Creating a Supplement Store

[Bob23]

How much would a supplement store make? Seems like it would be cool.

 

[toddmuelheim]

How much would a supplement store make? Seems like it would be cool.

About 30 million first year, 50+ Million each year thereafter. After expenses of course.

 

[Wolfy3d2000]

About 30 million first year, 50+ Million each year thereafter. After expenses of course.

Seems legit.

 

[Afi140]

Depends where. Two nutrition zones went under where I live in so cal. I think most people purchase online now or places like vitamin shoppe. Although I personally appreciate the smaller stores they don't seem to do too good long term. Online is usually much cheaper.

 

[Colbert]

Supplement barely have a mark up unless you can purchase in HUGE amounts. If you can not then you mostly have to go through the middle guy which they make their money and that is on top of what the original company makes so you have to mark it up even high.

Some companies sell directly to stores and so on but the big/main ones that are popular don't.

You would make a lot more money selling cupcakes and organic products...and I wish I was joking about that.

 

[Philosophy]

Supplement barely have a mark up unless you can purchase in HUGE amounts. If you can not then you mostly have to go through the middle guy which they make their money and that is on top of what the original company makes so you have to mark it up even high.

Some companies sell directly to stores and so on but the big/main ones that are popular don't.

You would make a lot more money selling cupcakes and organic products...and I wish I was joking about that.

The margin will be similar in all such cases. Price is at marginal cost in contestable markets.

 

[Bob23]

Im not gonna open a shop, it would be a fun job tho.

 

[goodvibes]

There's no money in small retail. Giants and the internet will crush you. Overhead is killer

 

[ELROCK]

There's no money in small retail. Giants and the internet will crush you. Overhead is killer

Unfortunately, I agree

 

[Colbert]

The margin will be similar in all such cases. Price is at marginal cost in contestable markets.

A small cupcake shop can charge way more and people will pay for it. Even WSJ reported that more and more people are starting to go mom and pop shops because of how much better and higher quality the foods and service are. Plus the more homier environment. Food and coffee shops are not what they use to be. Before starbucks nobody would pay $7 for a cup of fancy coffee...and now, it's a norm.

 

[aaronuconn]

A small cupcake shop can charge way more and people will pay for it. Even WSJ reported that more and more people are starting to go mom and pop shops because of how much better and higher quality the foods and service are. Plus the more homier environment. Food and coffee shops are not what they use to be. Before starbucks nobody would pay $7 for a cup of fancy coffee...and now, it's a norm.

So when a Walmart moves into town, it's not negatively impacting the local stores?

Have the link to that article? Interested in reading it.

 

[goodvibes]

Open up a shop and see what happens

 

[warbird01]

So when a Walmart moves into town, it's not negatively impacting the local stores?Have the link to that article? Interested in reading it.

Doubt it would. The crowd buying $7 cupcakes is not the same as the crowd shopping at walmart. Check out peopleofwalmart.com if you don't believe me

 

[Philosophy]

A small cupcake shop can charge way more and people will pay for it. Even WSJ reported that more and more people are starting to go mom and pop shops because of how much better and higher quality the foods and service are. Plus the more homier environment. Food and coffee shops are not what they use to be. Before starbucks nobody would pay $7 for a cup of fancy coffee...and now, it's a norm.

Now you are introducing irrational consumers that are influenced by image/reputation and alike; search costs (prime locations) also enter the frame. In such a case Starbucks has market power, it essentially is not competing with the fringe competition as they are competing amongst themselves. Starbucks charges $7, Bill's charges $6.99 to gain the rational and remaining consumers, you open a shop and charge $6.98, and so on. Starbucks' market share at $7 remains or slightly falls.

Remember that fixed costs for more production also enter the frame in regards to marginal cost. Many variables are worth considering, however given the competition and costs associated with a cupcake shop making a profit is not as easy as one would think.

 

[Colbert]

So when a Walmart moves into town, it's not negatively impacting the local stores?

Have the link to that article? Interested in reading it.

again, Walmart is not the same as a cupcake or some mom and pop food shop. Buy pickles and bread with a plunger is different than buying some Italian dish for lunch.

Also a store has to use common sense. If you are in a college town and you want to open a pizza shop and charge premium price then you are stupid. College students are manly and mostly are going to go a dominos or pizza hut because they can get a lot more food for way cheaper. You have to look at where you are located.

Now you are introducing irrational consumers that are influenced by image/reputation and alike; search costs (prime locations) also enter the frame. In such a case Starbucks has market power, it essentially is not competing with the fringe competition as they are competing amongst themselves. Starbucks charges $7, Bill's charges $6.99 to gain the rational and remaining consumers, you open a shop and charge $6.98, and so on. Starbucks' market share at $7 remains or slightly falls.

Remember that fixed costs for more production also enter the frame in regards to marginal cost. Many variables are worth considering, however given the competition and costs associated with a cupcake shop making a profit is not as easy as one would think.

Starbucks didn't start huge though, did they? Nope. They started small and grew into what they are. Don't think of there right now. Think of where and how they started. Small, moved to the right locations, grew, became super popular, and now they can open multiple shops in a small town knowing that people will pay for the premium price.

I'm not saying that it is easy to open a cupcake shop. I'm say it is much more sensible than a supplement store because you can control a lot of your own variables and control the cost a lot more. If you are offering the same exact product that someone else is selling for MUCH less then you are done for. This goes back to the walmart case. A food shop you can offer something that is not offered other places.

Like in Austin, college town, but a lot of important things come and happen here. People know that Austin is very popular because of all the mom and pop shops. They go to them. I paid $7 for a donuts, with tip it was $10. For a simple donuts. But it was a very good donuts that they were famous for and it was a re-feed meal so I was like why not. But in the same scenario, if you can not offer something amazing and unique and you open a food truck in Austin then you are stupid because you'll eventually close.

 

[mase1]

I know for a fact VS gets optimum nutrition 5lb for $26 each, mark up on supps is high it is a luxury ish product.

 

[Philosophy]

Starbucks didn't start huge though, did they? Nope. They started small and grew into what they are. Don't think of there right now. Think of where and how they started. Small, moved to the right locations, grew, became super popular, and now they can open multiple shops in a small town knowing that people will pay for the premium price.

I'm not saying that it is easy to open a cupcake shop. I'm say it is much more sensible than a supplement store because you can control a lot of your own variables and control the cost a lot more. If you are offering the same exact product that someone else is selling for MUCH less then you are done for. This goes back to the walmart case. A food shop you can offer something that is not offered other places.

Like in Austin, college town, but a lot of important things come and happen here. People know that Austin is very popular because of all the mom and pop shops. They go to them. I paid $7 for a donuts, with tip it was $10. For a simple donuts. But it was a very good donuts that they were famous for and it was a re-feed meal so I was like why not. But in the same scenario, if you can not offer something amazing and unique and you open a food truck in Austin then you are stupid because you'll eventually close.

For every success story there are a million failures. And remember that large supplement stores were once very small too.

In economics cupcakes are classified as a homogeneous product, differences such as taste, preferences, loyalty, etc. are all subjective. I know what you are implying; in this case popularity is driving demand and hence there exists some market power for this firm allowing it to raise prices profitably. Each firm however has different marginal costs, so we are not sure what the exact margin of the doughnut firm is.

Both options are very limited because of no barriers to entry/exit, hence unless you are the only shop in town favourable profits will be very difficult to achieve. In a contestable market you do want to offer the lowest you possibly can to achieve monopolistic profits, and that's why a firm with lower marginal cost has a competitive advantage. As you mentioned, Walmart is a good example of a firm with a lower MC and in their case they also can and do offer goods at negative margins.

I agree that it may be more sensible, but remember we are comparing cupcakes (food) to supplements. The former will have a much greater demand and hence make it slightly more viable to open.