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0 pointslotsofpulp3y ago0 comments

Who is more efficient than Amazon/Walmart/Target/Home Depot/Staples/Costco/etc?

They set the bottom price, and if they are earning 2%-4% profit margins, then their costs increases will have to end up in either prices increases or them no longer selling the product.

The funny thing is that it is Amazon coming along and greatly increasing demand for labor (in conjunction with reduced supply of that type of labor) that caused all the other warehouse jobs and retailers to increase pay.

And I hope the labor continues making gains in their quality of life at work and pay, but I do not see this happening without an increase in prices for products (like we have already seen).

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Retric3y ago

That’s assuming they keep their margins the same. The thing is Amazon isn’t manufacturing anything so their “thin” margins aren’t as sensitive to increased labor costs as 2-4% suggests.

Paying 18$ for something your selling for 20$ is a 10% margin, taxes and CC processing fees are similarly inflexible. So if 2-4% of the final price is profit then they could raise their internal costs by 10% and still be profitable.

danaris3y ago

> if they are earning 2%-4% profit margins

They're not (depending on the product).

My wife used to work in Halloween costume design for a wholesaler (and some of her costumes did end up in Target and Walmart, which was cool to see), and the retailers' margins on those were at least 50%.

As I said, the margin does depend heavily on the product, but do not assume that across-the-board average margins are anywhere near that razor-thin.

lozenge3y ago

That's a markup, not a profit margin. A profit margin is after all expenses, which a wholesaler doesn't know about.

makomk3y ago

Yeah, and I don't think it would be terribly unusual for 50% markups to translate to low-single-digit profit margins in cost-competitive retail sectors - those both seem like about the right ballpark overall. Retail has a lot of costs and wages are one of the big ones.

lotsofpulpOP3y ago

That is irrelevant because the entire organization’s profit margins are where increased wages would come from.

danaris3y ago

My point is that the entire organization's profit margins are not likely to be anywhere near 2-4%.

lotsofpulpOP3y ago

That is what their 10-K filings say.

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Retric3y ago

That’s assuming they keep their margins the same. The thing is Amazon isn’t manufacturing anything so their “thin” margins aren’t as sensitive to increased labor costs as 2-4% suggests.

danaris3y ago

> if they are earning 2%-4% profit margins

They're not (depending on the product).

As I said, the margin does depend heavily on the product, but do not assume that across-the-board average margins are anywhere near that razor-thin.

lozenge3y ago

That's a markup, not a profit margin. A profit margin is after all expenses, which a wholesaler doesn't know about.

makomk3y ago

lotsofpulpOP3y ago

That is irrelevant because the entire organization’s profit margins are where increased wages would come from.

danaris3y ago

My point is that the entire organization's profit margins are not likely to be anywhere near 2-4%.

lotsofpulpOP3y ago

That is what their 10-K filings say.

1 more reply

j / k navigate · click thread line to collapse