![Chris [BEANS]](/styles/overclockers/avatars/6.png){kind=avatar}
Soldato
- Joined
- 30 Dec 2003
- Posts
- 6,374
- Location
- Bigger box!
Morning,
I wonder if any economics students or graduates or those involved in wholesale at a high level might be able to help me out??
I get the idea behind cheap stuff per say. Producing a product as cheaply as possible, using cheap material, cheap labour, producing in bulk etc, etc....
However, I can't make sense of SUPER cheap stuff, not loss leaders, just stuff that is inexplicably cheap....
I recently got an iPhone 5 charger for £1.
It's better than the proper apple one that fell apart after a couple of months.
I've since bought cheap replacements for anything between £5 - £10 and they've all fallen apart.
This one, £1, is great. It travels with me and is very robust, good quality, and cost a solitary pound.
It got me thinking. It's a unique design, not a bootleg*, it's a different shape, different materials etc.
So, someone had to design it. Someone had to do this on CAD, had to knock up prototypes to make sure it works, someone had to pick the materials, source them, either get the machines to make the charger or find someone who's already bought the machines.
All these people work in buildings and pay rent, electricity, water etc, they all need a wage.
Someone needs to design the packaging, someone has to print the packaging, someone has to then physically package it.
Someone from the factory has to get paid to load a lorry, someone has to buy that lorry, someone has to fill that lorry with fuel and drive it to a port.
You need a container, it needs to go on a boat, the boat needs to cover the cost of taxes, crew, fuel.
You need to make arrangements with a port in England, where labour is exponentially dearer than in the far East where we began.
More labour, lorries etc.
Then it arrives in a shop, staff paid at least minimum wage, someone is paying rent on that shop, again electricity, tax, council tax, etc...
Then I buy it for £1, and that pound is enough per unit that everyone along that chain makes enough profit for it all to be worthwhile.
That really doesn't make any sense to me. There's no way there's profit in that?!
I won't go into the same boring detail, but the other day I stopped off at Asda on route home to pick up a red onion. It cost 2p. How can ANYTHING cost 2p and be worth the while of everyone involved in getting it to the till?
Cheers
* - Bootlegs. As I understand it, in the Far East big factories will for example, churn out official iPhone 5 chargers all day, for Apple, using all the legit designs and materials etc. Come night time, the day shift go home, bootleg shift comes in and the factory carries on over night making the exact same product, same materials etc, except this time it's not branded and is sold super cheap. Obviously a cheaper way than the above becaue the vast majority is done for you.
I might be wrong, feel free to correct me
I wonder if any economics students or graduates or those involved in wholesale at a high level might be able to help me out??
I get the idea behind cheap stuff per say. Producing a product as cheaply as possible, using cheap material, cheap labour, producing in bulk etc, etc....
However, I can't make sense of SUPER cheap stuff, not loss leaders, just stuff that is inexplicably cheap....
I recently got an iPhone 5 charger for £1.
It's better than the proper apple one that fell apart after a couple of months.
I've since bought cheap replacements for anything between £5 - £10 and they've all fallen apart.
This one, £1, is great. It travels with me and is very robust, good quality, and cost a solitary pound.
It got me thinking. It's a unique design, not a bootleg*, it's a different shape, different materials etc.
So, someone had to design it. Someone had to do this on CAD, had to knock up prototypes to make sure it works, someone had to pick the materials, source them, either get the machines to make the charger or find someone who's already bought the machines.
All these people work in buildings and pay rent, electricity, water etc, they all need a wage.
Someone needs to design the packaging, someone has to print the packaging, someone has to then physically package it.
Someone from the factory has to get paid to load a lorry, someone has to buy that lorry, someone has to fill that lorry with fuel and drive it to a port.
You need a container, it needs to go on a boat, the boat needs to cover the cost of taxes, crew, fuel.
You need to make arrangements with a port in England, where labour is exponentially dearer than in the far East where we began.
More labour, lorries etc.
Then it arrives in a shop, staff paid at least minimum wage, someone is paying rent on that shop, again electricity, tax, council tax, etc...
Then I buy it for £1, and that pound is enough per unit that everyone along that chain makes enough profit for it all to be worthwhile.
That really doesn't make any sense to me. There's no way there's profit in that?!
I won't go into the same boring detail, but the other day I stopped off at Asda on route home to pick up a red onion. It cost 2p. How can ANYTHING cost 2p and be worth the while of everyone involved in getting it to the till?
Cheers
* - Bootlegs. As I understand it, in the Far East big factories will for example, churn out official iPhone 5 chargers all day, for Apple, using all the legit designs and materials etc. Come night time, the day shift go home, bootleg shift comes in and the factory carries on over night making the exact same product, same materials etc, except this time it's not branded and is sold super cheap. Obviously a cheaper way than the above becaue the vast majority is done for you.
I might be wrong, feel free to correct me
