Fashion companies are often accused of inflating their prices – perhaps none moreso than sneaker brands. After all, how much can it possibly cost to slap together some rubber and fabric in Vietnam?
Solereview recently took a closer look at what it actually costs to manufacture sneakers. And while some are certainly overcharging (the biggest price of these Berlutis might be the shame in wearing something so ugly), companies such as Nike and Adidas are working on surprisingly thin margins.
On a pair of $100 running shoes, Solereview estimates Nike is profiting ~$5 per sale. $22 goes to producing the sneakers, then another $23 for shipping, marketing, and miscellaneous overhead. That leaves about a 10% profit on a $50 wholesale price for Nike.
And the retailer? Ostensibly, there’s a $50 profit margin, but once you account for business expenses and discounts, they only do a little better at $6 per sale (largely because they’re giving up 25% off-the-bat for markdowns). On the Adidas side, margins are even thinner.
Lesson: it’s hard to make money selling $100-200 sneakers made abroad.
You can read the full article here.
(via Valet)