Percentage of wholesale to retail

General Discussion
1

Anyone know what the percentage is that Surfboard retailers increase the price of a typical board? I know that it probably varies but anyone have a ball park figure?

I was thinking it was something like 20%?

Example: The retailer recieves a board from the builder for $700 dollars. The retailer adds the 20% to their cost and then puts it in their racks at $840. Does this sound correct?

Do retailers still only make about $100 off the boards they sale. Its seems higher then that to me now. I was thinking that it has increased to about $150 average.

Comments

Gregg

2

it is what it is! every shop sets its own margin. 10-25% is what shops expext to see as a mark up

3

Yeah, gotta factor in quantity discounts, costs for shipping, inventory costs, handling, storage, pre order discounts, ethics…

Most shops would double profits just selling clothing.

Would you buy surfboards from clothing stores?

4

speaks to the sad state of surfboard retailing… clothes are marked up @ 50%. Much of retail is about double what “wholesale” is.

5

Well- we marked up the last batch $50-$75 US, after shipping. Which was, then, on the order of 15-20%, I’d have to look up the exact figures. Love to mark 'em up more, but unless you are the only game in town…or within a couple hundred miles… there is somebody down the road marking them up the same or less, and I have to sell against 'em.

From that, you take away the money-up-front factor where you have to pay up front for your boards unless you are the boardmaker’s biggest customer ( or unless you want to pay easy credit terms that make credit card interest look like giveaways) and , unless you’re the best customer said surfboard company has, the 25% of the boards that come through which have nothing in common with what you ordered but have to unload somehow.

Figure in the free t-shirt, leash and bars of wax for life that the average buyer expects and will go elsewhere if he doesn’t get 'em. Figure in the 20% of your orders that don’t sell, so you wind up dumping them for cost or less. Figure in the damaged-in-transit boards ( around 10-20% ) that you pay to have fixed and then unload at cost or less.

And of course there is the Friend of the Average Surfer - the local shaper who sells you his boards and then turns around and sells 'em out his back door to anybody for what you paid for yours: wholesale. I appreciate that he needs cash flow too, but he’s cutting me off at the knees.

And of course, the guy who said “Gee, I want one just like this one, except six inches longer and bright orange” and you include one in the order…and when it comes in, he shows up with one only 3" longer, pale blue and Chinese and gee, you’re stuck again.

Kinda explains why I don’t carry new boards any more, ya know? If I have an inventory budget of, say, 40 grand for the season, why throw away a third or more of that on stuff I will probably lose money on. While I might impress lots of people, I am not gonna be around for the long haul.

I make more on a used board, or far, far more on a rental board, than I will ever dream of seeing on a new board. The average rental board makes me over $600 ( $25 a day, maybe 24 days in a season it’s out, less by the week but then again it’s out all week) by the time it’s a good idea to unload it for what I paid for the thing.

You carry surfboards as a loss leader. Not to make money, but to bring people in who look at the boards and then buy the stuff that you do in fact make money on…

hope that’s of use

doc…

6

May not be too relevant to you but recently a CI K step up poly shortboard was in the local surf shop window in the UK for £410. It was bought by a staff member for £320. Its reasonable to assume that the board wouldn’t be sold for a loss so minimum mark up is £90 or 28% . Only other price I know was a JC SD3 6ft surftech which I remember coming in at £280 ( I happened to see a price list) and was on the rack for £450 at the time so mark up of 60%.

I think these are probably extreem examples because good local made boards are available off the rack for £300.

Also worth bearing in mind that there is usually an automatic ‘local’ discount of 10% on most surf hardware.

From experience in other businesses I think the mark up should be in the region of 40% unless you can sell in large volumes.

7

Only possible chance a retailer has of getting 40 up is to buy Asian boards by the boatloads.

No other way !!

Then he risks getting labelled a non core shop.

8

Agreed I don’t think 40% would work for boards so in a way am glad that cloths are high profit and someone else can buy them and subsidize the rows of boards in the local shop… I chose 40% because where I work ( food industry)the mark up has to be in that region to make a reasonable living for the owner and workers,cover overheads and not be so pressurized that service/quality suffer.

Perhaps surfboards are too cheap?

9

Well, that’s pretty much it, Taylor - small goods or soft goods, as they are called, are what pays the overhead, the light bill, the rent and all that sort of stuff. What’s on the price tag is ‘keystone’ markup- double wholesale, basicly. If I paid five bucks for it, it’s gonna go out the door for $9.95.

It also explains the ‘2 for 1’ end of season sales on clothing, where the shop is trying to dump this season’s unsold stuff at cost.

Heh- of course, you gotta love the graphics types that come in, and they see your shirts hanging there on the rack at $14.95.

But, ya see, they have their Super Cool Design they did all by themselves ( never mind that it was done on a really bad, cheapo bale goods t-shirt with one poorly made screen and it looks like the screen-printing was done in the back of a moving truck on a bumpy road) … and they will sell it to me for Only Twelve Dollars, so I can make a whole Three Bucks On Each One.

Never mind that I am paying seven or eight each for top-of-the-line 100% heavy cotton t’s with my shop logo on 'em front and back, several colors and several screens for each, never mind that if one comes from the screener anything less than perfect I don’t pay for it, never mind that after a dozen years with them my screener gives me 90-days-same-as-cash when Graphics Type wants all the money up front, never mind that their Super Cool Design looks like something which was left in the wake of a diarrhettic goat with a bad diet of lawn trimmings, shrubbery and mutated veggies…and of course don’t mind at all that Graphics Type is peddling said t-shirts out of his car trunk at the local flea markets and any gathering more impressive than two dogs…ahmmmm…‘fighting’…in the street and selling 'em for Only Twelve Dollars…

You have to wonder where they come from, where they can grow up so utterly innocent of basic retail economics…

Gotta love 'em, though. Instead of paying for 'em up front, I will, maybe, if they don’t look completely like dog doo, take a few on consignment. Graphics Type leaves 'em and if I sell any, I put the money under the drawer in the register. Where it stays until Graphics Type comes in again…and usually, you see him once or twice again in that season and never, ever again.

If, by some miracle, they do sell out over a few years ( by which time Graphics Type is off saving the world someplace else, burning up his trust fund…did I mention that they all seem to have nice fat trust funds? And are invariably crunchy as all hell. ) …well, that is what we call in the surf trade ‘beer money’ .

And that, in turn, makes up for more than a few of the little travails of the surf biz…

doc…

10
Quote:

…recently a CI K step up poly shortboard was in the local surf shop window in the UK for £410. It was bought by a staff member for £320. Its reasonable to assume that the board wouldn’t be sold for a loss…

I think it’s just as reasonable to assume that the shop wouldn’t have sold it to an employee for 320 if there was a good prospect of getting 410 from a customer, so perhaps that particular transaction isn’t the best example to use for approximating gross margins…

-Samiam

11
Quote:

…Kinda explains why I don’t carry new boards any more, ya know? If I have an inventory budget of, say, 40 grand for the season, why throw away a third or more of that on stuff I will probably lose money on. While I might impress lots of people, I am not gonna be around for the long haul.

I make more on a used board, or far, far more on a rental board, than I will ever dream of seeing on a new board. The average rental board makes me over $600 ( $25 a day, maybe 24 days in a season it’s out, less by the week but then again it’s out all week) by the time it’s a good idea to unload it for what I paid for the thing.

Not to mention that if you are a one shop pony with limited or no warehouse space (probably more shops than not are in locations where commercial space is at a premium), and hit an unanticipated period of slow sales, you may not have room to pick up the used boards that make money because you have to keep your commitments to take the new boards that don’t. Shortly, the locals who don’t really understand the business start bad-mouthing the shop because it is suddenly not offering squat for trade-in value. I see several local shops in this bind fairly often. Figuring out display area allocations in a surf shop has to be truly crazy-making task.

-Samiam

12

Exactly - a lot of shops are allowed a certain number of ‘pro deals’ every year, where the owner or one of the senior staff gets a board or wetsuit for less than cost. It gets the brand name out there to show the flag, as it were.

One of the perks of the surf biz…

doc…

13

Oh yeah, that’s exactly it.

Remember the first twin fins, back in the '70s? One year they were the only thing you could sell, the next year it was something else and twin fins you couldn’t unload on anybody.

Well, one shop down the road sold the hell out of twin fins. I mean they owned the new board market that year, we didn’t have but two or three of 'em go through, our team guys, and those were under protest.

We had to suck it up on board sales…but the next year, the other shop gave trade-ins on twin fins ( he was and is an honorable guy, though no longer in the biz ) and we didn’t have to. He wound up with a back room full of unsalable boards and went under while we stayed alive.

Sometimes it’s planning, sometimes its not trusting things, and sometimes it’s just dumb luck

doc…

14

never mind that their Super Cool Design looks like something which was left in the wake of a diarrhettic goat with a bad diet of lawn trimmings, shrubbery and mutated veggies…

Doc,

Far and away the funniest thing I have heard(read) in weeks! Well said, sir, well said.

15
Quote:

In Reply To

…recently a CI K step up poly shortboard was in the local surf shop window in the UK for £410. It was bought by a staff member for £320. Its reasonable to assume that the board wouldn’t be sold for a loss…

I think it’s just as reasonable to assume that the shop wouldn’t have sold it to an employee for 320 if there was a good prospect of getting 410 from a customer, so perhaps that particular transaction isn’t the best example to use for approximating gross margins…

-Samiam

Sorry but I think you’re wrong in this case because the CI boards do sell regularly for around the £400 mark (this board was a bit more as its a signature model) and also was in the window for about three or four days only and was brand new in the shop not hanging around,dinged etc.So I stick by my assumption that on CI boards mark up is about 28% here in Wales UK.

I did however say that this was probably not a good example as good local boards can be had for much less so agree with you that is not representative of what percentage mark up a shop gets on most boards.

Similar discussion in Industry Talk http://www.swaylocks.com/forum/gforum.cgi?post=261398;sb=post_latest_reply;so=ASC;forum_view=forum_view_collapsed;;page=unread#unread

16

Hi Doc…

Then you have those that come on the internet forums so they can find out mark up and go beat you up at the counter for selling your goods to high or shop at T.J. max where they buy what you have on your racks for less than you paid for it; even though the rep said they don’t sell them. The only soft goods worth having are your own. If you can’t sell them, don’t get in the business.

Honestly with the invention of the internet, the surfboard business as it was it ruined. Every kuk and his brother knows the cost of boards and wants to buy cheap. Another reason China is popular. The resurgence of the retro has allowed some to make more money than before as most are holding their prices for the polished and dyed stuff. China will figure that one out soon enough with the help of some well meaning board builders. We have seen how quick top board builders will jump on something to make a buck with surftech and boardworks. Heck, with boardworks, many of the guys are not even shapers, but some surf shop owner who says he designed something he stole from some other shaper and put his lable on it.

17
Quote:

Hi Doc…

Then you have those that come on the internet forums so they can find out mark up and go beat you up at the counter for selling your goods to high or shop at T.J. max where they buy what you have on your racks for less than you paid for it; even though the rep said they don’t sell them. The only soft goods worth having are your own. If you can’t sell them, don’t get in the business.

Honestly with the invention of the internet, the surfboard business as it was it ruined. Every kuk and his brother knows the cost of boards and wants to buy cheap. Another reason China is popular. The resurgence of the retro has allowed some to make more money than before as most are holding their prices for the polished and dyed stuff. China will figure that one out soon enough with the help of some well meaning board builders. We have seen how quick top board builders will jump on something to make a buck with surftech and boardworks. Heck, with boardworks, many of the guys are not even shapers, but some surf shop owner who says he designed something he stole from some other shaper and put his lable on it.

Ha! The company I work for mines and distributes products for a variety of different markets. A few years ago when web portals came into vogue, some sales and marketing employees were agitating for a web site with comprehensive product and pricing information. The Powers That Be decided that doing so could erode gross margins exactly as you suggest has happened to the surfboard business, and declined. Sharp people, I’m glad I work for them…

-Samiam