How Does Champion Make Any Money on SuperTech?

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With SuperTech filters retailing at Wally World for around $2.00, how on earth can this be a profitable exercise for Champion Labs? Their out-the-door pricing to Wal Mart has to be at $1.00 or less per piece in order to allow for all the distribution costs and Wally's profit.

I would bet money that Champion looses on every filter they sell Wal Mart and are hoping to make it up on volume. I would also bet that if a SuperTech manufacturing batch comes out ooops, a little off, that there must be intense pressure to ship the stuff. I doubt that Wally is going to do any kind of detailed quality inspection such as Bosch or AC might do when Champion makes products for them.

Finally I think it is just a matter of time before Wally takes the contract to some new vendor in China. China is cranking out cars and car parts in volume for their home market now and we can expect to see that stuff showing up in the US in volume. Maybe that is Champions angle. They may be taking it in the shorts for Wally in hopes of stemming the tide of Chinese imports.

Personally I will stick with buying Wix filters for now. I feel that Wix makes a quality product at a reasonable price with wide distribution and wide part number coverage. Saving a few bucks by going to Wally World will not make my monthly budget any noticeably better and feeds the monster. Of course with Dana putting Wix up on the auction block nobody knows what will happen there. I hope to **** it doesn't become a division of Allied Signal (Fram). Maybe the Arvin/Mentor Purolator people will pick up Wix. Purolator's distribution network has really dwindled over the years and Wix is very strong in the independent auto parts and NAPA channels.
 
I was wondering the same thing the other day.
That's a lot of metal, fibre, and labor for a $2 piece.

I'm currently using a SuperTech ST8A on my SHO becuase, quite frankly, this engine isn't worth the $5.50 a Wix will cost me.
Once I swap engines though, Napa Gold's are back in play.
 
quote:

Originally posted by jthorner:
With SuperTech filters retailing at Wally World for around $2.00, how on earth can this be a profitable exercise for Champion Labs? Their out-the-door pricing to Wal Mart has to be at $1.00 or less per piece in order to allow for all the distribution costs and Wally's profit.

I would bet money that Champion looses on every filter they sell Wal Mart and are hoping to make it up on volume. I would also bet that if a SuperTech manufacturing batch comes out ooops, a little off, that there must be intense pressure to ship the stuff. I doubt that Wally is going to do any kind of detailed quality inspection such as Bosch or AC might do when Champion makes products for them.

Finally I think it is just a matter of time before Wally takes the contract to some new vendor in China. China is cranking out cars and car parts in volume for their home market now and we can expect to see that stuff showing up in the US in volume. Maybe that is Champions angle. They may be taking it in the shorts for Wally in hopes of stemming the tide of Chinese imports.

Personally I will stick with buying Wix filters for now. I feel that Wix makes a quality product at a reasonable price with wide distribution and wide part number coverage. Saving a few bucks by going to Wally World will not make my monthly budget any noticeably better and feeds the monster. Of course with Dana putting Wix up on the auction block nobody knows what will happen there. I hope to **** it doesn't become a division of Allied Signal (Fram). Maybe the Arvin/Mentor Purolator people will pick up Wix. Purolator's distribution network has really dwindled over the years and Wix is very strong in the independent auto parts and NAPA channels.


WallyWorld, like Costco and other big stores have tremendous buying power. That explains why things are so cheap at those places. As for Wix, if someone does buy them out, please let it be Toyoda Boshoku, I want to see Japanese technology on a American-made filter.
 
Maybe champion never intended to make a profit on ST filters. The more of the same product you produce.....the cheaper you can produce it. ST and the STP filters sold at autozone, are duplicates. The STP's sell for a dollar more, and without a doubt, autozone pays more for them than wally world does. If champion, can just break even on ST's, then maybe they can make a buck profit on the STP filters.

As far as wix, I guarantee their filters cost more to produce, especially since they don't produce the volumes that champion does..........and most wix filter retailers, have a much higher markup...........maybe there isn't as much of a profit margin difference as we think.
dunno.gif
 
Economies of scale. That's all. I bet they make a ton of money on the walmart filters.

Dan
 
"As for Wix, if someone does buy them out, please let it be Toyoda Boshoku, I want to see Japanese technology on a American-made filter."

Purodenso Company announces new company name

Effective Oct. 15, 2001, Purodenso Company is announcing the company’s new name after the recent acquisition of 51 percent ownership by Toyoda Boshoku Corporation, headquartered in Kariya, Japan. The new name is TBDN TENNESSEE COMPANY. The Jackson, Tenn., company will no longer use the previous name of Purodenso Company.

According to TBDN TENNESSEE COMPANY President Martin Suzuki, DENSO transferred 51 percent ownership to Toyoda Boshoku at the end of September, maintaining 49 percent ownership.
 
I'll tell you what I find a bit surprising. If I were in charge at Champion, I'd sell it to them at cost or a very small mark-up. BUT I would also stipulate that they had to carry my other line & reduce the Fram SKUs by half.

Champion is not thinking this through.
 
Store brands can be profitable because of reasons already mentioned, but keep in mind that branded products often have to pay for shelf space through rebates and advertising allowances so a higher retail price doesn't necessarily mean more profit
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No marketing to pay for, one less middleman, and low markup. Wal-mart marks up their automotive stuff very little. I think oil is 2-5%.

-T
 
quote:

Saving a few bucks by going to Wally World will not make my monthly budget any noticeably better and feeds the monster.

Agreed. I have been eyeing the new Advance Auto brand filters. These appear to be a Purolator Premium Plus for about $0.50 more than a wally world ST.
 
quote:

Originally posted by novadude:

quote:

Saving a few bucks by going to Wally World will not make my monthly budget any noticeably better and feeds the monster.

Agreed. I have been eyeing the new Advance Auto brand filters. These appear to be a Purolator Premium Plus for about $0.50 more than a wally world ST.


I was at Advance Auto yesterday and briefly examined their house brand oil filter. Don't recall it's name but it's red with a really neat grip surface over the entire filter, not just on the cap as with the Fram's. I looked at and a Fram and it's not a Fram. It does look closer to the Purolater in construction. But it seemed to be light in weight. They had them mixed in the Frams. Ironically the model numbers appear to be similar to the Fram numbers. I guess they are targeting them as competitors to Fram.

Whimsey
 
You have fixed costs and variable costs. Variable costs go up with volume, materials, labor, etc. Fixed costs are thing like the cost of the machinery, corporate overhead, etc. If you can move more product out the door recovering the variable cost and spreading the fixed cost over more units, your are ahead. So by selling ST's to Wally's cheap, everyone except the competition comes out ahead.
 
Walmart is probably only making 15-20% on these $2 items. That means Champions sale price to Wally is a probably about $1.50-$1.60 without shipping.

That gives them enough net to keep the line running at high numbers and allows them lower costs on the identical filters they sell to others at a greater markup...
 
quote:

Originally posted by Dan4510:
Economies of scale. That's all. I bet they make a ton of money on the walmart filters.

Dan


I don't know about a "ton of money" but I agree they most certainly do profit from the relationship whether directly on the ST sales or as a result of increased production for their other brands. sbcgearhead made a very good point!

Mikep
 
No business that wants to remain in business voluntarily takes a consistent loss. And no division manager who wants to keep his job does either. Maybe, just maybe, there's a heck of a lot more markup on oil filters than you guys are willing to believe. A tin can with paper, a couple of neoprene pieces, a spring or two, and various small steel (or cardboard) stampings, and some paper. Half the food you buy comes in tin cans, and you throw 'em away without even thinking twice. As others have said, Wally*World is a marketing gorilla that can negotiate a bare bones price from Champion Labs due to the volume they buy at. And Champion's darned glad for the orders. As for Champion Labs setting conditions on Wally*World's marketing Fram (or any other brand of oil filter for that matter) in order to continue supplying STs, bull-oney! That's called "restraint of trade", and at least three federal agencies would be all over that like a bad fitting suit before Champion Labs could say "Jack Robinson". As for Purolator supplied "Advance Auto" oil filters, how is this news? For years the Pep Boys chain has offered the same Purolator Premium Plus filters under their "Pro Line" house brand at about fifty cents higher than STs, too.
 
quote:

For years the Pep Boys chain has offered the same Purolator Premium Plus filters under their "Pro Line" house brand at about fifty cents higher than STs, too.

Oh. I don't go to Pep Boys, so I did not know that.
 
jthorner Is this just another post for you to bash Wal-Mart??? A high percentage of your posts end up negatively criticizing this company. This is just one of them that like the others have no merit.
 
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