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Originally Posted by MAD
Yes, Amazon would have better buying power than DSE.
But DSE has better buying power than Joe Public.
DSE can buy from a wholesaler.
Joe Public has to buy from a retailer.
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Its not just buying power though. Amazon would have a single head office plus a few warehouses.
DSE has a head office, plus they have warehouses. However on top of that they also have retail outlets that need to be paid for (rent, wages, electricity etc), the retail outlet costs would be significant.
For example a 200m^2 shop @ $1,000m^2 pa is paying $200,000 just on rent. If they have 50% markup (which I doubt), that means they need to sell $300,000 just to cover rent. Then lets say they need to sell another $900,000 worth of stock to cover wages and electricity.
You are talking $1,200,000 in sales each year before you can even *think* about making a profit, and that doesnt take into account interest, marketing, account keeping fee's, refits, computers etc that still need to be added in.
Amazon wouldn't have any of these overhead costs, and the people they *do* employ @ the warehouse and head office, would be paid less then the equivilent position over here.