|Whats a typical markup for goods sold on Internet|
Typical markup for physical goods sold and shipped from ecomm sales
In Brick and Mortar sales, the general rule of thumb is a 100% markup on goods (ie. if you buy for $50, you sell for $100). I know their are general exceptions for clothes which generally have a higher markup and electronics which have a lower markup.
I have been experimenting on the web over the past few years and have slowly raised my markup from 50% up to about 80%. From my experince, resistance starts appearing at 70% markup, and have adjusted my prices back to the 70% level.
What are your experinces with markup?, and what have you found as the best markup level?
I can only speak as a consumer, but we expect prices online to be noticeably cheaper (ie. not a 5% savings) than in a storefront.
For one thing, we usually have to pay shipping. I would say almost every consumer automatically ads the price of shipping to the total when evaluating the cost of an item.
Also the amount of time it takes to receive an item is going to be kind of inconvenient and will have a price associated with it. I'll easily pay 10% more on many items to be able to have it that same day from a storefront (of course it depends on the item).
Consumers are also very aware that prices online are lower because there is less overhead, and they expect that. I would say, other than shipping, the missing part of that 30% is going to be the general expectation of online consumers, but don't count out the delay in time as a factor that cuts into your markup.
for a while I was looking into retail prices for watches: (average prices)
- wholesale: $10
- 'watchman' in Laughlin, NV: $20
- internet storefront (watchsite): $15 to $40... depends on site and audience.
- walmart etc. $35
- mall: $50
Another thing I thought of. Most people who buy stuff on the net are far more informed as consumers than the general public. Most people just waltz on over to walmart, buy a shirt, and go home. Online consumers are very savvy and probably do alot more comparison shopping and research - I mean, they're on the internet already and on top of that, there is no urgency to have the item *now* since they're buying it online. You lose alot of the "impulse buy" effect.
I've never bought anything on the internet without doing tons of research and comparisons for it, reviews, the whole bit of it. I'll even go as far as looking up details or complaints about the online store itself, if I'm unfamiliar with it. (had my credit card number hijacked in the past).
When I think about it like this, I have to say that online consumers are just not your typical consumers. Sorry I don't have much feedback about what is a good markup level. Maybe your 70% is the state of nature on the net?
Online consumers are very savvy and probably do alot more comparison shopping and research - Wouldnt bet on that.
Ive had two customers where they were so hopelessly lost Ive had to phone them and talk them through the process.
I definitely get customers that spend more on shipping than on the product, so I definitly have impulse buyers
In general I believe the customer types are:
Those that impulse buy
Those that are comparision shopping for best price
Those that are primary concerned with wide choices of selection.
I wonder if ecomm weights more to one type of customer than the other, as compared to brick and mortar, or if it all depends on the type of ecomm business.