Most people do not understand that in most business operations it takes a 20 percent margin just to offset operating expenses. Wal-Mart is one of the most if not the most efficent operator in the world and they run around 18% on overhead, about 10 percent labor cost and the rest operating cost.
The little shops prolly run closer to 30-35%, many have rent or leases on their property, taxes, labor cost, utilities, advertising, local business license,the cost of sending techs to school, etc,etc. They have brick and mortar to support, many of the internet operators don't have the same expense structure. The small dealer doesn't have the thousands of items to mix the margin out on, like 5% markup on chain, but somewhere, they are making 50-100% to mix out and offset the low margin. Bailey's for example, I guarantee you they are making 50 to 100 percent on apparel, that's the margins associated with clothing, the items they import, like the little chain saw mulitool, if it's costing them more than three bucks they are getting hosed. I can't hardly shop retail, because of being a buyer for many years in retail, going to the factories globally and seeing what things actually cost it just makes you sick to pay retail. Baileys makes a ton off the direct import items they bring in, not knocking them, it's common business practice.
Just one stark example, I was in a factory that makes those button down oxford shirts with the little horse and polo player, you know the brand, those shirts sell for between 75.00 and 90.00 bucks a piece, they cost 3.50 a piece at the factory, needless to say I bought and shipped home a **** load of them. Keep in mind you little local dealer is struggling just to stay alive in this economy, the government is saddling them with more and more regulations and expenses. I'm not saying pay stupid prices, I often find the best price on the internet when making a purchase and then factor in shipping and the time it takes to get it, I'll go to the local business and ask how close they can get to the price, I'll usually offer to pay 15-20% more to buy locally.
Sometimes they can do it sometimes they can't, just did it on a Miller welding helmet for my son, I could get it off the internet for 200.00 bucks to the door. The local farm supply had them marked at 279.00 I offered them 235.00 to have instant gratification and stay local, they couldn't do it. I bought over the net, but I feel like I tried to buy local. They said 235.00 was well under their cost. The distrubutor's have thousand and thousand's of items to mix the margin, with cost spread out over and expotential increase in sales, little guys just don't have this luxury. If we don't support the little guy every once in a while, we'll all be #####ing when they are gone and the internet guys have raised prices. Just like the little mom and pop stores that used to line main street, we all went to Wal-Mart and now they are gone and we ##### about Wal-Mart. It's the same thing.lol
