Why Is Perfume Sold Cheaper in Some Stores?
Makers of luxury goods try to control the outlets for their products through contracts with retailers. This allows them to cultivate exclusivity and control details such as availability and cost. Does this Spark an idea?
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Distribution
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Distributution centers are middle-men. Getting perfume to consumers entails production at a manufacturing facility, packing it up and shipping it to a distributor, who processes and delivers orders from retailers or wholesalers. Retailers receive delivery and put perfumes on shelves, while wholesalers sell them to other retailers.
Pricing
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Several factors affect retail perfume pricing. First is volume--the more purchased, the better the cost. The second factor is credit--customers who sell a lot, fast, and pay quickly get better deals.
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Gray Market
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Through legal but questionable maneuvers, such as buying products outside the United States, retailers can purchase perfume "below cost." By purchasing abroad, perfume can be bought for up to 50 percent cheaper, reported Time.com, allowing retailers to charge less.
Black Market
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During distribution, someone in the chain steals a few cartons of perfume and sells it. Or, items are stolen from a business, warehouse or consumer and resold, leaving pricing up to the purchaser.
Knockoffs
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When street vendors or other "disreputable" sources sell brand-name perfume, the products may be impostors. Difficult to discern from the original, they're sold at a fraction of the cost. According to USA Today writer Jayne O'Donnell, nearly 80 percent of counterfeit goods seized by U.S. authorities in 2009 came from China.
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References
Resources
- Photo Credit perfume image by ann triling from Fotolia.com loaded trucks image by timur1970 from Fotolia.com
