Velvet Rain
PARKED
- Joined
- Oct 13, 2012
- Messages
- 4
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Hi guys, I have a question in my head which I can't seems to find the answer.
I know electronic stores are making a killing and I'm wondering how. Those mid size electronic stores in the shopping malls that are selling brand new electronic products (ie: cell phones, cameras, laptops, etc...), I could be wrong but profit margin is low isn't it? If so, how do they managed to open up so many branches?
1) How do they make a profit when the margin is so thin? (unless manufacturers sell them at low cost and they resell it at a much higher price to consumers)
2) If demand for the particular product drops ie: (BEFORE: cost $500 selling $550) (NOW: cost $400 selling $450) , that means if the store have old inventory purchased at $500, they can only sell it at $450 now which is $50 loss? Depreciation expenses? Unless they can refund it back to the manufacturer?
3) If product becomes obsolete, how do they write it off? Depreciation expenses?
Thanks.
I know electronic stores are making a killing and I'm wondering how. Those mid size electronic stores in the shopping malls that are selling brand new electronic products (ie: cell phones, cameras, laptops, etc...), I could be wrong but profit margin is low isn't it? If so, how do they managed to open up so many branches?
1) How do they make a profit when the margin is so thin? (unless manufacturers sell them at low cost and they resell it at a much higher price to consumers)
2) If demand for the particular product drops ie: (BEFORE: cost $500 selling $550) (NOW: cost $400 selling $450) , that means if the store have old inventory purchased at $500, they can only sell it at $450 now which is $50 loss? Depreciation expenses? Unless they can refund it back to the manufacturer?
3) If product becomes obsolete, how do they write it off? Depreciation expenses?
Thanks.
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