21/03/2024
Don't envy high prices from retailers
As the manufacturers, we often complain the low selling prices ,but envy the high prices from the retailers overseas. Appearances can be deceiving . With some of our retailed experience before ,I can share some reasons why retail prices may seem high but the actual profit margins are not substantial, and in some cases, even result in losses.
Taxation Costs: Consumption tax rates in Europe are generally high, such as the 19% value-added tax (VAT) rate in Germany. Retailers must include taxes in the selling price, but this portion of the revenue goes directly to tax authorities, not to the retailer's profit.
Labor Costs: Labor costs in Europe are typically high, with average hourly wages reaching around €13. These high labor costs directly impact the operational expenses of retailers.
Warehousing and Inventory Management Costs: Renting warehouse space for storing inventory and managing inventory come with associated costs, including inventory tracking, order processing, and packaging.
Insurance and Facility Maintenance Costs: Retailers need to purchase insurance to protect their inventory and facilities against potential losses. Additionally, regular maintenance and upkeep of facilities are necessary to ensure safe operations.
After-Sales Service Costs: European consumers often enjoy extended after-sales service periods, such as three-year warranties and five-year free part replacements. Some customers may even return for part replacements ten years later. This means retailers incur additional expenses for after-sales service and assume corresponding responsibilities.
Unreasonable Customers: Retailers often face unreasonable customers who may falsely claim product defects, such as attributing their own mishandling during installation to product quality issues. E.g. In cases like these, when customers inform us that the glass shattered, but not immediately upon unboxing, we understand that it was accidentally broken by the customer. In such situations, all we can do is to offer the replacement free of charge .This increases costs
Do you still envy the high prices from retailers?^0^