"Mark up" or profit in an item to someone outside of a retail environment can be very misleading. When banding percentages of 35% or 40% about it looks like the shops are on a to a good thing but obviously it all comes down to the item value. If you had for example 100% mark up on a £10 item it sounds good but you have to sell a bloody lot of them to pay staff wages!. Now in the Motorcycle trade you would expect us to have huge profits on brand new bikes that retail up to £15000......but we dont. we have a dealer mark up of just 10% accross the range. So in a £6000 bike we have £600 to play with IF we sell it at full money. By the time the customer wants a "deal" we are down to £300 profit, then we have to pay registration fee and road tax, thats down to £180 profit, then put it through the workshop for PDI. So thats virtually bugger all left then!
Im not sure how you guys in the model trade get on with bigger "warehouse" style dealers but we have huge issues. They are able to buy in huge amounts of bikes from the manufacturers and store them away. By doing this they hit their dealer purchase targets and claim their manufacturer bonus (which they see as their takings for the year) for hitting those targets, now all they have to do is get rid of all the bikes! They knock them out at cost price or sometimes less than cost price, dont give a bugger about customer service and carry on. This give the impression to the public that there must still be money left in the bike to be had as they assume big shops wouldn't sell them with no margin!
For our wee shop where we do try and look after our customers this has the effect of people coming in to us after seeing these low prices on the internet at the bigger shops and expecting us to beat those prices because they think we must make soooo much money out of them!
It's strangling our trade and before long there will be no local dealers at all, we will all have to trudge half way round the world to get the bikes, and travel back there for servicing etc.
The reason for my waffle is to try and explain perhaps the reasons why dealers are getting quiet and only lasting a few years. Because of our human nature we all try to get a bargain and will shop around the world rather than support our local dealers. Until we change our attitudes to buying, prices in the local shops will never come down.
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