I Can Get It For You Wholesale

June 10, 2020 at 12:22:20
Specs: several
The cost of selling 10 items might be $100, or $10 per item.
If they sell for $20 each, the retailer makes a profit of $100,
or $10 per item.

Because of overhead, costs are not directly proportional to the
number of items sold. The cost of selling 100 of the same item
might be only $500, or $5 per item. The retailer can sell them
for $15 each and still make a profit of $1000, or $10 per item.

When the Internet makes that item available to customers for $15,
including delivery, customers buy from the Internet, not their
nearest store. The retailer can no longer sell 100 items, so the
cost per item rises, the profit per item falls, and total profits
fall drastically. If the retailer raises prices to cover the
increased costs, sales fall even further. They are forced out
of business, even though they did nothing wrong.



Do you economists out there disagree with any of that?

Is there anything that really, really needs to be added?
(A heck of a lot *could* be added.)

I think I was prompted to write this by the fact that I just
ordered a bunch of stuff from Amazon that I might have bought
locally were it not for the virus hysteria.

Do you think the title fits? I was originally just going to
title it "Retail".

-- Jeff, in Minneapolis


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#1
June 11, 2020 at 04:29:41
re: "They are forced out of business, even though they did nothing wrong."

Unless you consider remaining as a brick & mortar business "wrong".

re: "Do you think the title fits?"

No, because I don't see anything related to buying wholesale in your post.

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#2
June 11, 2020 at 06:15:21
Why would anyone consider remaining as a brick & mortar
business to be "wrong"? Who might such people be, if any
actually exist?

I stole the title from the title of a 1937 novel which was made
into a Broadway musical in 1962. I have neither read the book
nor seen or heard the show, but I have heard references to it
throughout my life. The idea of the title is that this guy can get
ahold of almost anything you want and sell it to you at the
wholesale price, which obviously undercuts the retailer.

I'm talking about doing that on a wholesale scale.

-- Jeff, in Minneapolis


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#3
June 11, 2020 at 06:22:19
'twas ever thus... be it in a legal way - or otherwise (black market and so on...)

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#4
June 11, 2020 at 21:33:38
re: Why would anyone consider remaining as a brick & mortar business to be "wrong"? Who might such people be, if any actually exist?

It's called keeping up with the times.

Remember a company known as "Eastman Kodak"? They used to make this thing called "film". Then somebody invented "digital photography". (remember a company known as "Eastman Kodak"?)

How's Kodak doing today? Did they stick with their former cash cow and keep making film or did they keep up with the times and accept that going digital (the technology that they invented) was the only way to survive? I pretty sure that the decision they made was wrong.

If you continue trying to make a bad business model work and don't adapt to what's happening around you, you are doing something wrong.

Do I feel bad for all the moms and pops whose stores have shut down? To some extent, sure. But just like the horse and buggy related companies that existed when the automobile came along, those that adapted survived. Those that stuck to an obsolete business model failed.

If your brick and mortar store sells the same things that can be purchased online for a cheaper price and you don't change the way you run your business, you are doing something wrong.


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#5
June 13, 2020 at 14:13:37
Stores like Home Depot are maintaining brick and mortar and also selling on the internet competitively. My wife has bought many clothing items from Macy's. If the item needs to be returned, it can be returned to the brick and mortar store. The brick and mortar then sells that item in the store at a reduced price. Works out for everyone.

If all brick and mortar were gone how would you even know what NEW items you wanted to buy without first seeing them in the store?

DD3, you are correct in business in general must adapt and evolve or go under. That doesn't mean closing all brick and mortar.


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#6
June 13, 2020 at 17:17:07
How's Kodak doing today?

Still around, stock is selling for $2.57 was as high as $4.03 in January.
Not the behemoth it used to be, but still around.

MIKE

http://www.skeptic.com/


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#7
June 13, 2020 at 20:26:12
I know that Kodak is still "around".

However, the stock that you are talking about is KODK, not EK, which sold for as high as $94.75 in 1997, closed as low as $0.65 in 2012 and was delisted in 2013 after Kodak went bankrupt.

If it takes 7 years to get your stock back on the market - and under a different symbol, for that matter - we're not really talking about the same company, are we?


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#8
June 13, 2020 at 21:20:00
re: "Stores like Home Depot are maintaining brick and mortar and also selling on the internet competitively. My wife has bought many clothing items from Macy's.

Yes, Home Depot, Macy's and many other B&M based stores adapted by adding an on-line presence. That's how you survive in business - you adapt.

However, Home Depot, Lowes, Menards, Tractor Supply, etc. are the type of stores that will probably always have B&M stores. You can't get 1-day Prime delivery on enough 4 x 8 sheets of drywall to build a 2500 sq ft house. Some products require a physical presence.

In addition, Macy's closes stores every year, with another ~30 to close in 2020 while they invest more capital into their website. Again, they are adapting to a new business model.

If the item needs to be returned, it can be returned to the brick and mortar store. The brick and mortar then sells that item in the store at a reduced price. Works out for everyone."

In most cases, if it's bought online, it can be returned "on-line". Pre-paid returned shipping labels are almost universally available these days. I never buy anything on-line before I know what the return process is. That takes the hesitation out of buying something on-line.

re: "If all brick and mortar were gone how would you even know what NEW items you wanted to buy without first seeing them in the store?"

I'm not sure I understand that question. I buy stuff on-line all the time without ever seeing it in a store.

Heck, I don't even need to know what it's called. All I need to know is how to use a search engine and a couple of key words. I could spend a year shopping in B&M store and never see as many options as I'll see on-line. Just last week I needed a way to organize SWMBO's cutting boards. I started searching for "cutting board holders", "kitchen racks", etc. In a matter of minutes, I had seen hundreds of items and order exactly what I needed. Never left the recliner.

In fact, some items you can't see in a store even if you wanted to. A recent example: Lowes has a KitchenAid range on sale. Special order only. I can order it on-line or I can go into the store and they can order it on-line for me. No one has it on the floor. The B&M store was of no use to me.

A couple of years ago I bought a Bosch Glide miter saw on Amazon. Couldn't look at it at any store. No one stocked it. A few B&M stores sold it, they just didn't stock it. And guess what? That 85 pound, $600 miter saw was eligible for free return shipping. Even if I could buy it in a store, why would I carry it home (and maybe back to the store) if it can show up (and leave) my door step for free?


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#9
June 14, 2020 at 06:01:30
DD3

"If all brick and mortar were gone how would you even know what NEW items you wanted to buy without first seeing them in the store?"

I used an example of women's clothing. My wife may have seen a dress in a Macy's B&M store that she liked but they either didn't have the correct size or color in the store. She probably wouldn't have ordered that dress had she not seen it in person. Additionally, the return rate for online stores is higher than B&M. I assume that is due to a disconnect between what the buyer thought they were purchasing and what they actually received.

"Pre-paid returned shipping labels are almost universally available these days". I disagree with that statement. There are many vendors that do supply you with a prepaid RMA. It is far from universal. I recently bought a hard floor machine directly from Hoover. I was disappointed with it and requested an RMA from Hoover, which by the way doesn't automatically include one. I had to then take the item to Fedex and stand in line to start the return process. Then had to monitor my credit card statement until it was credited. Thee entire process was less than pleasing.


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#10
June 14, 2020 at 06:52:17
The need for a real live "shopping experience", as the Ad agencies and their ilk like to call it, is very evident when it comes to buying anything in the clothing/shoes area. Even in a given B&M store one may find that the sizings differ between two different brands. A size 12 in one product range may well be a 10 or a 14 in another brand's range. Doesn't matter if it's male or female (of any age) clothing either; the "variable inch" sees to the norm. But at least one can try and decide there and then..

Buying online - invariably it's wiser to buy two/three sizes and try and return as appropriate. But at some stage that's likely to stop as the vendors get fed up with paying for the returns. If they do continue with free returns at some stage that's going to built into the sale price (if it isn't already). Some online outfits seem to refuse/disallow free returns...; even stating that in their online presence for a given item. And that's not just clothing/shoes and similar.

Buy something from the People's Republican paradise land of China - and who know which inch they use; what will be the quality of what you get (a lot of fashion wear is simply poor quality; and their sizes are way out of line with the rest of the world (for reasons mentioned above).

One problem with many of the big B&M stores is that they don't have the full ranges in house; and suggest one buys from their online site. Then either have it shipped direct to home/office, or pick up from their local store. And return to local store (in some cases...) or mail it back as needs-be.

I buy my shirts in USA/Canada (when I can get there...) where I can get the proper collar/sleeve combination - which is virtually impossible in the UK. A given well known brand has its shirts made in any one of three locations; and they all use a different inch. I find it essential to try a shirt on before I buy; and often find that the same style made in two/three locations differs by a half to full size collar... Change to another brand and it too will not match the previous brand's sizings... Same with trousers/jeans etc...

The B&M store does at least allow that try before buy and not have to slug through the returns process...

Technology hardware items seem more easily found online a lot of the time these days; and often cheaper than the few big names still on the high street/mall. Some of the personal service which contributes to that "live experience" has deteriorated over the last few years; product knowledge seeming to be what's on the box and no more than that. With that in mind it's not surprising that many buy IT/cameras - even some tv/video kit - online; as there is often more info there than in some of the big name B&M stores...?

But... unless the B&M stores survive (i.e. not disappear) - and that does mean we the customers use them and that they also offer a good service - the end result will be a monopoly by Amazon and whomever; and prices will rocket upwards, and a reduction in choice/product ranges too.

Problem for many smaller (and these days larger too) B&M stores is the ground rent and local taxes. Landlords are simply squeezing the life out of many small/local business; and business taxes locally don't affect the likes of Amazon - who seem to pay little if any tax compared to the smaller outfits... Those big online giants claim they live by the rules... But they make sure the rules they live by and apply are certain to enable them to avoid taxes, the equivalents of which the smaller local stores can't avoid... Hence they make huge profits (with notional taxes only) at the expense of everyone else...


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#11
June 14, 2020 at 07:20:17
OTH:

I'm sure we could go back and forth with examples of how the return process works for some companies vs others. I could tell you about chewy.com giving me up to year to return a product for free if I'm not satisfied for any reason. I could tell you about target.com giving me a full refund on a set of bowls and letting me keep the bowls. The vast majority of products that I buy on Amazon come with free returns, which I've taken advantage of numerous times. In most cases, I leave them at my mailbox for pick-up. Worst case is I have to drop them at a Staples shipping counter. The difference is, they are packed and ready to go. No need to deal with a customer service rep at a return counter.

re: "Then had to monitor my credit card statement until it was credited."

That's a wash. Any return process involving a credit/debit card, in person or by mail, needs to monitored.

re: "requested an RMA from Hoover, which by the way doesn't automatically include one."

I didn't say anything about "automatic inclusion". I used the words "Pre-paid return shipping labels are almost universally available these days." Universally available, once you ask. I also said "almost". As I mentioned earlier, it's not going to be the same across every company. In the case of Hoover, it sounds like you did indeed get a pre-paid return shipping label, once you asked.

re: " I had to then take the item to Fedex and stand in line to start the return process"? Sounds like another wash.

Wouldn't you have had to go through a similar process in a store? e.g. "stand in line to start the return process."

Regarding your wife's dress, that is indeed an example of someone wanting to see the product before purchasing. However, that one example does not fully answer the question you asked:

"If all brick and mortar were gone how would you even know what NEW items you wanted to buy without first seeing them in the store?"

Did you stop by the Hoover store before buying the floor cleaner?


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