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Comments (14)
Luis Carmona
IPVMU Certified | 02/04/15 08:59pm
And are they officially sanctioned distributors for these big name brands they sell?
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Matt Bode
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Chris Dearing
Not expecting you to necessarily know John, but wondering out loud
Do they own inventory, or is everything pass-thru?
Sample product:
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Undisclosed Distributor #1
The reason the owner wants to bail is probably because it has become increasingly difficult, if not impossilble, for small online resellers of security products to compete with the major online resellers who have enormous purchasing power and have the scale and efficiency to operate on narrow margins. There are certainly not 25-30% gross margins available to this type of operation. I take onboard that this company may provide specialized knowledge that is not available from the large online resellers but the market is very limited for those who are prepared to pay a big premium for this.
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Undisclosed Distributor #1
I reckon 10-15% margins are more realistic if they are buing well. But with no employees, operating costs are next to nothing net of owners compensation. With sales averaging less than $1000 a day there is not much time/work involved so this can be a nice side gig for someone to make a little extra cash...but impossible to grow. It is the small online resellers that have 3+ employees that have the real problem.
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Curtis Nikel
In any business there is margin where there is mystery.
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Josh Penfold
For security parts, getting anything over 10% right now would be tough. I own a Ecommerce company, and we transitioned away from alot of these items as its a commodity now. We stick with a few brands that fit our projects that we build, thats about it
I know small stores that mark the products 2-3% above cost since they have little overhead. Online sales is tricky to run, and unless you really know the products, and are experts at Google PPC and SEO then its almost impossible to make any decent amount of sales. In order to be sustainable you have to be in the $1 million to 1.5 million range for 1-3 FTE. For additional employees you have to hit $750k in sales per FTE to expand.
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