Retail vs. eBay/Amazon - Profit Margins/High St Future?
Discussion
Does anyone here sell stuff off eBay or Amazon who can shed a little light, albeit generic, on what kind of margins they're working off?
I'm asking because over the last few weeks I've been ordering quite a few bits that have left me wondering both how retail shops stay in business, and also how people make any money selling off Amazon and eBay unless it's simply in massive massive bulk.
Example items:
Socks, possibly the most boring purchase ever but we all need them.
The ones I wanted are £4 if I go into a shop in town, or £3.40 on eBay posted, oddly from a retail shop in another town, so I got a load off eBay and when they arrived the postage on £20 worth was £3.50.
So £24 handed to the retailer in town vs. £16.50 to the eBay retailer who has a physical shop, and when the socks arrived they all had £3.99 price stickers on them.
Seems kind of nuts that he can be making any money selling them for that price taking postage into account, but you'd assume they're priced accordingly.
Second purchase, plain tee shirts, again nothing special but if I go into town there's nowhere selling them for less than £7-8 and they're £4 online posted.
Between Amazon, eBay, John Lewis "click and collect" and being canny with other online vendors I've almost eliminated the need for a local high street, and I feel quite guilty for that because it's nice to go for a look around the shops sometimes - though you can't get away from the fact that buying many things in town is basically burning pound notes.
The flip side is I'm also not sure how many resellers can be making any money at all from eBay/Amazon type selling.
Bit a ramble really but this last few weeks has really brought it home that we're almost headed for a nation of showrooms, pick up points other than food and haircuts and the odd niche purchase.
I'm asking because over the last few weeks I've been ordering quite a few bits that have left me wondering both how retail shops stay in business, and also how people make any money selling off Amazon and eBay unless it's simply in massive massive bulk.
Example items:
Socks, possibly the most boring purchase ever but we all need them.
The ones I wanted are £4 if I go into a shop in town, or £3.40 on eBay posted, oddly from a retail shop in another town, so I got a load off eBay and when they arrived the postage on £20 worth was £3.50.
So £24 handed to the retailer in town vs. £16.50 to the eBay retailer who has a physical shop, and when the socks arrived they all had £3.99 price stickers on them.
Seems kind of nuts that he can be making any money selling them for that price taking postage into account, but you'd assume they're priced accordingly.
Second purchase, plain tee shirts, again nothing special but if I go into town there's nowhere selling them for less than £7-8 and they're £4 online posted.
Between Amazon, eBay, John Lewis "click and collect" and being canny with other online vendors I've almost eliminated the need for a local high street, and I feel quite guilty for that because it's nice to go for a look around the shops sometimes - though you can't get away from the fact that buying many things in town is basically burning pound notes.
The flip side is I'm also not sure how many resellers can be making any money at all from eBay/Amazon type selling.
Bit a ramble really but this last few weeks has really brought it home that we're almost headed for a nation of showrooms, pick up points other than food and haircuts and the odd niche purchase.
I can't speak for Amazon stuff, but I know a number of retailers that offer fairly substantial price reductions for buying online, or even by telephone.
I think there can be quite a few factors.
I have seen a cigar merchant I know take the ordered goods directly from the shop humidor and package the order right in the shop. 20% saving. They do it (lower prices) simply to compete with other online vendors.
Presumably a small margin is better than a lost sale, when the goods are equivalent.
I prefer a real shop myself for almost everything, excluding tobacco purchases, computer components, and basic car parts.
Of course almost anything you have bought before, all things being equal, you can then order online with reasonable safety.
High street shops do generally have pretty high margins on most stock.
Honestly, I think a lot of retailers are really struggling with this one.
They almost have to sell online, but many are struggling with making it pay, when they are using the high street shop back room as their online order processing and dispatch office as well.
(Morley or Wolsey socks by any chance?
)
I think there can be quite a few factors.
I have seen a cigar merchant I know take the ordered goods directly from the shop humidor and package the order right in the shop. 20% saving. They do it (lower prices) simply to compete with other online vendors.
Presumably a small margin is better than a lost sale, when the goods are equivalent.
I prefer a real shop myself for almost everything, excluding tobacco purchases, computer components, and basic car parts.
Of course almost anything you have bought before, all things being equal, you can then order online with reasonable safety.
High street shops do generally have pretty high margins on most stock.
Honestly, I think a lot of retailers are really struggling with this one.
They almost have to sell online, but many are struggling with making it pay, when they are using the high street shop back room as their online order processing and dispatch office as well.
(Morley or Wolsey socks by any chance?
)... think of it as the money the lose in profit as "marketing budget" ... so now you know about this other shop you may well go and buy some other bits from them in future... socks are fairly low value / high volume product... profit margins on socks isn't their main focus... if that makes sense.. its getting you used to buying from them...
With any business you will rarely if ever know the full picture.
The T Shirt you buy for £8 might cost the retailer £1 but if course they will have many other costs associated with operating.
One things for sure the Internet will kill plenty more businesses in the not too distant.
When did you last go into a travel agent?
The T Shirt you buy for £8 might cost the retailer £1 but if course they will have many other costs associated with operating.
One things for sure the Internet will kill plenty more businesses in the not too distant.
When did you last go into a travel agent?
IMO canny retailers will use the high street as a showroom, make it experiential and use a lot of technology to upsell and reward repeat customers. The need to hold large volumes of stock is not a factor any more with next day delivery (or better) available. This might penalise people who absolutely must have it today, but few others.
Sadly this means the high street will become showrooms, pound shops and phone shops, with some small independents surviving on customer service and adding touches that major multiples can't.
My 2 cents for town councils and the like: bite the bullet, downsize town centres, keep rates for independents low and wean yourselves off parking income.
Sadly this means the high street will become showrooms, pound shops and phone shops, with some small independents surviving on customer service and adding touches that major multiples can't.
My 2 cents for town councils and the like: bite the bullet, downsize town centres, keep rates for independents low and wean yourselves off parking income.
miniman said:
IMO canny retailers will use the high street as a showroom, make it experiential and use a lot of technology to upsell and reward repeat customers. The need to hold large volumes of stock is not a factor any more with next day delivery (or better) available. This might penalise people who absolutely must have it today, but few others.
Sadly this means the high street will become showrooms, pound shops and phone shops, with some small independents surviving on customer service and adding touches that major multiples can't.
My 2 cents for town councils and the like: bite the bullet, downsize town centres, keep rates for independents low and wean yourselves off parking income.
But won't someone think of the local authority final salary pensions ? 😊Sadly this means the high street will become showrooms, pound shops and phone shops, with some small independents surviving on customer service and adding touches that major multiples can't.
My 2 cents for town councils and the like: bite the bullet, downsize town centres, keep rates for independents low and wean yourselves off parking income.
miniman said:
IMO canny retailers will use the high street as a showroom, make it experiential and use a lot of technology to upsell and reward repeat customers. The need to hold large volumes of stock is not a factor any more with next day delivery (or better) available. This might penalise people who absolutely must have it today, but few others.
Sadly this means the high street will become showrooms, pound shops and phone shops, with some small independents surviving on customer service and adding touches that major multiples can't.
My 2 cents for town councils and the like: bite the bullet, downsize town centres, keep rates for independents low and wean yourselves off parking income.
But won't someone think of the local authority final salary pensions ? 😊Sadly this means the high street will become showrooms, pound shops and phone shops, with some small independents surviving on customer service and adding touches that major multiples can't.
My 2 cents for town councils and the like: bite the bullet, downsize town centres, keep rates for independents low and wean yourselves off parking income.
Thankyou4calling said:
With any business you will rarely if ever know the full picture.
The T Shirt you buy for £8 might cost the retailer £1 but if course they will have many other costs associated with operating.
One things for sure the Internet will kill plenty more businesses in the not too distant.
When did you last go into a travel agent?
Do my homework on the Internet , then email my local travel agent , I take a good few holidays a year and only once in 2015 they couldn't price match or beat .The T Shirt you buy for £8 might cost the retailer £1 but if course they will have many other costs associated with operating.
One things for sure the Internet will kill plenty more businesses in the not too distant.
When did you last go into a travel agent?
Don't write them off.
There will always be travel agents but you have to accept they are a dying breed.
The days when, if you wanted to book a holiday, you went into a high street branch, collected the brochures and took them home before returning to chat and book are, for the vast majority long gone.
Same with lots of other groups of retailers Video shops, record shops, insurance brokers and others.
The Internet has killed them or is at least killing them.
It's quite remarkable that Estate Agents survive and indeed thrive I think because that's an industry the web should've wiped out.
The days when, if you wanted to book a holiday, you went into a high street branch, collected the brochures and took them home before returning to chat and book are, for the vast majority long gone.
Same with lots of other groups of retailers Video shops, record shops, insurance brokers and others.
The Internet has killed them or is at least killing them.
It's quite remarkable that Estate Agents survive and indeed thrive I think because that's an industry the web should've wiped out.
Amazon will frequently sell items at a loss.
It's frankly bizarre. They have very fees if you're selling though them and that gets you very little.
I was selling them FMCG products and amazon was my customer, as opposed to my company selling our product on Amazon IYSWIM. They tried to increase theircharges rebate at one point (marketing fees, etc, etc) to 26%, so everything I sold to them at £1 per unit I'd have to give them back 26p. We agreed a much lower rebate, but still expected the same conversations every year.
Strangely my selling price to amazon was higher than any other retailer
Amazon would price match to the lowest selling price in the market, even if that was promoted, so they were frequently selling my product at a loss. (They'd then send me bills for lost margin and I'd tell them to eff off)
They also started charging us for packaging - we sold product in jars, which went through the Tesco et al supply chain with no issue. Amazon as a delivery service asked us to provide the product in a package which would survive a trip in a yodel / DHL etc van or they'd bill us for every case that they had to pack.
Unbelievable really.
Amazon's focus is on customer service and loyalty though. They're happy to make a loss until everybody is buying everything on amazon then they'll (crank up the prices) and start to turn a profit.
It's frankly bizarre. They have very fees if you're selling though them and that gets you very little.
I was selling them FMCG products and amazon was my customer, as opposed to my company selling our product on Amazon IYSWIM. They tried to increase their
Strangely my selling price to amazon was higher than any other retailer
Amazon would price match to the lowest selling price in the market, even if that was promoted, so they were frequently selling my product at a loss. (They'd then send me bills for lost margin and I'd tell them to eff off)
They also started charging us for packaging - we sold product in jars, which went through the Tesco et al supply chain with no issue. Amazon as a delivery service asked us to provide the product in a package which would survive a trip in a yodel / DHL etc van or they'd bill us for every case that they had to pack.
Unbelievable really.
Amazon's focus is on customer service and loyalty though. They're happy to make a loss until everybody is buying everything on amazon then they'll (crank up the prices) and start to turn a profit.
buy 90% of stuff online these days, and a lot off Amazon - their prices are usually good and customer service is also good v shopping on high street is a PITA with uncompetitive prices, much less stock choice and high parking charges.
A lot also comes down to convenience, most people work hard during the week, so I either shop online during a quiet couple of minutes at work or spend my valuable weekend time trudging round shops.
Shops don't help themselves though, saw a book I was after as a present - saw it at £36 from Waterstones online, so nipped down to branch very close to work so I could buy that day - was £40 in store and they wouldn't sell it to me for £36. So I thought sod you and left, checked Amazon and bought it from them for £24! Well done Waterstones, £20 profit down the drain as you will be soon - shame as I like browsing around bookshops.
A lot also comes down to convenience, most people work hard during the week, so I either shop online during a quiet couple of minutes at work or spend my valuable weekend time trudging round shops.
Shops don't help themselves though, saw a book I was after as a present - saw it at £36 from Waterstones online, so nipped down to branch very close to work so I could buy that day - was £40 in store and they wouldn't sell it to me for £36. So I thought sod you and left, checked Amazon and bought it from them for £24! Well done Waterstones, £20 profit down the drain as you will be soon - shame as I like browsing around bookshops.
Thankyou4calling said:
There will always be travel agents but you have to accept they are a dying breed.
They're actually doing well. What isn't working so well these days are the ones that don't do anything other than sell package holidays out of a brochure - you're quite correct in saying that the internet have killed those.However, the proper travel agents - the ones where you ring them up and say "I want to spend three weeks in Bhutan, visiting every major tourist attraction there, but I don't know what the tourist attractions are." and they do everything for you, including flights, hotels, transfers, tour guides, and visas - are doing much better, possibly because of all of the reasonably well-to-do baby boomers retiring with widened horizons.
It might be possible to do all of the legwork yourself, but for something that complicated you really want someone with contacts and experience as they'll get it done much cheaper, better, and faster than you ever could.
Hackney said:
Amazon will frequently sell items at a loss.
It's frankly bizarre. They have very fees if you're selling though them and that gets you very little.
Thanks, I found that explanation very insightful.It's frankly bizarre. They have very fees if you're selling though them and that gets you very little.
I doubt the things I was buying are popular enough to be affected by anything like that but I had simply assumed sellers just paid a fee/commission to use Amazon and then set their own prices and the race to the bottom was between themselves just as on the high street albeit wider.
Adam B said:
Shops don't help themselves though, saw a book I was after as a present - saw it at £36 from Waterstones online, so nipped down to branch very close to work so I could buy that day - was £40 in store and they wouldn't sell it to me for £36. So I thought sod you and left, checked Amazon and bought it from them for £24! Well done Waterstones, £20 profit down the drain as you will be soon - shame as I like browsing around bookshops.
I've had that a couple of times.I mean we have Debenhams and a couple of small "gents clothes shops" in town but you'd get looked at a bit funny asking if they could discount two tee shirts.
I was stood in the local shoe shop once looking at a hundred quid pair of shoes that I wanted, had a quick look online in the store, sixty quid - "Can you do anything?" and the answer was nothing at all. I felt a little guilty for essentially using them as a showroom but if they'd got close I'd support the local businesses.
I fear the gaps are unsurmountable though.
We had a similar situation with a cooker we bought recently - local shop could deliver in 3 weeks, AO.com could deliver tomorrow for £200 less, even after haggling. Felt guilty, but £200 is £200 even putting aside the convenience.
The comment above about Amazon effectively switching on their profit when they are ready is very true - once they have total saturation of the market and everyone hooked on the convenience and customer service, a small tweak to margins will snap them into massive, massive profits IMHO.
The comment above about Amazon effectively switching on their profit when they are ready is very true - once they have total saturation of the market and everyone hooked on the convenience and customer service, a small tweak to margins will snap them into massive, massive profits IMHO.
There will always be a place for physical stores. Plenty of people have paid that amount for products and will continue to do so just for the product in their hand right there and then.
As for margins; for some goods these have never been lower. For example I saw pricing for mobile phone covers. £9.99 say on that crappy stand in your local shopping mall. One retailer told me he buys them for 10p to £2.00 including any transport costs.
I think physical stores that dabble in online sales see the online customer as incidental profit especially if the customer is hundreds of miles away and would never be an instore customer.
As for margins; for some goods these have never been lower. For example I saw pricing for mobile phone covers. £9.99 say on that crappy stand in your local shopping mall. One retailer told me he buys them for 10p to £2.00 including any transport costs.
I think physical stores that dabble in online sales see the online customer as incidental profit especially if the customer is hundreds of miles away and would never be an instore customer.
Gassing Station | The Lounge | Top of Page | What's New | My Stuff