Suzanne O’Connor’s Bargains LA

The Premiere Bargain Hunting, Bargain Shopping & Sample Sales Guide for the Los Angeles Area.

Zannee's Blog

Thursday, July 11, 2019

The Costs of Retail

By Suzanne O'Connor

While I was visiting a Warehouse Distribution Outlet it dawned on me that the discounts were based on removing the large section of distribution and marketing.

This warehouse outlet was selling product at below or at the cost to manufacture.

So then why is everything so expensive at the retail level? The quick answer is COST.

-The Cost to produce a product.
-The Cost to distribute a product.
-The Cost to market and brand a product.
-The Cost of accepting returned product.

Under each of these basic categories are the devilish details.  The cost of a products content, manufacturing, labor, management, design & development, shipping & distribution, advertising, returns, warrantees, branding and more.

As the consuming public we are to blame for some of these costs.

We expect products we buy to work as described…. That means design, development and testing.

We want the product to be affordable which means often manufacturers have to produce out of the country or consider using lower grade materials to keep pricing down.

We want the product to be easy to shop for. That entails shipping & distribution channels and platforms which have overhead costs in employees and storage.

We want to be able to return product.
Returned product often cannot be resold again. Packaging has been damaged and the item is technically used. So they figure in markup to cover that loss.

All these costs are wrapped up in the retail pricing adding 60-150% to the cost of the product. Plus the profit expected by the manufacturer.

The good news is you can lower the purchase price by purchasing direct from the manufacturer at Warehouse Outlets, Sample Sales, Liquidators and direct online sales platforms. That’s where BargainsLA comes in!

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