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Re: Kite Prices Inflated and Fixed (End of Story...)

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  • swengelska
    Interesting viewpoint that fits well with other retail industries. Other things to think about: 1. a lot of kiters are moving from windsurfing and thereby
    Message 1 of 2 , Nov 6, 2003
      Interesting viewpoint that fits well with other retail industries.

      Other things to think about:
      1. a lot of kiters are moving from windsurfing and thereby
      cannibalising the windsurfing sales.....
      2. Kitesurfing has a very steep learning curve. Both in terms of
      equipment complexity, safety and image. It may not grow to be huge
      sport...

      Tom

      --- In kitesurf@yahoogroups.com, wickedkiter <no_reply@y...> wrote:
      > I like the discussion of kiting prices and your estimates and
      > miscalculations of kite costs. Until last year, I worked in
      Florida
      > for a large kite retailer (don't ask for the name, I'm not
      saying).
      > I loved placing orders, etc. During every discussion, we (as
      > retailers) were told by wholesalers to keep our markup as close as
      > possible to MSRP, but to NEVER go below a 25-30% markup above our
      > cost. If we did go below 25%, we would lose our account.
      > Interesting talk in a free trade economy, don't you think?
      >
      > Why was this? Simply put--It's price fixing. This made me
      wonder,
      > how much wholesalers actually make. The following example may
      shed
      > some light on this. At the end of last year's season, Cabrinha
      (or
      > their main distributor--also out of Florida) sent out a flyer for
      > closeouts on blacktips and directional starter combo sets. The
      price
      > you ask? Our wholesale cost was $399.00 for both the board and
      the
      > kite/bar/bag/pump--Any size. This was rather a shock considering
      we
      > had been purchasing kites sets at the full wholesale cost for the
      > entire season for $575-$725 depending on size.
      >
      > The store I worked for sold a lot of kites, including stunt kites,
      > and the typical retail markup on stuntkites is 50% to 100% (Also,
      > there's no threats of account deletion for retail sales). In
      > contrast, the typical retail markup on a kiteboarding kite is
      25%.
      > Thus, if you paid $575 for a kite and managed to get 25% you're
      > making a whopping $143.75. Not very lucrative... I mean think
      about
      > it. If we sold 10 kites in a month, we've made $1400.00. The
      > monthly rent on our store was $1,100.
      >
      > I believe the premise behind this strategy is to establish a price
      > standard; however, what the industry doesn't understand is it's
      > shooting itself in the foot. Wouldn't more people come to kiting
      if
      > costs were low? Thus, improving volume, increasing distribution
      and
      > profit.
      >
      > But who is getting rich here? Surprise, many of the same
      companies
      > which made a killing on windsurfing. Thus, since there pricing is
      > established, it's established--It is not going to change in 2006.
      > Because you as the consumer view your 2002 kite as being some
      mutant
      > worthless piece of junk, thus you MUST HAVE your 2004 or the guys
      at
      > the beach will laugh at you.
      >
      > Solution: Fly it till it dies. Don't get a new kite. Or, instead
      > get sponsored by one of the Top Industries. What is Lou's
      Wainman's
      > salary anyway? I heard $40,000. In contrast, what is Robby
      Naish's
      > salary?
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