Cycling retailers profit margins

[berty bassett]

only a total guess and i dont want to be shouted at BUUT i just bought a bike with 50% off - i know it was wiggle and also know that i got 2011 model in jan 2012 - but i can't believe that they are willing to lose 20% .i know they have not got the same overheads as small outlet but they have got their own problems that have to be paid for i can only guess that their mark up must be high to begin with or it just ain't worth their time . shops are there to make money not just to provide items we want . now i've put me fingers in me ears so i can't hear you shouting at me - la la la la

 

[NotthatJasonKenny]

A bike shop is just like any other retailer, 35-40% margin feels about right to me for that type of product. I have experience is FMCG which can vary between 100%+ for clothes to 25% for nursery goods to even lower than that for high end goods like cars. As someone earlier pointed out, gross margin is not nett profit and good service costs money too! You want your LBS to make a few quid so he will be there to look after you if you need him!

That's what worries me about the canyon route!

Great idea of setting up a coop buying group for bikes tho! If enough people wanted the same bike and we approached someone with a wholesale order, I could arrange that I reckon!

 

[NotthatJasonKenny]

only a total guess and i dont want to be shouted at BUUT i just bought a bike with 50% off - i know it was wiggle and also know that i got 2011 model in jan 2012 - but i can't believe that they are willing to lose 20%

I don't know for sure but some manufacturers in other industries offer them a stock assist bonus to dispose of old models if they order so many new models.

It is a franchise after all!

 

[Linford]

your mate is wrong.

Margins on bikes are about 30%, unless they're discounting. Margins on clothing can be higher, and on little bits like brake blocks, cheap pedals they can be very high - but you have to sell a lot of cheap pedals to make a living! A small bike shop will pay the rent (if they can pay the rent) with repairs, although many undercharge chronically.

We appear to be in agreement on this..

 

[threebikesmcginty]

Are we talking about margin or mark up, they're not the same thing?

 

[Doseone]

I really don't know about the cost price of bikes, but a bikeshop owner I was talking to a while back told me that he only gets one month interest free on bikes that he buys in. After that it costs him to hold the bikes in his shop. Pretty hard business to be in.

 

[NotthatJasonKenny]

Are we talking about margin or mark up, they're not the same thing?

I was talking about mark up.

"Terminology speaking, markup percentage is the percentage difference between the actual cost and the selling price, while gross margin percentage is the percentage difference between the selling price and the profit."

 

[Scruffmonster]

I think, if I may be so bold, that there isn't much about the bike trade Hilldodger doesn't appreciate. I would go so far as to suggest that he might even know more than your mate that works for Evans. But, that's probably because he's been doing what he's been doing for decades.

I stand humbly corrected, but nothing about 'I really really doubt that' informed me of such experience.

It's likely enough that my mate saw an invoice for say a batch of Allez Sports and took them to be Comps, as an example of how the values could have cocked up. This is why I sought clarity. It's not a case of 'My mate down the pub told me this', it wasn't sold as juicy gossip, just a case of me letting him know how Sports Direct kick out running shoes at such basement prices and he regaled me with his old Evans experiences.

 

[Trembler49]

I was talking about mark up.

"Terminology speaking, markup percentage is the percentage difference between the actual cost and the selling price, while gross margin percentage is the percentage difference between the selling price and the profit."

Sorry, but margin is the difference between the selling price and the cost.

E.G. You buy for £50 and sell for £100, that is a 100% markup, but a 50% margin. As a rule of thumb a margin below 40% is not enough in a retail business.

 

[NotthatJasonKenny]

Sorry, but margin is the difference between the selling price and the cost.

E.G. You buy for £50 and sell for £100, that is a 100% markup, but a 50% margin. As a rule of thumb a margin below 40% is not enough in a retail business.

Google it.

 

[Rapples]

Google it.

You may be wise to take your own advice

 

[Vapin' Joe]

only a total guess and i dont want to be shouted at BUUT i just bought a bike with 50% off - i know it was wiggle and also know that i got 2011 model in jan 2012 - but i can't believe that they are willing to lose 20% .i know they have not got the same overheads as small outlet but they have got their own problems that have to be paid for i can only guess that their mark up must be high to begin with or it just ain't worth their time . shops are there to make money not just to provide items we want . now i've put me fingers in me ears so i can't hear you shouting at me - la la la la

Old stock can often be sold at a loss just to get it out of the way and generate some cash flow. It isn't earning anything sitting in the warehouse in the hope that someone will eventually walk in and pay full price for an out of date bike.

 

[Andrew_P]

IMO Retailers do not make a big margin on Bikes the brand name does. The Retailer makes on servicing and parts clothes etc

 

[mickle]

[QUOTE 1858818, member: 9609"]Very desirable very expensive bikes will have a much higher mark up than easy to sell every day bikes. And that is pretty much the story throughout the world of retail.[/quote]
Nope.

 

[Andrew_P]

[Pedant} Stock write offs can be sold at 100% profit, as their cost is taken off the books, and therefore zero. Cash loss. P&L profit. [Pedant]

I always thought that stock write off's were a provision unless disposed of or destroyed and when sold had to be written back in to stock?