Retail Distribution Economics: Margin After the Middlemen
This lesson is an article published by Eightx.
Read the articleWhat you'll get
A worked example from a fractional-CFO firm follows a $4.99 grocery item from shelf price down through the retailer's cut, a distributor's cut and trade spend to the brand's gross profit, which it puts near one dollar: about 20% of the shelf price and about 40% of the brand's net revenue. It is an illustrative model, not any company's books, and the firm sells finance services, but its layout of shelf price, retailer, distributor, trade spend and unit cost is the one to copy into your own sheet.
Do this week
Build a price waterfall for one product in a spreadsheet, starting at your intended shelf price and subtracting the retailer's cut, a distributor's cut, trade spend and your unit cost, and write the dollars left per unit as a share of the shelf price.