Wholesale prices vs retail prices?

[LoganW]

I've been doing some research in to wholesale vs retail electronics prices. I've discovered big distributors like D&H (that have ties with tons of big corporations) keep their wholesale prices under lock and key from the public.

Well I have to say I'm a little curious now that I know that. When I contacted distributors and it sounded like I had to be a nationwide company to find out it made me even more curious. Does anyone know exactly what wholesale prices are compared to retail prices? Exactly how much do they inflate the prices at retail?

[tjdee]

1. Wholesalers buy in bulk.

That is my understanding.

So they'd rather sell 800,000 stereos to Macys than one to you.

Many industries do this, and the retail markup can be pretty arbitrary. I'd imagine it can be over 100%, if they feel like it.

[mongo]

2. Retail 101

The term markup as used in retail is the % profit you will recieve on an item. IE.

a 50% markup is when you buy something for $5.00 and sell it for $10.00
a 60% markup is when you buy something for $4.00 and sell it for $10.00
and so on.

That being said, that normal markup of your local dept store is in the 60-70% range. The normal markup for a jewelry store is 65-80%. Some of your mom-n-pop retailers and flea market vendors may have a markup as low as 50%.

Now, you may think that tripleing the price for something is obscene, but when you adding shipping, overhead and human resources, it's necessary unless you are the largest of retailers.

Your local store mom-n-pop store is further hurt by the fact that they have to buy from a distributor, who will buy items for 40% less than the manufacturers "wholesale" price. So someone like walmart can buy directly from an importer or manufacturer for 40% less than a small retailer. In order to match prices, small retailers have to settle for a much smaller margin.

One last thing - markup is a closely gaurded secret in the retail industry. I won't say what ours is, but we have a much lower markup on lingerie than say video - which is the only department in our store that really makes money.