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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 | 1 comments | 09 Apr 25 12:58 UTC | HN request time: 0.237s | 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. alangibson ◴[09 Apr 25 16:40 UTC] No.43634140[source]▶
Short answer is return on investment. If I get $50 on a $75 investment when I used to get it on a $50 investment, my ROI goes down. My investors are now mad. They sell their stakes and buy into a company with a better ROI. My stock price goes down and now I'm mad.