Appliance store cost structure

[JHZR2]

Does anyone know what the typical markup is on appliances?

The reason I ask is because I just bought a Webber Q 320 and a Friedrich air conditioner. The pricing that I got was far lower than Amazon and AJ Madison which both seem to be the cheapest online sources. This was after shipping and tax was considered with the online stores having neither.

The store we go to is a small mom-and-pop Business that is been around since the early 50s. Their sign states that they're part of some kind of billion-dollar buying conglomeration, so I would assume that that means they get fairly attractive wholesale prices. There're so far lower than what Walmart is selling the grill for online but I can't imagine that their wholesale price structure is less than Walmart.

They've always had the same sales people in the store and it does not look like a high turnover place. So I assume that their benefits and compensation is fairly decent otherwise the people with cycle through.

So what kind of profits are there in appliances? Obviously these folks are doing something right, and they way undercut all the big guys.

 

[LeakySeals]

Lots of variables to consider. The main one would be volume. The ability to cut deals in bulk. Ma and Pa can't do that. 15-20% has been tossed around, but a store like Walmart could be 5% and because of the volume, still turn a better profit than Ma and Pa at 20%.

 

[Tempest]

It's possible that their building is paid for and there maybe some other advantages for having been in the same place for so long.

Undercutting the competition might be required to keep the door open as well.

 

[AlienBug]

Probably dealing meth.

 

[HTSS_TR]

Season appliances have high markup, because they usually have big discount in off-season.

 

[JHZR2]

Originally Posted By: LeakySeals
Lots of variables to consider. The main one would be volume. The ability to cut deals in bulk. Ma and Pa can't do that. 15-20% has been tossed around, but a store like Walmart could be 5% and because of the volume, still turn a better profit than Ma and Pa at 20%.


I think you have that one backwards. Mom and pop are giving me far better deals than the high-volume best wholesale price big-box sellers. Along with a far more knowledgeable staff and better service.

In my opinion better deals are available everywhere people just shopping big box for laziness. Because it is not just seasonal appliances where we have gotten super good deals from these folks. Unless dishwashers washers and dryers are all seasonal appliance....

 

[AVB]

I worked with a part-time Lowes employee he said they made pretty good commissions for selling appliances. I didn't even know Lowes paid commissions.

 

[PandaBear]

It is important to take a look at the overall merchandise they carry. I know a lot of Trader Joe's like grocery outlets survive by offering cheap prices on surplus / spot market produces when they are available and don't even carry them when they are not.

The same would go for appliances, I would imagine the mom and pop don't carry anything but those the big box wouldn't want to (or wouldn't take all of them at), or those older models. It is also possible that their real estate is paid for and self employed so they are taking a very low income / cost compare to the big box (common in the restaurant business).

Or they are strategically located where the manufacturers want to keep them around by paying them for the "shelf space", so they decide to sell for less to keep up with the customer volumes.

 

[JHZR2]

Originally Posted By: AVB
I worked with a part-time Lowes employee he said they made pretty good commissions for selling appliances. I didn't even know Lowes paid commissions.


But we have gotten better deals here then at Home Depot or Lowe's. And it's all current model, current generation stuff.

 

[Loobed]

I don't know about appliances, but the mark up on furniture is insane. I knew someone who worked in a furniture store that would give credit to anyone. He said the down payment needed paid for the piece of furniture and everything else was profit. A $200 sofa cost $30. Pay $30 down and $5 a month plus 20% interest. If the person didn't pay, they repossessed the sofa and through it in the garbage. They would give them almost unlimited chances to pay.

 

[AVB]

Originally Posted By: JHZR2
Originally Posted By: AVB
I worked with a part-time Lowes employee he said they made pretty good commissions for selling appliances. I didn't even know Lowes paid commissions.


But we have gotten better deals here then at Home Depot or Lowe's. And it's all current model, current generation stuff.


My point was that the commission is included in the mark up.

 

[The_Jeff]

Every big box store has some big profit items. It can be dumb stuff like dishpans and superglue: $4 at walmart, $1 at dollar tree.

What's a barbecue grill really, just some stamped steel.

 

[Smoky14]

Most are in the 30% neighborhood.

 

[Vikas]

Is this a brag thread?

 

[JHZR2]

Originally Posted By: Vikas
Is this a brag thread?


Brag thread? For what? Everyone loves a deal.

If anything it is a point that the small business can be competitive, have longer-term employees (stable in their jobs) and offer better deals than the big box walmart, HD, bbuy type places and the online retailers... While knowing more about their product and providing better sales and having a lot more knowledge about what they are selling.

Ive found this to be the case in a number of areas, but appliances was just my one for the day, so it was the basis of the post.