High Street Brands Going Bust-Who's Next?
Discussion
An example of why the High street cannot compete on certain items:
Hello,
We thought you'd like to know that e-shop dispatched your item(s). Your order is on the way, and can no longer be changed. If you need to return an item or manage other orders, please visit Your Orders on Amazon.co.uk.
Your estimated delivery date is:
Wednesday, February 27, 2013
No tracking information. Why?
Your order was sent to:
United Kingdom
Your item(s) is (are) being sent by Royal Mail. This order does not have an associated tracking number.
Delivery Information
3.5mm Stereo Jack Plug to 3.5mm Stereo Jack Plug 1.2M
Sold by e-shop
£0.49
Item Subtotal: £0.49
Delivery & Handling: £0.00
Total before VAT: £0.49
Total: £0.49
Paid by Amex: £0.49
It's easy to return an item. Visit our Online Returns Centre.
If you need further assistance with your order, please contact e-shop.
We hope to see you again soon.
Amazon.co.uk
Hello,
We thought you'd like to know that e-shop dispatched your item(s). Your order is on the way, and can no longer be changed. If you need to return an item or manage other orders, please visit Your Orders on Amazon.co.uk.
Your estimated delivery date is:
Wednesday, February 27, 2013
No tracking information. Why?
Your order was sent to:
United Kingdom
Your item(s) is (are) being sent by Royal Mail. This order does not have an associated tracking number.
Delivery Information
3.5mm Stereo Jack Plug to 3.5mm Stereo Jack Plug 1.2M
Sold by e-shop
£0.49
Item Subtotal: £0.49
Delivery & Handling: £0.00
Total before VAT: £0.49
Total: £0.49
Paid by Amex: £0.49
It's easy to return an item. Visit our Online Returns Centre.
If you need further assistance with your order, please contact e-shop.
We hope to see you again soon.
Amazon.co.uk
Mermaid said:
An example of why the High street cannot compete:
Hello,
We thought you'd like to know that e-shop dispatched your item(s). Your order is on the way, and can no longer be changed. If you need to return an item or manage other orders, please visit Your Orders on Amazon.co.uk.
Your estimated delivery date is:
Wednesday, February 27, 2013
No tracking information. Why?
Your order was sent to:
United Kingdom
Your item(s) is (are) being sent by Royal Mail. This order does not have an associated tracking number.
Delivery Information
3.5mm Stereo Jack Plug to 3.5mm Stereo Jack Plug 1.2M
Sold by e-shop
£0.49
Item Subtotal: £0.49
Delivery & Handling: £0.00
Total before VAT: £0.49
Total: £0.49
Paid by Amex: £0.49
It's easy to return an item. Visit our Online Returns Centre.
If you need further assistance with your order, please contact e-shop.
We hope to see you again soon.
Amazon.co.uk
Well, there are several aspects to that communication, but the one that is clearest to me is the fundamental: the 'race to the bottom' on pricing in the online world. You've bought something of some value, but at a total price below the cost of postage.Hello,
We thought you'd like to know that e-shop dispatched your item(s). Your order is on the way, and can no longer be changed. If you need to return an item or manage other orders, please visit Your Orders on Amazon.co.uk.
Your estimated delivery date is:
Wednesday, February 27, 2013
No tracking information. Why?
Your order was sent to:
United Kingdom
Your item(s) is (are) being sent by Royal Mail. This order does not have an associated tracking number.
Delivery Information
3.5mm Stereo Jack Plug to 3.5mm Stereo Jack Plug 1.2M
Sold by e-shop
£0.49
Item Subtotal: £0.49
Delivery & Handling: £0.00
Total before VAT: £0.49
Total: £0.49
Paid by Amex: £0.49
It's easy to return an item. Visit our Online Returns Centre.
If you need further assistance with your order, please contact e-shop.
We hope to see you again soon.
Amazon.co.uk
completetangent said:
Well, there are several aspects to that communication, but the one that is clearest to me is the fundamental: the 'race to the bottom' on pricing in the online world. You've bought something of some value, but at a total price below the cost of postage.
Exactly, I have never seen this before.Cost of product, margin, value added tax, packing, postage all for 49p - this is predatory pricing.
Justin Cyder said:
Or a loss leader as widely used in high street retail or a generic product made in a production run of a million plus to gain economies of scale.
But you use a loss leader to hook a customer and sell him something else with decent margin. It plainly failed in Mermaid's purchase. There's no store loyalty in these "me-too" marketplaces (Amazon and Ebay), so the loss leader goodwill does not pass over into future sales, either. It's barmy, and looks to me, to be unsustainable and/or desperate.Justin Cyder said:
Don't rush to judge the businesses of others.
Er, isn't that exactly what this thread is about! 
Justin Cyder said:
Er, no. You can't know the economics of that business is my point. For all you know, they sell a million a month at 49 pence, buying them at 30 pence. Nice work if you can get it.
How do you know the loss leader failed?
And also don't forget where he'll be looking for his next purchase. How do you know the loss leader failed?
Justin Cyder said:
Er, no. You can't know the economics of that business is my point. For all you know, they sell a million a month at 49 pence, buying them at 30 pence. Nice work if you can get it.
How do you know the loss leader failed?
I do hope you're not running a business! Had you bothered to read Mermaid's post, or my comment on it, you'd have spotted something fairly significant. To spell it out for you: out of your guesstimated profit of 19p, the retailer had to pay for free postage and packing. There was no profit.How do you know the loss leader failed?
FWIW, I think that 'race to the bottom' consumer pricing (High Street or online) will, long term, take you with it. But that's AN Other thread.
I`ll give you another angle
Company sets up to sell hearing aid batteries, huge market, repetitive nature just need to get to people who cannot hear.
Answer - sell phones and accessories for the hard of hearing cheaper than anyone else / cheaper than cost to build up the database for the battery sales
Happened to me - killed my loud phone sales, the makers then helped them as they were a big seller of loud phones so they gave them rebates etc
Classic way to ruin a sales channel / market aided by the makers.
Company sets up to sell hearing aid batteries, huge market, repetitive nature just need to get to people who cannot hear.
Answer - sell phones and accessories for the hard of hearing cheaper than anyone else / cheaper than cost to build up the database for the battery sales
Happened to me - killed my loud phone sales, the makers then helped them as they were a big seller of loud phones so they gave them rebates etc
Classic way to ruin a sales channel / market aided by the makers.
jas xjr said:
with the never ending growth of online sales , why would a manufacturer not just sell to the end user . cut out the middleman .
It takes big balls to try that. Building a retail brand from scratch is extremely difficult and if most of your existing sales already come through those middlemen, who will be mighty unimpressed to find out your selling direct and may well stop selling your products long before you've built up the direct sales channel to replace it with. The only way I could see it working is if you are already a household name and are selling a truly unique product.
completetangent said:
Justin Cyder said:
Yep. In our tenth year and doing very nicely thanks. We prosper by not making assumptions. 
Stop patting yourself on the back and tell us how you can pack and post items for under 19p. completetangent said:
Stop patting yourself on the back and tell us how you can pack and post items for under 19p.
Why shouldn't I? We've survived the worst economic downturn in a generation in one of the most competitive businesses around. Unless of course you suffer from the English disease...To tediously reiterate the original point, 49p delivered doesn't tell you anything. They may be selling at a loss in order to drive traffic to other products & cross subsidising. They may also be selling at such volumes that their supply chain costs are low enough to make it worth doing. They may be drop shipping & piggy backing a much larger company's Royal Mail deal.
The point is I don't know & neither do you. That is your answer my argumentative friend, hence why I say don't rush to judge the business of others.
Justin Cyder said:
Why shouldn't I? We've survived the worst economic downturn in a generation in one of the most competitive businesses around. Unless of course you suffer from the English disease...
To tediously reiterate the original point, 49p delivered doesn't tell you anything. They may be selling at a loss in order to drive traffic to other products & cross subsidising. They may also be selling at such volumes that their supply chain costs are low enough to make it worth doing. They may be drop shipping & piggy backing a much larger company's Royal Mail deal.
The point is I don't know & neither do you. That is your answer my argumentative friend, hence why I say don't rush to judge the business of others.
I'll take that as a 'no', then. To tediously reiterate the original point, 49p delivered doesn't tell you anything. They may be selling at a loss in order to drive traffic to other products & cross subsidising. They may also be selling at such volumes that their supply chain costs are low enough to make it worth doing. They may be drop shipping & piggy backing a much larger company's Royal Mail deal.
The point is I don't know & neither do you. That is your answer my argumentative friend, hence why I say don't rush to judge the business of others.
FWIW, I run an online mail-order business, and that's why I know there was no profit in Mermaid's purchase.
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