Quote:
Originally Posted by Chemyst
On a visit to the CI Mothership, home of CBid, I asked the sales guys
if they ever considered stopping the auctions, since they don't get
near retail on most auctions.
They said that the auctions are such a small percentage of their overall
sales that they don't even care, and wouldn't notice if the auctions were
discontinued or not.
Usually there are around 200+/- auctions each day. So not really that many
orders from the auctions. I guess catalog sales are much bigger.
fwiw
Chemyst  |
Lesson #1
Big online cigar stores make a friggin' huge profits on most of their cigars. They are almost like jewelry stores. When I was young, I learned how to cut stones and make jewelry from a master in the jewelry section in downtown L.A. Mall and chain jewelry stores make an average of 400-600% profit on everything they sell. You buy a sweet ring for your honey for $1000. It cost them $150. Maybe.
I used to make a fortune designing, making and selling jewelry out of my home with only 100% profit.
The big cigar stores wheel and deal with the big manufacturers. "We'll give you X price on these cigars if you take these cigars off of our hands. Some big manufacturers won't do business with smaller outfits if they don't take what they give them.
So when a big outfit "proudly presents a new formula from X Cigars," they are probably ones forced down their throat.
Yes. Volume is a factor. But most cigar outfits don't have the luxury of volume and in order to stay in business, get outrageous deals on some of their cigars. Just a smaller function of what the big ones do.
The mark up isn't what the jewelry business is, but it ain't far behind.
So don't listen to the BS when a salesman tells you how much of a deal he's giving you.
There are exceptions. Start ups suffer a lot. Street cred is everything. If they make an excellent cigar, their profit margin is low in the beginning.
Remember, these products are primarily made in third world countries. Labor costs are low.
On the other hand, you have the manufacturers that are savvy business men. And they know if they over charge, it will affect their reputation. These are the companies that cigar making is in their soul...for generations.
Look at Brick House and Ambos Mundos. Good cigars that are exceedingly affordable. Smart marketing.
The auction houses are smart marketing for both CI and Famous. I don't care for JR.
They sell cigars at a reduced rate that averages 35%-50% off their retail. And they are still making a profit. Not much. But they ain't losing a dime.
And if you like the cigar, you're prone to buy it without going through the hassle of an auction.
Win/Win.
Look at me.
I get 1-1000 cigars for a review. If the cigar is exceptional, I go begging to my friends or family to buy a bundle or box for me. I'm always behind the game.
Buyer Beware!