The Wholesale Forums

[mattuk]

I was just wondering what kind of margins people generally look for. I'm sourcing products at the moment to sell via my website, and obviously I have to compare against existing websites selling the same items.

I was wondering what kind of margin/markup people generally look for and also when a a margin becomes so tight that it's pointless selling.

Taking one example a product I was looking at this morning sells wholesale for £24 with a RRP of £32 a 33% markup. However looking around a lot of sites were selling for £29 - a 21% markup. By the time I've figured in VAT @ 15% and and a payment processing fee of 3% my 'profit' margin is down to 3%!

Obviously bulk buying and negotiating prices down is the way to get ahead, but I was just wondering at what point people consider things not worth their time?

[PT]

Are you not missing several other expenses out of your calculation?

[mattuk]

Originally Posted by PT

Are you not missing several other expenses out of your calculation?

Yes, obviously all of my own trading costs and time, but those are the fixed costs per product. Any other costs would reduce proportionately as volumes rise.

[PT]

Shipping? Advertising?

[mattuk]

Originally Posted by PT

Shipping? Advertising?

Shipping from the distributor is free, to the customer is in addition to both my price and my competitors so they cancel out - both look to be about the same.

Advertising costs would be one of the trading costs - as volumes increase their proportion as a % of the margin/selling price would decline. Most of my traffic is natural search engine traffic through so these aren't particularly high anyway.

[mdsltd]

Originally Posted by mattuk

Shipping from the distributor is free, to the customer is in addition to both my price and my competitors so they cancel out - both look to be about the same.

Advertising costs would be one of the trading costs - as volumes increase their proportion as a % of the margin/selling price would decline. Most of my traffic is natural search engine traffic through so these aren't particularly high anyway.

In the mobile phone wholesale industry if you work from 1-10% you are doing well

[jbdgoods]

Our company just started putting together products as well. We are sticking to the general rule of at least 25% below retail (this includes shipping with a tracking number and customer signature - through FEDEX) some products go up to 75%. But because of this our product line is very random.

[mattuk]

I guess it also comes down to the final retail price of a product. 25% of a product that sells for £250 is pretty good. A 50% margin on something that retails for a tenner isn't so interesting - unless you can shift huge volumes.

[PFA Direct]

The majority of our products sell for anywhere between 100% - 300% profit but the average retail price of said product is £25

Its not big profit but its ££ in the bank at the end of the day, we have gone from doing 5 or 6 transactions a day to 1 or 2 every other day - I have no idea why things have gone qt but someone in the same line of business has said the same

Fingers crossed things will pick up over the next few weeks

[Acetech]

In my opinion, especially in todays competitive market that any profit margin is acceptable, sure it may start off slow but as sales volumes rise so will the general profit. That's the problem, many people are pushing for high profits per sale when in many sectors it just isn't possible, especially online, and given time with smaller profit's the volumes will come in many cases to make a living (but that doesn't mean that you can't try to source cheaper suppliers as you go along), and as your turnover increases generally processing fees lower and as profits rise you can start ordering in larger quantities to get a lower price (if only in one or two of your more 'popular' lines at first).