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

I've always wondered why the supply chain has exponential price increase at each step. The example given (guessed at) is the factory produces the shoe for $12.5 and sells it to Nike for $25. Nike then sells it to Footlocker for $50 and they then sell to a customer for $100. Everyone expects to mark up their costs by about 100 percent. Why is that the case? Even if we say the markup isn't 100 percent, why is it a percentage of cost at all? If the shoe factory can make $12 then why can't Nike and Footlocker both make $12 and retail the shoe for $50?

I'm not saying things should be different, just wondering why it is the way it is. If Footlocker was also selling some cheapo shoe for $50 presumably they do the same amount of work to bring that to the store. Are they only paying $25 for those? Why does it cost half for them to handle a cheaper shoe?

On thing you have to consider is the scale at which these shoes are sold at each step. From the factory they're processed and shipped in giant containers. The overhead of handling each shoe is fairly small at that stage.

When it comes to the retailer, there's a huge increase in the amount of work and overhead for each shoe sold. And the labor cost for that work is much higher than on the Asian side of the supply chain. That's also where you get potential waste from returns and discarded inventory and such. The retailer also have their own marketing costs.

I don't find it strange at all that the retailer expects a 100% markup.

Real estate is insanely expensive - you have to sell a lot of shoes with your "100% markup" to make rent.

The flip side however - e-commerce with its totally different cost structure and same traditional RRP as brick and mortar retail - should be - a gift from above for retailers.