a retail store needs 50% markup, so 30% seems reasonable in that context (indeed I'd've guessed 25%).

fruit2020 4y ago
So when I buy an Oled tv, does the store procure it for half the price from the distributor? Sounds like a huge margin. How about from an ecommerce store, which a lot of times have slightly less but close prices to regular stores, can the distributor force them to keep prices up not to upset the other resellers?
- junofan 4y ago
  It’s a sheet of plastic glued to another piece of plastic. Yes.
- wmf 4y ago
  So when I buy an OLED TV, does the store procure it for half the price from the distributor? Generally yes. can the distributor force them to keep prices up not to upset the other resellers? Retailers upsetting other retailers is called channel conflict and is often solved with minimum advertised price policies. High-end companies like Apple and Sony often have this policy which is why you see the same price everywhere.
  - tecleandor 4y ago
    Also, the margin in Apple products for retailers is quite, quite low. I'd say 10% or less. That's why lots of "Apple authorized resellers" have either closed or expanded their business to accessories and services in the last 10 years.
    - bombcar 4y ago
      Yes, the 50% "retail margin" is average, there are many things that are much more razor-thin. Commodities and valuable brands, for example.

tdeck 4y ago

There is an excellent video about designing electronic products that breaks this down in more detail: https://m.youtube.com/watch?v=UwrkfHadeQQ https://m.youtube.com/watch?v=UwrkfHadeQQ

GuB-42 4y ago

Just look at the prices on AliExpress. They are a fraction of the prices at retail stores, and it includes the sellers margins. And AliExpress products are not always counterfeits and can be acceptable in quality. A COGS of 30% is, as they say, on the upper end. For brands that have to offer a certain amount of quality in order to sell instead of going purely for ads and brand recognition. 50% is the retail store margin. I thought it was 40%, but that's probably a global rate, with electronics being higher.

Spooky23 4y ago
For consumer electronics? More like 15%. Less for competitive SKUs. Retailers make more money on cables and mounting brackets than a TV, for example.
- iggldiggl 4y ago
  I bought my current digital camera when one big-box electronics retailer had a special "we're paying your VAT" offer going on – over here, VAT is 19 %, and when the shop assistant entered the rebate, the POS system popped up a warning that the sale price was less than the shop's cost price. I don't remember the exact price, but it does indeed mean that the margin must have been less than 16 %.
  - Spooky23 4y ago
    When I worked a big box retailer in the 90s, usually the stuff that had fancy displays had a more generous margin. There’s also below the line margin from paid shelf placement and other things.
ezconnect 4y ago
I was surprised to see that retail stores get 50%. I was looking at fake leather bags the other day and they really look very high quality and sells for 10USD. I can't imagine making that bag for 5USD and making a profit off of it.
pclmulqdq 4y ago

HeyLaughingBoy 4y ago

Lord no. I was surprised that it was as high as 30%. I was always taught to aim for no more than 20% and that was for industrial products that sold in relatively low volumes.

junofan 4y ago

Try like 10–15%