@geetee1972
You reckon it’s a low as 9%
Who is making all the money then?
Too many links in the chain?
No I reckon it could be as high as 9%. They’d be doing well to make that given the nature of their business.
9% is a world average for all business of all types. It’s a reasonable yardstick to use. Some businesses make a lot less, like Tesco or Sainsburys which will make about 1% maybe 2% (although on a very large number and their stock turn is so fast they can generate cash four times over before they have to pay their creditors). Others will make a lot more, like consulting and B2B services which might make upwards of 20%.
If a bicycle component manufacturer was making the average, 9%, I think they could be very pleased with that. We may never know as they are private held although They have been rumoured to be floating soon so we should then start to get published accounts and then we can find out for sure.
In answer to your question its a combination of the value chain and the discounted price you sometimes pay not necessarily being one that yields a profit for the seller. £300 is what I would expect the distributor to be buying a fork at that retails for £800-900 so if you’ve bought one for £340, there’s barely any profit in it for anyone.