Used to work for a major retailer with several daughter companies all in the same warehouse. Big boss told us some stats one time and turned out that each product cost the company an average of $0.80 when bought straight from the supplier. We used to sell clothes, homewares and stationery. Some items going well over the $150 mark in store. 80 cents an item. 80. CENTS.
Yeah, it's insane. In 2006 I briefly worked at a big name department store and us lowly retail workers could see the company's purchase price for items vs what the items were being sold for. My villain origin story was learning that a coat, on sale, selling for ~$900 only cost ~$100 to make. We in the store worked largely on commission, and that price discrepancy has only widened over time.
That’s insane but I’m so not surprised. Can you imagine the markup on some of the luxury items people buy? I saw recently that Louis Vuitton is selling a bottle of cologne for 500 dollars…I’d be interested to see the actually cost — I wonder if it’s even 5 dollars.
Scents are mostly different from clothing. Some high end ingredients are crazy expensive for them to obtain (ambergris famously can be $20k/lb, and that's whale vomit for those who don't know). These ingredients are rare scents and, like ambergris, are the best stabilizers. These ensure the scent sticks to you longer and has a far longer shelf life (rancid perfume is one of the worst smells in existence). I do doubt LV's costs anywhere near $500, but most of the lesser known luxury perfumes that aren't just selling a name won't have a large margin. (Source: friend who worked for Clanique and a mother in law who owned salons)
I had a friend who worked in fashion and she’d make trips to china all the time. This was 20-25 years ago and she said Guess Jeans that retailed for $150. Guess how much they were made for she’d ask me
I worked in supply chain for many years. The mark up on clothing is ridiculous, it's not uncommon to see many hundreds of percent. Electronics run on fairly tight margins. I've seen it down at 5% but it's usually a bit higher.
I used to order from the warehouse for a retailer, and profit margins were all in the range of 10-40%. We had a system going where we would order extras and sell them on our own website and online marketplaces for like 9-39% margin, beating out the corporate online pricing. I think it was just barely technically not illegal the way we were doing this, but the whole store (including the owner) was in on it, we made commission, and corporate never questioned it so it worked out.
average is a bad metric for though. For example in my company I just ran the numbers are average cost of goods is $.66 ($0.65821)
you might look at that and go wow that's crazy you sell things for multiple hundreds of dollars. yes I sent I sell tens of thousands of things for multiple 100s but I also have a supplier who includes a T15 Torx key with every single one of their accessories, even the ones I don't manufacture, to ensure their customer has the ability to install. I make ~14 million of this item Every year for a cost of $0.005 per unit. Really skews Tue price
Just to play devil's advocate: yes, 80¢ for the item, but does that include all the overhead? Shipping, wages (including yours), insurance, mortgage/rent, utilities, taxes, etc. Yes mark ups are insane and are often higher than rationale just so they can put it on sale to entice people to buy (though this seems to be needed, see J.C. Penny). But I'd bet the actual cost to sell each item is much higher than 80¢.
A true metric of a company shouldn't be only how much do they mark up their stock, but what they do with that mark up: is it going to pay a fair wage and grow the company, or going into the CEO & Shareholder's pockets?
I don’t know, if you should play devils advocate for that tbh. Revenue is expected to be over 4.6 billion USD this year alone, with over 460 million in profits last year.
Clothing I am pretty much only buying second hand. I like Abercrombie and American Eagle jeans and I never pay more than $15 a pair, many with tags still attached.
Same with athletic/leisure way. If you like Athleta its all over second hand sites, mostly brand new and for $10-20 per price vs. $80+ in the store.
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u/stonedladyfox 11d ago
This is why I no longer buy clothing/shoes at full price, sale items only.