[dead]
How much do you think it costs to make a pair of Nike shoes in Asia?
141–150 of 1001 posts
Re: How much do you think it costs to make a pair of Nike shoes in Asia?
#142> But if we bump the cost of freight, insurance, and customs from $5 to, say, $28, then they wholesale the shoes to Footlocker for about $75. And if Footlocker purchases Nike shoes for $75, then they retail them for $150. Everyone needs to fixed percentages to avoid losses. I don't understand this paragraph. If Footlocker was okay with $50 profit/shoe, why do they need to claim $75 profit/shoe in their costs per shoe…
Because it's mostly wrong. Luxury goods like Nike's, iPhones, et.al. are priced to maximize revenue. If those started growing on trees for free it wouldn't appreciably change the price. They'd just bank the extra as profit.
Every product is priced to maximize profit (not revenue).
Apple sells lots of phones at different price points. So there is some price sensitivity via a vis value for money or competitive pressure.
Re: How much do you think it costs to make a pair of Nike shoes in Asia?
#143Earlier quoted context omitted.
Because the market recognized value add is the capital investment and returns, including the credit basis on which inventories flow. These people are operating on a per $ basis, not a per shoe basis. If the margins % lower then the capital will flow to something else more profitable and then prices rise until the margins are relatively flat across similar productive investments.
That doesn’t really make sense to me. The market cares about dollar returned vs dollar invested. If some piece in the middle of the chain goes up and end customer prices go up as well, that doesn’t directly affect investors at all. The way it could and likely will affect investors is if people start buying fewer shoes, but that is a different process than what you are describing. If I’m off base can you help me under…
If you can make $5k/year by investing $100k into shoe-selling, then those profits have to rise at the same rate as base costs, otherwise, people will just invest into eggplant-selling, instead.
Another perspective is that Footlocker would sell you those $25 Nikes for $300 if they could-- but if they tried, someone else would get active in the retail business and invest into a slightly less profitable operation (with lower margins) to eat into their market share.
But if the costs for everyone rise, raising the prices proportionally (instead of by fixed amount) makes total sense because it is not really gonna cost you market share (only decrease total market volume depending on consumer price sensitivity).
Note: We just observed those exact dynamics with Covid/Ukraine driven price increases, where retailers and other middlemen actually came out really good instead of sacrificing their margins to keep consumer costs down.
Re: How much do you think it costs to make a pair of Nike shoes in Asia?
#144> But if we bump the cost of freight, insurance, and customs from $5 to, say, $28, then they wholesale the shoes to Footlocker for about $75. And if Footlocker purchases Nike shoes for $75, then they retail them for $150. Everyone needs to fixed percentages to avoid losses. I don't understand this paragraph. If Footlocker was okay with $50 profit/shoe, why do they need to claim $75 profit/shoe in their costs per shoe…
They'll sell fewer $150 shoes than $100 shoes?
[deleted]
Re: How much do you think it costs to make a pair of Nike shoes in Asia?
#145> But if we bump the cost of freight, insurance, and customs from $5 to, say, $28, then they wholesale the shoes to Footlocker for about $75. And if Footlocker purchases Nike shoes for $75, then they retail them for $150. Everyone needs to fixed percentages to avoid losses. I don't understand this paragraph. If Footlocker was okay with $50 profit/shoe, why do they need to claim $75 profit/shoe in their costs per shoe…
Margin isn't profit. It's gross, before all your business expenses. If it's anything like the second example, they only see a few dollars out of that $50 as corporate profit.
Re: How much do you think it costs to make a pair of Nike shoes in Asia?
#146Article has absolutely nothing to do with the actual cost of shoes. Just the simple cost of model of manufacture -> distributor -> retailer. Nothingburger.
Re: How much do you think it costs to make a pair of Nike shoes in Asia?
#147my guess, less than $5
Re: How much do you think it costs to make a pair of Nike shoes in Asia?
#148Earlier quoted context omitted.
Because it's mostly wrong. Luxury goods like Nike's, iPhones, et.al. are priced to maximize revenue. If those started growing on trees for free it wouldn't appreciably change the price. They'd just bank the extra as profit.
An aside: the actual functional Nikes aren't luxury items, just really good shoes. My wife’s a foot surgeon and she won’t run in anything else because they fit her perfectly. I've never found Nikes that work for me, but Brooks seem custom made for me personally, so that's what I get. They're about the same price as my wife’s Nikes.
I agree fully. Having comfortable shoes with reasonable lifespans isn't a luxury.
If you spend more money and get a proportional increase in quality, that's not luxury. A luxury good occurs when the marginal increase in quality cannot be justified by the increase in price. For example, you could buy a quartz Casio for $25 that's more accurate than a $10,000 mechanical Rolex. Both tell you the same time.
Re: How much do you think it costs to make a pair of Nike shoes in Asia?
#149Earlier quoted context omitted.
Imagine if China decided to invade Taiwan like they've been threatening to do for a while. They would instantly cut off all exports to the US, because that's the smart thing to do. They would probably blockade Japan and other countries as well to keep them from exporting to the US, because that's the smart thing to do. Now since our supply chains were greatly disrupted (remember COVID?) we can only go to war with the…
Well needless to say all this has been realized about 2000 years ago and there are legions of smart people ensuring that it isn't a problem. Heck I used to ride the light rail in Sunnyvale past an old fab that had notices on the doors saying it was owned by the US Navy.
I thought those smart people were the ones saying our military supply chain is dependent on China.
Re: How much do you think it costs to make a pair of Nike shoes in Asia?
#150Earlier quoted context omitted.
i don't understand the obsession with jobs anyway people don't want a job, they want money and purpose most jobs barely deliver either
> i don't understand the obsession with jobs anyway > people don't want a job, they want money and purpose And society will not give them any of that without a job. There, now you should understand "the obsession with jobs." > most jobs barely deliver either And no job delivers even less .
then we should change society
that is my point