I was the buyer for a chain of bike shops. Unfortunately, distribution is the market bottleneck that is nearly impossible to break through.

So, at scale, no one is capable of predicting global demand accurately for any type of retail. Almost all products that are sold by small retailers are made and sold by the real manufacturer to distributors for 30-35% of MSRP. These distributors then wholesale the inventory to retailers with a 15-20% markup. This is absolutely necessary because it distributes the burden of inventory commitment to a hierarchy where local conditions are accounted for. The distributor is actually buying the inventory and taking on the risk of overburden that does not sell.

Likewise with retail. The markup is called keystone which means 50% margin. Most retailers will barely break even if the whole store averages 40% margins. Retail property and labor are extremely expensive and hard. In almost all small businesses, overburden is what kills them eventually. Overburden is what does not sell and becomes unmarketable over time.

Another aspect that is not intuitive here is that no matter how you select inventory, you will never sell that entire selection on a single platform. If you are not actively attempting to recuperate cash flow from overburden, the business will slowly drown. Sales in retail are not about overburden at all. Statistically, getting new people in the front door is the only metric that matters. Loss leaders and sales are about traffic not overburden. A good buyer plans and negotiates their loss leaders for sales within their preseason ordering.

Over the last couple of decades, more and more products have been created that bypass the big distributors. Most of it is because the product is just not worth the markup required for scaled independent distribution and middlepersons margins. However, now there is an issue of global demand where the manufacturer has the impossible task of financing scale and the inherent risk. If the product is not made at very large scale, it is uncompetitive to manufacture. You need someone willing to take that risk. As a person that has made these types of decisions at smaller scales of a few million dollars, go bet all that money on a hand of single deck blackjack because those 47-48% winning odds are outstanding by comparison.

Retailers place preseason order commitments to get slightly better margins, but primarily because the distributors are more like banks in retail. They offer credit and repayment options that mean the retailer is not required to pay up front in cash. With bicycle stuff, I placed all of my preseason orders between September and October for the following year. Stuff started arriving between December and January. I then had a first payment due in April, but I had to pay it back by the end of July. So I had to predict the summer market a year in advance and have all of my plan detailed by autumn.

This is how mom and pop independent retail actually works. It was not competitive with big box retail because those are not actually retailers. Those are rogue distributors selling directly to the public. The actual products are still the same 30-35% of MSRP.

The worst product trends in retail have been the tendency for companies to market themselves as exceptions. Like I despised GoPro in my stores. The margin on the cameras was 20% and each one costs a fortune. They constantly tried to deprecate models too. They tried to pitch that all the accessories were keystone and it made up for the terrible return on investment. In reality that inventory of accessories was overburden suicide of niche garbage for special use cases.

All electronic devices people want have fallen into this trap of low margins that are impossible for sustainable retail. When you see factory direct stores, that means the product has no margin for scale distribution. It is a neo feudalistic, brute force approach where someone is dumb enough to believe they will be able to predict global demand indefinitely without making any major errors. The public is dumb enough to follow along. Few realize the enormous power that is consolidated from cutting out the democracy of distributors and retailers. This consolidated monolith will eventually enslave everyone when they must overcome the inevitable mistakes they make. They will not just eat the loss or go out of business because they own your right to choose in a market without competition. It is surrendering choice to the dictator that makes their own demand by force.

Yeah, so, we don’t want that. - said no one. What you want is irrelevant. The lowest common denominator dictates the market. Democracy requires a well informed and skeptical citizenry. We live in an era with the smallest information bottleneck in several centuries. Search results are not deterministic and there are only two relevant web crawlers that all providers query. These are not deterministic. Two people searching on separate devices with identical queries will get different results. All major media is owned by less than a dozen people. You have absolutely no chance of informing the citizenry to make better decisions that may cost a good bit more money. People cringe if you tell them they are slaves, but do nothing if the word citizen is redefined as functionally equivalent.

The only way you will ever see such a product sold in any traditional independent retail scenario, is if some exceptionally altruistic billionaire were to chose to fund the thing with no concern over the loss. The only way to be competitive in price is to build at competitive scale of manufacturing. If someone else is doing this and using factory direct retail to stay in business with just a 30% gross margin in total, you will never find the necessary slice for regional distribution and retail. Your device will be $1000 at MSRP to their $600 equivalent. There is no solution to this issue. It is raw capitalism where the biggest fish makes the rules. The only counter balance in the system is an informed citizenry. This is why information and education are all that really matter. If the average person is too stupid for independent thought, it is the ultimate pwn as citizen means slave, and the peasantry are too stupid to recognize the situation where they own nothing and have no outlet to tell anyone or hear the plight of all the others.