Need Advise Regarding Depreciation Loss

cqd12345

Hi guys, currently I have a few 2nd hand electronic stores overseas that offer buy, sell and trade. All the stores are doing quite well and I'm looking to open another new branch that sells only NEW electronic products instead of 2nd hand products.

I've spoken to a few sole distributors of assorted brands (ie: Sony, Samsung, Acer, Asus, etc..) regarding their new electronic products and got their cost price list. The profit margin for new products seems to be a little lower than the 2nd hand products we are selling which means we will be selling in mass.

ie: Samsung LED TV cost price is $500 and retail price is $550. The profit margin is about $50 per piece.

My question is: If I place a bulk order with the distributors at cost price of $500 per piece with the intention to sell at retail price of $550 per piece, what should I do if the retail price drops to maybe $450 per piece and I still have left over inventory on hand? I mean if I sell the left over inventory at retail price of $450, I still lose $50 per piece (Depreciation Loss).

What should I do besides selling them at a loss? Any ideas? Please advise.

Thank you very much.

meinteel

Although I'm not retailing electronics (new or old), I've spoken to several bosses who do so. One of them, who happens to be my dad's old time friend kindly shared that new electronics market have an extremely small margin.

However if you can hit this annual quota, the brand would provide a huge commission bonus. Such as, major electronics stores would conduct massive sales from time to time in order to hit the target.

The boss who told me this secret explained why he sold all his electronics at S$10 profit - so that he would be much lower than major electronics store. This was in view of getting the annual quota.

Anyway, recommended retail prices are not expected to drop. If it does, you should contact the supplier and find out why so. Should the recommended retail price really drop, usually the suppliers would provide a discount. If its based on the promotion sales of major electronics store, there isn't much you can do but wait for the hype to die off.