Back when I was at Cornell, I used to order a bunch of shoes through the local runnign store and they'd give us them with a small markup on wholesale. But as shoe prices exploded, I was wondering if the wholesale price has gone up as well.
How much does a running store pay for a $150 shoe?
$150 is about $80
About $85-$90 depending on the company
Since you're asking other business owners to disclose the financial side of their business model, how about telling us how many clicks LR gets per month and how much you make off of web advertising?
Standard is to take about 40% off MSRP
Millions if not Billions.
You didn't get free shoes at Cornell?
MSRP is usually double wholesale.
That allows stores to charge 80% more and still call it a sale or discount.
When I managed a store we gave the local college the cost of the shoe plus 30% to cover our expenses. We did this as a courtesy to the school and to help support its athletic programs. These were NAIA schools at the time--so not big budgets.
Gordon Gekko wrote:
Millions if not Billions.
I truly believe this is the correct answer.
rojo wrote:
Back when I was at Cornell, ...
braggart.
Our specialty store , we sell to Universities at a 35% markup-. The past 5 years we increase our profit margin by mixing in Chinese made clones , which we purchase for $17 per shoe . So 60% real shoes , 40% clones . This is a win-win for all parties involved . We get a big smile from the University AD when ever we meet , which makes our staff feel good as well . Now , we may have cost some schools conference titles with the clone shoes , but it is also a good lesson to not trust the internets .
rojo wrote:
How much does a running store pay for a $150 shoe?
That depends on a few factors, rojo.
(1) What brand of shoe, which relates to the contract or level that the store (or company) is, according to the brand's B2B metrics?
(2) Is it a futures order, a fill order, or a special order? Brands typical have different discount schedules for different types of orders.
(3) Is the invoice being paid before the due date? Some brands give a few points for a discount if you pay the invoice before the due date. This also relates to what level or what contractual agreement you have with the brand.
(4) If there is an RTV agreement in place, does that offset any additional discounting? This is mostly the case with spikes, but can also come into place for companies either testing a market or a short-run of a shoe (i.e., ASICS Metarun). Typically if you can return the unsold shoes to the vendor for credit, you will not receive as deep of a discount.
So three different scenarios here (although there could be a BUNCH of different combinations).
FIRST SCENARIO
You are have a platinum account with Nike. You place a futures order for the Zoom Fly 4. You also pay your invoice within the net 30 window for an additional discount (boilerplate for all platinum accounts with Nike Running). Because you are platinum with Nike, you don't pay shipping on futures orders.
That $150 MRSP shoe is sold to you at 47% off (for futures; 45% for fills; 40% for special orders [i.e., one time or infrequent orders, typically done for special sizes or specific colorways that are not carried]). You get an additional 2.5% off when you pay within the net 30 window.
So that Zoom Fly 4, ordered on a future order, and paid within the net 30 window would cost the running store $77.51.
SECOND SCENARIO
You have a customer who wants a Saucony Triumph ISO ($150 MRSP) in a colorway that you do not stock. You place a special order for the shoe.
Saucony gives you 35% for special orders, plus shipping, which means you are paying $97.50 + shipping for that particular $150 MRSP shoe.
THIRD SCENARIO
On Running hasn't established themselves in your market yet. They are offering to fully stock your store with the Cloudswift ($150 MRSP) as a trial. Any unsold product can be RTVed to On for a complete refund. Shipping is on them.
Because of the low risk you are taking, you only get a 30% discount, but your margins are protected as you won't have to discount the shoe if it does not sell (which usually makes this a good move for running stores).
That $150 MRSP shoe will cost you $105.
So it's an oddly complicated question, rojo! It all depends!
browski wrote:
rojo wrote:
Back when I was at Cornell, ...
braggart.
Cornell is basically a SUNY school...
Former Running Company VP wrote:
rojo wrote:
How much does a running store pay for a $150 shoe?
That depends on a few factors, rojo.
(1) What brand of shoe, which relates to the contract or level that the store (or company) is, according to the brand's B2B metrics?
(2) Is it a futures order, a fill order, or a special order? Brands typical have different discount schedules for different types of orders.
(3) Is the invoice being paid before the due date? Some brands give a few points for a discount if you pay the invoice before the due date. This also relates to what level or what contractual agreement you have with the brand.
(4) If there is an RTV agreement in place, does that offset any additional discounting? This is mostly the case with spikes, but can also come into place for companies either testing a market or a short-run of a shoe (i.e., ASICS Metarun). Typically if you can return the unsold shoes to the vendor for credit, you will not receive as deep of a discount.
So three different scenarios here (although there could be a BUNCH of different combinations).
FIRST SCENARIO
You are have a platinum account with Nike. You place a futures order for the Zoom Fly 4. You also pay your invoice within the net 30 window for an additional discount (boilerplate for all platinum accounts with Nike Running). Because you are platinum with Nike, you don't pay shipping on futures orders.
That $150 MRSP shoe is sold to you at 47% off (for futures; 45% for fills; 40% for special orders [i.e., one time or infrequent orders, typically done for special sizes or specific colorways that are not carried]). You get an additional 2.5% off when you pay within the net 30 window.
So that Zoom Fly 4, ordered on a future order, and paid within the net 30 window would cost the running store $77.51.
SECOND SCENARIO
You have a customer who wants a Saucony Triumph ISO ($150 MRSP) in a colorway that you do not stock. You place a special order for the shoe.
Saucony gives you 35% for special orders, plus shipping, which means you are paying $97.50 + shipping for that particular $150 MRSP shoe.
THIRD SCENARIO
On Running hasn't established themselves in your market yet. They are offering to fully stock your store with the Cloudswift ($150 MRSP) as a trial. Any unsold product can be RTVed to On for a complete refund. Shipping is on them.
Because of the low risk you are taking, you only get a 30% discount, but your margins are protected as you won't have to discount the shoe if it does not sell (which usually makes this a good move for running stores).
That $150 MRSP shoe will cost you $105.
So it's an oddly complicated question, rojo! It all depends!
RTVs used to be so much of my work week. Did we work for the same company? The one based out of Denver and later Indy? I know what you have written here is standard language in RS, but it was nostalgic just seeing it explained so thoroughly and precisely.
Lenny Leonard wrote:
RTVs used to be so much of my work week. Did we work for the same company? The one based out of Denver and later Indy? I know what you have written here is standard language in RS, but it was nostalgic just seeing it explained so thoroughly and precisely.
Technically I was a FL corporate employee, but oversaw RSG. I was there for the JR acquisition, so we could have definitely overlapped.
Left after the JD Sports buy-out as my shares had just vested. Now in the non-profit world and don't necessarily miss the stress of retail!
Back in the day after I had completed my college eligibility, I was two classes short of graduating. With no scholarship money coming in I got a part-time job at a local running store. Back then in 1984 it was a standard 50% mark-up.