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My old computer business name was Edgecliff laptops....
... located in Australia's highest tax paying suburb next door to a primary school this area seemd ripe for a reconditioned laptop shop.
I had been around to the other 3 shops in the other expensive areas of Sydney, all were fully stocked and customers where filing in even as I went to meet the owners and introduce myself as a non-competing start up.
I watched as person after person came into the shops and paid out profits of between $500 and $1000 per laptop sale. This is it I thought, this is it!!
Two years later when I finally got out of the shop I went back to see how the other guys were going, two were out of business and the third was wholesaling direct to the public in small quantities - they had gone backwards too.
All was good while new laptops cost $3000 each, but then Dell and Compaq had a price war, new laptops plummeted to $1800 each. All my stock lost 60% of its value overnight, I got rid of it as fast as I could, loosing money and cutting losses.
Two years later my final decision to get out was due to two things;
- I had a customer call up to order a Compaq(HP) laptop from me, after checknig the prices on a new $1800 laptop I would make about $40 to match the price they were selling them for directly and then I would be liable for warranty, shipping and labour. Stuff that.
- In a trade magazine there was one company advertising "Best Margins In The Industry" in huge bold letters on a full page ad - 7.25% In incoherant rage I flung the magazine to the ground and left the shop for a couple of hours, soon afterwards I closed.
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