Stephensg wrote:My local cigar shop will sell a box for $150, but I can find the exact same thing here for $50. [...] Again, why are cigars so affordable here compared to local places, or even other websites? This place is a heck of a lot cheaper than even other websites like *** .
Business 101 stuff. If you're gigantic and have huge sales volume, factory-direct buying and maximum volume discounts (like the company that owns CigarBid), you can charge the cheapest prices and still do nicely for yourself. If you're medium-sized with more modest sales volume, possible middleman buying and medium volume discounts (like other cigar-selling websites), you have to charge more to do nicely for yourself. If you're tiny with tiny sales volume, middleman buying and no volume discounts (like single-location brick-and-mortar cigar shops), you have to charge an arm and a leg to do nicely for yourself.
You can say
"yes, but CigarBid has much higher expenses than a single-location brick-and-mortar cigar shop!" and you're quite correct, however their gargantuan sales volume and various economy-of-scale advantages mean that even with much higher expenses, they can still charge far less and do well.
Another way to look at it: consider
acquisition cost of each cigar and
expenses (not including buying the cigars) attributable to each cigar sold. For example, using some arbitrary made-up numbers:
LargeCorp Inc: Expenses (not including buying the cigars) are $750,000 a month, and they sell 2,500,000 cigars a month. Expenses attributable to each cigar is $0.30. Average acquisition cost of each cigar: $1.00 due to buying factory-direct and maximum volume discounts.
Uncle Billy-Bob's Corner Cigar Shop: Expenses (not including buying the cigars) are $15,000 a month, and they sell 5,000 cigars a month. Expenses attributable to each cigar is $3.00. Average acquisition cost of each cigar: $2.50 due to middlemen and no volume discounts.
LargeCorp Inc. has to charge $1.30 per cigar before they make a penny in profit. Billy Bob has to charge $5.50 per cigar before they make a penny in profit. Guess who can sell the same cigars much cheaper?
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