Forum Discussion
wintersun
Nov 15, 2014Explorer II
Amazon is also paying a lower price to its suppliers as they are ordering in much larger volumes. Same applies to Wal-Mart though this company also strong arms its suppliers to reduce prices which is why corners are often cut and name brand manufacturers will make special items for sale through Wal-Mart and other big box discounters.
A merchant will pay $5.00 or an item and then pay another $0.50 or more to have it shipped to them. They will receive it in and check that it is OK and then store it until a customer decides to buy it. The $5 item needs to be sold for $10 for the merchant to stay in business and at the end of the year they expect to make $1 on that $10 sale in actual profit and net income. If the item does not sell then they have to absorb the $6 cost for the item and its storage and that comes out of their pocket.
If someone is selling as a merchant on Amazon they are avoiding the costs of a building and of employees and all the related costs of insurance and taxes. In a lot of ways for many products it is a more cost effective way to get manufactured goods from the factory to the consumer.
The local merchant is often providing these items as a service to its customers who want to get it "today" and want to be able to pick it up and if there is a problem take it back to the store.
Would you want to have a Norcold fridge dropped off at your house and install it in your RV or for that matter find that it was damaged at the warehouse or in transit and have to repack it and strap it down and arrange for shipment back to the seller?
A merchant will pay $5.00 or an item and then pay another $0.50 or more to have it shipped to them. They will receive it in and check that it is OK and then store it until a customer decides to buy it. The $5 item needs to be sold for $10 for the merchant to stay in business and at the end of the year they expect to make $1 on that $10 sale in actual profit and net income. If the item does not sell then they have to absorb the $6 cost for the item and its storage and that comes out of their pocket.
If someone is selling as a merchant on Amazon they are avoiding the costs of a building and of employees and all the related costs of insurance and taxes. In a lot of ways for many products it is a more cost effective way to get manufactured goods from the factory to the consumer.
The local merchant is often providing these items as a service to its customers who want to get it "today" and want to be able to pick it up and if there is a problem take it back to the store.
Would you want to have a Norcold fridge dropped off at your house and install it in your RV or for that matter find that it was damaged at the warehouse or in transit and have to repack it and strap it down and arrange for shipment back to the seller?
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