I was reading the lotties thread and I'm kinda confused on how shops make their money. How can you explain it to a consumer. I've heard people say that they make their money on the dunks and clothes. Also if you could explain why maybe some shops don't get anything from certain distributors. Sorry if this is very amateurish but I get lost whenever I try to read into it.
This is my experience from working at my local.
I've heard people say that they make their money on the dunks and clothes.
Let's start with this. Shoes and clothing wholesale prices are 50% of retail. Sometimes wholesalers will give the shops discounts if they buy a certain amount of product, or if they just like each other.
With the actual skate gear (decks, trucks, etc),
the profit margins are FAR worse. The average wholesale price is about ~67% of retail. The 17% difference in prices adds up quickly.
Let's say you're selling 10 decks for $50 each and 10 jackets for $50. Each deck costed you $35, while each jacket costed you $25. Assuming you sold all of them, you received $500 from each category. Your
actual profit is $150 from decks, and $250 from jackets, for a total profit of $400 from the $1000 you made. You would have to sell two more decks to equal the profit from the jackets.
"Wouldn't selling a complete skateboard be more profitable compared to a item of clothing?"
Yes, but it doesn't happen everyday. Customers are way more comfortable spending $90 on three t-shirts or $100 on limited edition shoes instead of dropping $160-180 on a complete skateboard, especially if they don't know if they want to really get into it. Only skaters that are really deep into skating or the new people who've made up their mind will buy skateboards, but they're a minority in the entire skate shop customer base.
It's much cheaper and profitable to sell clothing and shoes instead of skateboard parts. The sneaker hype helps out a lot with this, as you'll have a bunch of nerds lined up all night for dunks which will sell out right away. There's also a chance that the people who missed out on the shoes will end up buying some sort of clothing so they don't make their visit a total waste.
It's also easier to sell clothing. You don't need to do 1 on 1 time with the customer on clothing, but with skate parts you need to spend a lot more time with the customer and you don't receive any extra profit from it.
Selling clothing:
Hey I'm ready to buy this t-shirt.
Cool, let me ring you up.
Selling skate parts:
Hey I'm looking to get the best deck and also the best parts you have. Where do I start?
*Proceeds to explain the difference between deck sizes, explain the difference between hard and soft wheels, helps pick out hardware and griptape and stickers, and then puts the total in the register.*
Oof, this is more than I thought. I'll just get the deck today and the other parts maybe later this week.
Unfortunately the above scenario is somewhat common. The majority of customers don't want to spend so much money on a wooden toy with wheels, but clothing is more attractive.
Also if you could explain why maybe some shops don't get anything from certain distributors.
As stupid as this sounds, this is literally based off the fact if the distributor likes you or not. If you're butt buddies with them, they'll help you out, maybe give you discounts on your orders, and fulfill your order before others. If you guys hate each other, they'll close your account and probably talk shit to other distributors about you (although this isn't the sole reason for closed accounts. Make sure you pay your open accounts and don't buy stuff that won't sell). It's pretty fucked up honestly, since that level of pettiness can kill a shop.
Another reason is that the shop doesn't have an account with the distributor. While they can easily hit up the distributor with an email asking for a new account, the shop may not want to open a new account especially if they still need to fulfill other accounts.