Why Everyone Wins with Direct to Consumer
In our last post we announced that you can now only get Aspinwall products in our store. That includes our physical location in downtown Billings, or our virtual location on this website. There were a variety of factors that played into it; the most important one was you.
Yes, you. Our faithful customers were the reason that helped solidify the decision that our Montana branded products will only be available from us. The verdict: you don’t have to pay as much for them. To fill you in, here’s how the traditional retail process works.
How a Product is Marked Up in Retail
Most retailers will try to make 50% profit when they sell an item (a little wiggle room for bulk orders).
Suppose you’re a widget maker, so you open up shop. Your widgets cost $1 to make, so you start selling them for $2. Life is good, and soon Big Box Store wants to buy a bunch of them. You sell them for $1.75 giving the retailer a discount, and you still earn about 40%.
The retailer, however, has their mark up, and they want to make 50% profit as well. When the product hits shelves, it’s now selling for $3.50. Of course you can’t compete and undercut the retailer and still sell them for $2, so you either have to charge the same price, or create an alternate “not found in stores!” version.
But if your widget doesn’t sell in the Big Box Store, you don’t get any repeat orders. So now you have to negotiate with Big Box Store to have your product prominently displayed. That means you have to pay to have your product in an area of the shelf (think End Cap and Eye Level). This added fee increases your overhead, so now you’re looking to cut costs.
The easiest way to cut costs is to reduce the quality (or in the case of food: size). Now instead of Grade A widgets, you are selling Grade B widgets for the same price.
In the end, you, as the widget producer, make less money. Your customer pays more for a product that isn’t quite as good as it used to be. And the Big Box Store is happy because they’re making money off you (this isn’t saying retailers are evil, but they’re the ones that win the most in this situation).
How a Product is Marked Up in Direct to Consumer
Most retailers will try to make 50% profit when they sell an item (actual mark ups vary depending on product).
As a widget maker, you do some market research and see that high quality widgets are selling for $3.50. You realize that the widget likely only costs $1 to make, so you produce them and sell them right to the consumer. No middle man that takes an extra cut.
As a direct to consumer retailer, you are able to sell the same quality, or higher quality, widget for almost half the price.
In the end, you make more money, your customer pays less for a high quality product, everyone’s stress levels go down, and life becomes much more enjoyable.
Aspinwall Has Polartec Fleeces
This direct-to-consumer transition means that we can branch out into more products. Our first digression from our incredibly awesome Montana shirts and hats (which will always be around) are the new Polartec Power Stretch fleeces.
Available in crew neck or quarter zip, these fleeces are comfortable, designed with the highest quality fabrics, look pretty sharp, and cost close to half of what other brands are selling their similar versions for.
What’s the one conclusion we can draw? We want you to have the highest quality product, for the lowest prices possible.
That’s the future of Aspinwall Mountain Wear.