I've been surveying my customers to see if they thought I should start selling embroidery/cross stitch floss in addition to the cross stitch designs I sell. The consensus was an overwhelming YES - especially if it could be sold at a discount like I do with my charts.
So - I spent most of two days looking into wholesale sources for floss. Well here's what I found:
1.) DMC floss is sold in boxes of 12 skeins per box.
2.) The WHOLESALE price (what I pay) of a box around $3.96 - which comes to .33 cents per skein.
3.) The SUGGESTED retail price for a skein of floss is .66 cents.
Wow - I never knew this. Most people tell me they get it at stores like Hobby Lobby or Michaels for anywhere from .35 - .50 cents - but it can be on sale for 4 for a dollar or even 5 for a dollar.
So - what does this mean?
Well - you're local LNS is probably making little or no money when they sell floss. .05 - .10 cents at most. So how can Michaels or Wal-Mart afford to have 5 for $1 sales? They buy 100's of thousands of boxes of floss as opposed to a couple of thousand a year (if that) by a small independent LNS store. So - they most likely get a GREAT deal, at far below wholesale. OR - they can afford to offer a great sale on a low-cost item like floss, because they know you'll most likely come in and purchase something else in addition to floss. This is called a 'loss-leader' and means they're willing to take a small loss on one item to gain a larger overall sale.
So - next time you have the luxury of visiting a local LNS - you'll have a better understanding and appreciation of why their prices on floss are what they are. I certainly appreciate it more!
Now - will I be selling floss? It's a tough call. Let's say I buy all the colors at .33 cents a skein and I offer it for .43 cents a skein. A customer shops at my store (yeah!!!) and purchases 3 skeins of floss for $1.29. I would make .30 cents - that's good!
But then the customer pays with a credit card or PayPal (which I encourage). The minimum fee for a transaction this size would be approximately .45 cents - so I would actually LOSE .15 cents.
This is why you're seeing the minimum shipping costs of $5.00 and minimum purchase amounts of $10 or more on many sites.
I am going to keep pursuing the issue - but I need suggestions. How can I offer this GREAT service to my customers, and not lose money doing it?
Regardless - I thought the whole story might enlighten you as it did me. I always figured floss cost the store maybe .10 or .15 cents and they were really marking it up - but not so.
You're ideas, comments, input etc. are GREATLY appreciated.
And so ends your lesson in economics for today! Thanks for reading! Carla