Articles like these make me appreciate my business degree, because this list is the basics of any business. 30% COGS, high shipping costs, outsourced manufacturing, big box focusing on low end market, etc is all very normal for almost any industry.
Exactly. I too majored in business and I read through to the end waiting to see where the "secrets" were. This is super, super basic stuff that has more to do with really simple microeconomics driving firms' investment decisions. Most frivolous consumer-oriented sectors of the economy are all the same.
I don't mean to be rude, but you don't need a business degree to understand the very basic things that you mentioned. I am fairly sure that most people using Hacker News understand those simple concepts in business.
I don't know; I've seen so many people (including my younger self) who have completely wrong intuitions about business. This often manifests as FUD and hating that can be hard to dispel.
I don’t have a business degree and yeah, I think I comprehend what was written, but before reading it I wouldn’t have guessed at much of it, a lot of my intuition or assumptions would have been wrong.
More generally, sure, you never “need” an X degree to understand X, but most people won’t have spent the time learning X on their own unless they have an X degree.
I think OP is saying that they're gaining a new appreciation for the fundamentals they learned which aren't necessarily common knowledge. Not that those fundamentals are so sophisticated that you need a degree to grasp them.
If you are in IT, and you're not a fantastic engineer. Level up your business skills.
ERP administrators are an untapped source of business knowledge, because they map all the crap business is up to and are forced to learn about all the weird metrics, acronyms, reports, and so forth a business uses to survive.
Just look at the prices on AliExpress. They are a fraction of the prices at retail stores, and it includes the sellers margins. And AliExpress products are not always counterfeits and can be acceptable in quality.
A COGS of 30% is, as they say, on the upper end. For brands that have to offer a certain amount of quality in order to sell instead of going purely for ads and brand recognition.
50% is the retail store margin. I thought it was 40%, but that's probably a global rate, with electronics being higher.
I thought the retail margin was related to (essentially) how much floor space your product takes and how often it is stolen. High-end electronics should be less than 50%. I certainly doubt that a flagship smartphone has 50% retail margin, for example.
And how often it is returned to the store because buyer didn't like it. Some things can be resold, but most of the time the seller eats up the costs. It is always amusing for me to see people being outraged by the costs and seeing nothing wrong with returning something to the store just because they can.
I was surprised to see that retail stores get 50%. I was looking at fake leather bags the other day and they really look very high quality and sells for 10USD. I can't imagine making that bag for 5USD and making a profit off of it.
I bought my current digital camera when one big-box electronics retailer had a special "we're paying your VAT" offer going on – over here, VAT is 19 %, and when the shop assistant entered the rebate, the POS system popped up a warning that the sale price was less than the shop's cost price.
I don't remember the exact price, but it does indeed mean that the margin must have been less than 16 %.
When I worked a big box retailer in the 90s, usually the stuff that had fancy displays had a more generous margin. There’s also below the line margin from paid shelf placement and other things.
You can do better if you're selling the stuff yourself, but that follows a bathtub curve with totally bespoke on one end and Apple on the other. It seems it becomes a struggle to keep up sales unless you're on Amazon and stacked on big box retailer shelves.
Lord no. I was surprised that it was as high as 30%. I was always taught to aim for no more than 20% and that was for industrial products that sold in relatively low volumes.
So when I buy an Oled tv, does the store procure it for half the price from the distributor? Sounds like a huge margin. How about from an ecommerce store, which a lot of times have slightly less but close prices to regular stores, can the distributor force them to keep prices up not to upset the other resellers?
So when I buy an OLED TV, does the store procure it for half the price from the distributor?
Generally yes.
can the distributor force them to keep prices up not to upset the other resellers?
Retailers upsetting other retailers is called channel conflict and is often solved with minimum advertised price policies. High-end companies like Apple and Sony often have this policy which is why you see the same price everywhere.
Also, the margin in Apple products for retailers is quite, quite low. I'd say 10% or less. That's why lots of "Apple authorized resellers" have either closed or expanded their business to accessories and services in the last 10 years.
After a decade working post graduation and nowadays being comfortable negotiating and managing millions-dollar projects, I still find the book covering all the fundamentals you need to know about modern business.
I'm not joking when I say this, I have no idea how business works. I get it in theory, hell I even sold one. But I still don't know. One of my space-cadet day dreams is trying to figure out just what someone could possibly learn in business school and I can't come up with anything.
Accounting (for example the poster in the link states marketing does not make up COGS, which to someone who studied accounting is obvious). Simple economics (poster reveals "secret" that Price*Quantity can equal higher total revenue when price/quantity change disproportionately). Consumer behaviour (Dr. Dre can lead people to believe crap from pile A is better than crap from pile B). This is apparent insider-knowledge from someone who spent several years in industry - or you can go to school for the first 1.5 years of a business undergrad program and learn it that way across many more industries. In the final years of business school once you've chosen a specialization, you may learn advanced corporate finance (stocks, bonds, weighted cost of capital, different types of break-even measurement like economic break-even vs accounting break-even). Or you may specialize in accounting, operations, marketing, yada yada. Then an MBA is apparently much of what is taught in a good business undergrad but perhaps faster-paced and you get a shit ton of networking value.
Apparently I've absorbed this knowledge via osmosis working in management at Tech Companies. All of what you said just seems mostly common sense to me. Even stocks, bonds, cost of capital and other "advanced" topics don't really seem very advanced.
For sure, I shouldn’t have called them advanced, they’re by definition broad enough to be industry agnostic and are typically taught in lower years. But if it were common sense it wouldn’t take a degree or years of experience to acquire that knowledge.
I doubt it's uncommon for people with long careers in management to gain the equivalent experience of a degree in a field so diverse and therefore generalized as "business."
22 year olds know this stuff when they leave school, right?
