Retail mark up

[johnnyb]

I've been making and selling a product via etsy. I do OK selling 2 or 3 a week. I decided to make a list of retailers likely to want my product. Anyway I phoned the first business and was shocked to find there typical margin is 2.4. So to give me £100 they would sell at £240! They did say they could squeeze 2 times. It's still a ridiculous amount. I begrudge ebay at 20_30%. No wonder its impossible to make and sell anything uk made. The company sell stuff from all over the world Inc Ukraine.

 

[Rhossydd]

Depends on what and how you're selling but 100% markup is pretty routine for 'arty' galleries, especially so if they have to add VAT to sale price.

 

[MF1000]

physical shop based retailers have high overheads with bith rent and business rates etc before they even open the door.

In the restaurant business they as a min work on 1/3s….1/3 food cost, 1/3rd overheads, 1/3rd profit - bear in mind that they are high turnover operations ……a piece of furniture etc might take weeks to sell.

 

[johnnyb]

I'm struggling to feel what benefits they could offer. I suppose a journo could see it and make an article reference. But they may sell less than me. To be fair it would be the highest priced object there selling I could see . But it does fit well with them. Maybe try another outlet see what they think. Physical shops are a bit of a pain to sell wholesale

 

[adidat]

I was involved with a fairly unique food and drink business for some years in a very hipster area of East london. I was shocked to find out there rent was over a 100k a year for a small shop and tiny basement. It showed me at a young age the tough realities of business having to make 2k a week just to pay the rent!

With all the costs involved selling a product most of us consume daily and think nothing of the cost as its so cheap to produce at home for 6 quid a pop!

Even a fantastic week of sales the business could struggle to break even. There is a lot to be said for the landlords greed....

 

[Cabinetman]

I was involved with a fairly unique food and drink business for some years in a very hipster area of East london. I was shocked to find out there rent was over a 100k a year for a small shop and tiny basement. It showed me at a young age the tough realities of business having to make 2k a week just to pay the rent!

With all the costs involved selling a product most of us consume daily and think nothing of the cost as its so cheap to produce at home for 6 quid a pop!

Even a fantastic week of sales the business could struggle to break even. There is a lot to be said for the landlords greed....

Not sure about that last sentence, but I think you meant there’s a lot needs saying about greedy landlords!
You are so right, commercial estate agents are without doubt a terrible parasitic bunch, almost as bad as Lawyers. They both just spread misery and get rich at the same time on the hard work of others, in my opinion.

 

[Sideways]

Markup / margins vary by niche, by location, by type of retailer ...
2x isn't at all unusual for specialist stuff, just as at the other extreme discount food supermarkets in Europe used to be about 3% and they were jealous of the 5%+ being made by the UK supermarkets. One is very small volume, one has huge turnover.
You just learned a valuable lesson about the importance of understanding cost structures.

I once looked into selling a food product through various routes. Supermarkets are **** to deal with. Specialist grocer / delicatessen types have slow sales, need big markups (albeit nowhere near 2x), and need a catalogue full of lines to choose from. When you only sell a few per week and sell-by-dates means you don't want to hold more than 6 weeks stock, you need to buy a mixed basket of stuff just to amortise the cost of shipping. That venture didn't make it past the market research even though the product was great.

It's all about power and who controls access to the customer. Unless you sell a "must have" product, the retailers don't need you, there's always someone else.
The next scenario you'll encounter is galleries or whatever wanting your goods on consignment. You take all the risk, put your product in their store at your own cost and they only pay you if and when they sell it :-(

Online selling has opened up an opportunity for a lot of people to sell a lot of stuff straight to the consumer. That includes etsy. Before online shopping and the explosion of delivery services these businesses wouldn't have existed because the economics don't work. Mail order would have been reliant on small printed ads in lifestyle magazines and newspapers for a single item or limited range of recognisable products..

 

[johnnyb]

You raise an interesting point re access to market. Another concern was I provide product and they sell it as our product. Thus I'm considering a simple brand(anyone know where I could get a zig zag border stamp?)
It feels that the market has a gate and certain companies closely control what goes in and out. Pay and we'll allow limited access. I'm going to jump in with my usual disregard for outcome...what can go wrong ill send the shop a few just to dip our proverbials in.

 

[Blackswanwood]

I guess there’s a shopkeeper’s forum with members on it discussing craftspeople who turn up expecting their products to be sold at a price that leaves them making a loss.

Good luck with it @johnnyb - if you can show your product sells you will hopefully have a bit of leverage on negotiating price.

 

[johnnyb]

They know the products sells because they sold a similar product for a while. They retained a couple and there always asked are those for sale. I can imagine why they no longer make these! But I figure there prices are out of date(if it was 100 3 years ago its 200 now)

 

[Jester129]

Think of what tooling companies charge their end user! Ridiculously high prices!

 

[Rhossydd]

I'm struggling to feel what benefits they could offer.

The greatest advantage is the potential customer actually seeing what they're going to buy. Many craft items have their greatest appeal when you can touch and see them in actuality. That might lead to some impulse sales.
The other point is that the product will be seen by people that may never think of buying (or searching to buy) online.

 

[Phil Pascoe]

Mail order would have been reliant on small printed ads in lifestyle magazines and newspapers for a single item or limited range of recognisable products..

Don't forget also that many of those ads. stated allow 21/28 days for delivery - half the time they didn't need to hold the stock, just to get it in and out within that time.

 

[TomGW]

Another thing to consider is setting up your own website and showing it in your Etsy or eBay pictures. Your own website can offer lower prices and provide the opportunity for a wealth of workshop photos and blurb about craftsmanship etc etc, plus a contact number to allow you to a bit of salesmanship.
My brother has a high volume business with both eBay and Amazon and shows his own website fairly clearly in photos. Also shows a photo of his bricks & mortar premises where it's easy for anyone to see the web & phone contact details. I suppose this maybe works better for establishing repeat business.
To be fair, he has just done the reverse of what you want to do. He has successfully transformed a traditional business into a web based business with customers literally worldwide - actually it was his son who moved onto eBay as an entrepreneurial 12 year old when his dad told him he was wasting his time

 

[Doug71]

I guess there’s a shopkeeper’s forum with members on it discussing craftspeople who turn up expecting their products to be sold at a price that leaves them making a loss.

My ex owns and runs a nice little deli and off licence which also sells giftware. She often moans about the wannabe artists (apparently generally middle aged women) and craft people who want to take over her precious shelf space to display the tat they have made. When she asks what's in it for her they normally have this illusion that the bent twig that they have sprayed silver and hung a few love hearts on is going to increase the shops footfall. The normal mark up on giftware is 100% plus vat but they always think she should make an exception for them as it makes their creations sound too expensive.

In the past she has dedicated an area for a display by local artists etc so is not totally against it, it's just 99% of the stuff people bring in looks a bit too homemade if you know what I mean.

She keeps asking me to make some simple things like boot racks/ coat hooks etc to sell but I never get round to it, I must give it a try at some point

 

[Distinterior]

..... She often moans about the wannabe artists (apparently generally middle aged women) and craft people who want to take over her precious shelf space to display the tat they have made. When she asks what's in it for her they normally have this illusion that the bent twig that they have sprayed silver and hung a few love hearts on is going to increase the shops footfall.......

 

[Sgian Dubh]

When I lived in Houston I designed and made an exhibition piece, a cabinet for which I wanted to gross about $5,500. The gallery put it on their floor with a price tag of $15,000. I didn't manage to get a sale there, perhaps surprisingly, or not. Slainte.

 

[johnnyb]

I'm still unconvinced of the merits of using a shop to sell(despite having made and wrapped fot shipping) but I'm nothing if not open to things. One result of my first conversation is its tempered my enthusiasm somewhat. But I'll follow through come what may.

 

[johnnyb]

Ps I reckon any craft item is hard to sell at profit. Especially more rustic offerings. Although I often prefer them over imported tat.

 

[Spectric]

With selling you have two choices, one is to make something and hopefully someone wants it enough to buy it and the other is to make to order what someone actually wants.