Saturday, December 26, 2009

High retail price

Some people are surprised that the retail price (e.g. of my books or torchlights) are so much higher than the wholesale price (e.g for sale to hotels) or for direct purchase from my office.

They are not aware about the high cost of distribution of these products. I have to pay to the distributor nearly 60% of the retail price. They have to give a large portion of this margin to the retail store. The goods are given on consignment. If they are not sold, they are returned to me. I have to bear the cost of production or purchase, delivery charge, GST and also take the risk of the obsolete, unsold products.

Many retailers also find it hard to survive. They have to pay high rental for their stores and wages for their sales employees. They do not get sufficient business and margin to cover their operating costs.

Many small businesses find it difficult to survive in this type of environment. In my case, I am not making any profit due to the high cost of doing business, but doing it partly for fun. (If you want a lower price for my torchlights, come to my office at get it for $5.50 if you buy more than 5 pieces).

My friend saw a rechargeable torchlight, with similar features, on sale at the airport store at $27.50.. So the price of $8 at the retail store is cheap, by comparision.

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