All very good points but the distributor is yielding NET EFFECTIVE under 10%
most of the time and relies on the volume to keep the doors open. You forgot
marketing expense in the distribution level this is more then labor costs
and the returns are a crap shoot at best. This is why my truck is a 1989 and
my wife's NEW car is a 1985 Volvo. Look at any small distributor in the R/C
business you will not see them in a new MBZ except at places like Horizon
and G.P.. I had to sell my house yup I lost it all (almost filed the big
B.K. two years ago) doing this but I know in the long run it will pay off it
better or my wife will O.J. me. QUIZ TIME! Question how do you make a
small fortune in the R/C industry?" Answer Start with a large one!"
Some ad costs,
R/C Car action = $2,850 a month for a full color ad IF YOU DO LESS YOUR NOT
EVEN NOTICED!
RCM over a grand a month
AMA over a grand a month
And you know people still do not see your ads! In fact we get this all the
time, "Well if Multiplex is so good why don't we see your ads." Or better
yet, "Why do you use the internet to promote your products we would buy you
products if you advertised in the magazines!" Lets see get reaction from
the end consumers with internet and get to know your clients or place an ad
in a magazine and HOPE people see it and act!
This is why we LOVE S&E they give great rates to us and thus we advertise
with them.
Then there is all the hand out every club asks. We get no less then 100
requests for free stuff a week now. IF YOU SEND CERTIFICATES YOUR LOOKED
DOWN UPON but in fact this is all we can afford most of the time!
There is one club that I used to get a request a week from (I could not
afford to send 90% of what they wanted) not for little stuff mind you they
wanted planes and servos! When I looked at how much product we sell to that
part of the country come to find out that they buy the least of any club
despite the fact they are one of the largest groups in soaring.
Whoops you forgot the physical plant costs for a distributor. Do to the
volume you need to achieve you have to have MEGA space and that costs.
Remember the boxes planes come in are not that small! Heck our SHIPPING
(not display boxes) BOX BILL is over 2K a month.
Shipping product in, materials handling, returns, service all erodes the 15%
gross margin most small distributors get from the guy making the product.
Smooth Sailing,
Karlton Spindle
Http://www.MultiplexRC.com
RCSE-List facilities provided by Model Airplane News. Send "subscribe" and
"unsubscribe" requests to [EMAIL PROTECTED]
