Whats the Margin on Golf Balls & Clubs

[Hawkers2008]

I was just wondering

* what the theoretical margin is on balls and clubs for normal shops is. I imagine that its something like 30 to 40 percent but have no idea.
* whether shops like Drummonds work on lower margins (or if they usually just get a lower cost but similar gross margin % like Coles & Woolies do)

Maybe someone can enlighten us.

[Captain Nemo]

Prob alot more than that!

[rubin]

average on the majority of sporting equipment is 100%. This is general retail price though. eg if it cost the company 50, they would sell it for 100.

Thats the average though it varies from brand to brand and item to item.

I've been told the average for golf gear is between 80 - 100 %. but same deal, varies from brand to brand and item to item.

[TheTrueReview]

I'll give the unhelpful response of "a shyteload". I know of one company that makes more out of wholesaling product (which it concentrates on for that reason) than its large retailing arm.

[sms316]

I was just wondering

* what the theoretical margin is on balls and clubs for normal shops is. I imagine that its something like 30 to 40 percent but have no idea.
* whether shops like Drummonds work on lower margins (or if they usually just get a lower cost but similar gross margin % like Coles & Woolies do)

Maybe someone can enlighten us.

Margins are smaller than you think.

[Hawkers2008]

By Margin I mean (Sell Price - Cost Price)/Sell Price

My family used to be involved in a newsagency, margins on Papers/Mags are 25% so off a $1 (gst ex) paper the owner makes 25 cents. Margins on greeting cards are a much nicer 45.9%.

[Hawkers2008]

Is it more like 25% then Shaun

[3oneday]

What SMS said.

My brother once ran a pro shop, they made more money on drinks and confectionery than golf gear.

100% would be extreme, maybe closer to 15 to 20% tops.

[rubin]

Are you looking at per item, or overall?

[sms316]

Is it more like 25% then Shaun

I'll give you a couple of examples.

Cost of ProV1 in Australia to retail outlets is somewhere close to $60 + GST. You can generally buy a dozen for about $75-$79. If you are silly enough to buy them by the sleeve or singular the margin is obviously higher. So in this case it is a bit out of whack to talk margins as such.

If you are paying $150 an iron for a set, you could assume within reason that the cost per iron would be about $110 + GST.

[3oneday]

Profit margins on drinks etc much higher and you sell more of them, whereas you could have a $1000 set of irons sit there for months, to make $100 or $150. Also, you have maybe a 90 day account with the golf companies, so you gotta pay them at some stage.

Pretty stressful life given the guys (like me) who buy all their gear overseas.

[sms316]

Profit margins on drinks etc much higher and you sell more of them, whereas you could have a $1000 set of irons sit there for months, to make $100 or $150. Also, you have maybe a 90 day account with the golf companies, so you gotta pay them at some stage.

Pretty stressful life given the guys (like me) who buy all their gear overseas.
Pretty much on the money. A good gig for running a pro shop is a driving range (unless theft is a major issue).

[just]

The distributors must be making a shite load then.

[sms316]

The distributors must be making a shite load then.

Wouldn't have the faintest idea how much their costs would be. I wouldn't imagine setting up an Australian distributor and the cost of importing would be cheap.

Kind of like when you hear about the cost price of something to Woolworths/Coles. I'd hate to think what their rent is per month to Westfield etc.

[Chris32]

I'd assume everyone taking there bite from the cherry along the way means that once its on the pro-shop floor the cost price would only be between 15 and 20% at best for most gear

[just]

Wouldn't have the faintest idea how much their costs would be. I wouldn't imagine setting up an Australian distributor and the cost of importing would be cheap.

Kind of like when you hear about the cost price of something to Woolorths/Coles. I'd hate to think what their rent is per month to Westfield etc.

Then someone is ripping the Australian consumer off, because a quick scan tells me the Australian cost for golf equipment is roughly double the US, which is not justifiable in anyones language, which is why so many buy their own from the US.

[3oneday]

I would imagine that as a distributor you would have to commit to buy XX number of dollars worth of product. I think I looked at the Iomic distributorship once but I had to buy 100,000 grips.

So imagine committing to buy $1,000,000 worth of TaylorMade a year. You buy the product at a fair price, add GST, add shipping, add wages, add storage costs. Suddenly it's cheaper for even Golf Mart to buy off 3balls :lol:

[Russ]

So imagine committing to buy $1,000,000 worth of TaylorMade a year. You buy the product at a fair price, add GST, add shipping, add wages, add storage costs. Suddenly it's cheaper for even Golf Mart to buy off 3balls :lol:

You also have to consider the fact there's every possibility the distributor had to borrow at least a portion of that money (and very likely over 50% of it) to take on the contract - that means the loan repayments & interest are factored in. Shit adds up fast.

Then you realise the stuff doesn't fly out the door, as the market is fierce, and before you know it you've still got 60% of your stock out there that's about to be superseded. You tell the shops to discount it to try and move it at the same time every other company is doing the same - and then take on a boatload of new stock - cycle repeat.

[braddles]

I'll give you a couple of examples.

Cost of ProV1 in Australia to retail outlets is somewhere close to $60 + GST. You can generally buy a dozen for about $75-$79. If you are silly enough to buy them by the sleeve or singular the margin is obviously higher. So in this case it is a bit out of whack to talk margins as such.

If you are paying $150 an iron for a set, you could assume within reason that the cost per iron would be about $110 + GST.

I was talking to a pro on the weekend and the cost of ProV1s has fallen to around $42 plus GST. I thought I saw them for $61 per dozen at a golf shop (House of Golf), but I could be wrong about that. I buy them from the US for US$47 per dozen delivered - I would hate to be a pro in the internet age!

[Baudwalker]

Then someone is ripping the Australian consumer off, because a quick scan tells me the Australian cost for golf equipment is roughly double the US, which is not justifiable in anyones language, which is why so many buy their own from the US.

YES THEY ARE AND THEY ARE CALLED MANUFACTURERS!

Without exception I am aware of the makers have different WHOLESALE PRICES for the US and the REST of the WORLD.

This is why you can buy from almost any US retailer that will ship overseas and still be cheaper than anything sourced through the official channel in Australia

Given the closeness of the value of each currency one would expect much less variance in prices .. HOWEVER .. the the locals have to pay so much more they have buckleys chance of competing on PRICE alone.

The overseas places have no local taxes when they ship out of state/country (well almost all do) and the locals also pay 10% GST which is missing on stuff under $1K brought in

SO..the locals have a heap of issues just to try and be competitive..

[Minor_Threat]

Profit margins on drinks etc much higher and you sell more of them, whereas you could have a $1000 set of irons sit there for months, to make $100 or $150. Also, you have maybe a 90 day account with the golf companies, so you gotta pay them at some stage.

Pretty stressful life given the guys (like me) who buy all their gear overseas.3OD is on the money here..

[Bruce Dickinson]

It also varies across categories (balls, gloves, irons, putters etc) and brands. Some of the hardware margins are not much better than 20% for certain brands at the moment.

[just]

Thanks for the info, makes a little more sense now. How does it work for manufacturers who have no middle man and have local subsidiaries ie. Taylormade. They are not presumably paying more for wholesale cost are they?

[Hawkers2008]

Thanks for the info, makes a little more sense now. How does it work for manufacturers who have no middle man and have local subsidiaries ie. Taylormade. They are not presumably paying more for wholesale cost are they?

Probably not but you can be sure that the owner still wants to recover the extra costs of the local distribution operation and if the finance people have any say they probably want a buck on the investment in the local operation as well.

[sms316]

I was talking to a pro on the weekend and the cost of ProV1s has fallen to around $42 plus GST. I thought I saw them for $61 per dozen at a golf shop (House of Golf), but I could be wrong about that. I buy them from the US for US$47 per dozen delivered - I would hate to be a pro in the internet age!

That may well be true. HoG and Golf World aren't the best examples though. Allegedly a bit of parallel importing going on there.

[Daves]

Wouldn't have the faintest idea how much their costs would be. I wouldn't imagine setting up an Australian distributor and the cost of importing would be cheap.

Kind of like when you hear about the cost price of something to Woolworths/Coles. I'd hate to think what their rent is per month to Westfield etc.

Not nearly as much as you think it is. The majors anchor shopping centres. No majors and your shopping centre ain't worth much. They pay substantially less per m2 than another tenants.

[Veefore]

Not nearly as much as you think it is. The majors anchor shopping centres. No majors and your shopping centre ain't worth much. They pay substantially less per m2 than another tenants.

The last I heard they weren't paying anything. But that was a few years ago.I've been out of retail for a while now.

As for ProV1's there was an article a couple of years ago that quoted their manufacturing cost as roughly $1.80 per dozen.

[MegaWatty]

What's the cost of R and D? Packaging? Warehousing? Shipping? Marketing?

[Daves]

The last I heard they weren't paying anything. But that was a few years ago.I've been out of retail for a while now.

As for ProV1's there was an article a couple of years ago that quoted their manufacturing cost as roughly $1.80 per dozen.

Could be right in some centres, at least for a few years anyway as an incentive. I am out of touch now but say 5 years ago the typical majors rental was probably $200 to $300 per m2 with no outgoings. They do typically take long term leases though , 15/20 years with lots of options.

I have seen ProV1s for as little as $55 a doz in Pro shops in recent months. Clearance for new model coming, strong dollar etc would all be driving the price down.

Haven't seen too many rich golf retailers, so would think it is a pretty tough gig as others have suggested.

Like a number of consumer goods, you can often still buy golf gear for retail prices in the US, that are less than what the retailers can buy them here wholesale from their distributors. Same story for fishing gear, boats, motors etc, electronics etc .

There are reasons why the US market should be a bit cheaper overall , but there has always been a big black hole to me in the Distributor space. The fact that many global brands do their own distribution tells the story I reckon. If it wasn't lucrative, they would sell the distribution off to others.

[Veefore]

What's the cost of R and D? Packaging? Warehousing? Shipping? Marketing?

That was hard cost and included packaging. The other things you mention add up to waymore than that (per dozen).

[LarryLong]

What's the cost of R and D? Packaging? Warehousing? Shipping? Marketing?
My estimates would be bugger all, bugger all, bugger all, bugger all and shitloads. :)

[daMANiack]

Hi,

Exactly. if I can import GENUINE & AUTHENTIC golf equipment from USA in small quantities each shipment, pay shipping from USA, add my margin and still undercut OZ retailers by 30-40%, someone is making a $HIT LOAD of money from the OZ consumer.

When I talk of undercutting by 30-40%, I refer to the price equipment is being listed at, not the RRP.

Cheerz :) :D ;)


Then someone is ripping the Australian consumer off, because a quick scan tells me the Australian cost for golf equipment is roughly double the US, which is not justifiable in anyones language, which is why so many buy their own from the US.

[markTHEblake]

someone is making a $HIT LOAD of money from the OZ consumer.

You mean like employees salaries? :-)

My business imports products (not golf) and sells at a 50% margin (average). If we didnt, we wouldnt have a job and the shareholders wouldnt make a modest return. Also the change in exchange rate is killing us, just bear with me for a sec as it affects all retailers that import. lets say we import AUD1,000,000 of product a year and sell at a margin of 50%, gross trading profit of $500,000. Now we are selling the same volumes but cost of imports is down to $700,000, now our gross trading profit is only $350000. Yet our operating expenses paid out in AUD, like salaries, rent and so on, have not reduced by the same % so now we might even be losing money.

Therefore we either have to increase sales volumes considerably, or increase our margins. We cannot do the first, and do not want to do the latter. That is probably one big reason why you see retailers not dropping their prices to an equivalent of the exchange rate, if they have bricks and mortar presence here, like Harvey Norman, Golf World etc.

[Hawkers2008]

You mean like employees salaries? :-)

My business imports products (not golf) and sells at a 50% margin (average). If we didnt, we wouldnt have a job and the shareholders wouldnt make a modest return. Also the change in exchange rate is killing us, just bear with me for a sec as it affects all retailers that import. lets say we import AUD1,000,000 of product a year and sell at a margin of 50%, gross trading profit of $500,000. Now we are selling the same volumes but cost of imports is down to $700,000, now our gross trading profit is only $350000. Yet our operating expenses paid out in AUD, like salaries, rent and so on, have not reduced by the same % so now we might even be losing money.

Therefore we either have to increase sales volumes considerably, or increase our margins. We cannot do the first, and do not want to do the latter. That is probably one big reason why you see retailers not dropping their prices to an equivalent of the exchange rate, if they have bricks and mortar presence here, like Harvey Norman, Golf World etc.

The other thing that would killing lots of importers is they paid for stock when dollar was lower so it cost more than it would now. This makes it hard to compete with overseas sellers (or consumers who can direct source) now at lower prices with the higher dollar.

[markTHEblake]

The other thing that would killing lots of importers is they paid for stock when dollar was lower so it cost more than it would now.

anyone who is holding stock as long ago when the dollar was much lower would have gone broke already and nothing to do with the dollar. Thats would be shocking inventory control. It would be pretty rare for a retailer to have inventory in excess of 60-90 days.

[daMANiack]

Hi,

My Direct Sales agents in USA margins are considerably less than in Australia, they're happy with quick turnover, in OZ, it seems they like fewer sales with large margins.

In OZ, seems more like 75-100% markup, in USA it's more like 20-25%.

I'm buying at wholesale prices, my DSA are happy to make 10% on sale plus Callaway, Mizuno, TaylorMade bonuses for volume of sales and for prompt payment of monthly account.

A lot of my stock is generally pre-sold due to my pricing, means I don't get caught with A$ currency fluctuations and getting caught with old stock. I do a lot of sourcing/brokering for my clients. In this circumstance, my margins are very low, but it's an In/OUT transaction.

Cheerz :) :D ;)

[Hawkers2008]

Hmm

75% markup is 43 % margin & 100% is 50% margin sound kinda high.

[Veefore]

Hmm

75% markup is 43 % margin & 100% is 50% margin sound kinda high.

That would be about right. When I was at Bedshed the margin was 40% to 60%. Under 40% and it wasn't viable. Around 50% it starts getting comfortable.
The cost of doing business in Australia these days is incredibly high. And that is even before you have bought any stock to sell.

[Bruce Dickinson]

That would be about right. When I was at Bedshed the margin was 40% to 60%. Under 40% and it wasn't viable. Around 50% it starts getting comfortable.
The cost of doing business in Australia these days is incredibly high. And that is even before you have bought any stock to sell.

The average margin on some hardware (drivers/irons/wedges etc) is not much better than 25% at the moment

[Veefore]

The average margin on some hardware (drivers/irons/wedges etc) is not much better than 25% at the moment

Yeah, Nuttsy at Harty and Ross at Collier told me that in the past as well. They said it was mostly the high end stuff where the margin was small. The stuff that sells on name recognition. Nuttsy stocks it because of demand but if he had the choice I think he would go to Newman and Brooks business model of selling the cheap stuff with the higher markups. It's weird that he can make nearly as much off a set of no-name $400 irons as he can off a set of Titleists.

There are a couple of other industries that are like that as well where certain specialist type products have a "cache". But in general retail nowadays with high rents and overhead 25% across the board would have you looking for a new job in 3 months.

When Galleria first opened a friend of my dad had a news agency there. Second year they wanted $250,000 rent. That was back when a quarter million was a lot of money too, not just a years salary for a miner. :)