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How much do you think it costs to make a pair of Nike shoes in Asia?

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689 points taubek | 2 comments | 09 Apr 25 12:58 UTC | HN request time: 0.397s | source
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hx8 ◴[09 Apr 25 16:16 UTC] No.43633780[source]▶
> 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 go up? The costs of handling the shoes, retail space, advertising, and labor are all fixed.

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1. Vvector ◴[09 Apr 25 16:36 UTC] No.43634076[source]▶
But the cost of buying and holding inventory goes up. If a store has 10k shoes in inventory @ $50/each, they are carrying $500,000 in inventory. If the shoes now cost $75, they need $250k more for inventory. Capital for inventory isn't free.
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2. anthony_d ◴[09 Apr 25 18:04 UTC] No.43635252[source]▶
The need for inventory decreases at the same rate as the sales throughout, e.g. if it takes twice as long to sell a pair of shoes than you only need to hold half as many.