facepunchlove

I'm interested in attempting to start my own business as a retailer selling these products (along with other CPU's), however in low quantities. How much do you purchase them for?

DuckieHo

Low quantities might be an issue for discounts?

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facepunchlove

I never said I wanted a discount...

I was asking how much it costs to purchase from the distributor.

As in

Intel > distributor > retailer > customer.

prosser13

I'm not sure Tankguys will openly give you their distributor details/prices so that you can compete with them for some reason...

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pheoxs

Someone asked this before ... I believe Tankguys said that unless you move the cpus in large quantities you won't get a good price on them at all, for low quantities buying them from newegg would actually be cheaper...

(I swear I remember him saying that but don't quote me on it..)

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dralb

yup, I remember that to. You need to find a market where you can inflate the retail price to make a profit. I doubt you would be willing to buy them in the lots large enough needed to buy right from the distributor. Retailers do not make much on CPU's, so they are usually sold very close to cost. Since newegg and the like buy them in the thousands, it will be hard for you to compete.

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tankguys

Off the cuff, basic pricing examples (they move around depending on QTY and whatnot):

E8400 boxed: $225.00
E8400 OEM: $195
Q6600 Boxed: $268.00
Q6600 OEM: $253.00

That's what you pay for the chip. Now, ship them to your location ($1-2 per CPU, generally speaking). Now take into account credit card processing fees, which will run you an average of 3.7% or so. Next, consider this business is one of the ripest targets for credit card fraudsters. Just starting out, when you have no idea what you're looking for, expect to be burned on 1/20 orders, less once you get smart. So, add at least 5% to your prices to cover fraud losses, at least at first. Next, don't forget you have to buy shipping materials, that adds another $1 or so to each item.

Thus, your new "cost" looks like this:

E8400 boxed: $247
E8400 OEM: $215
Q6600 Boxed: $292
Q6600 OEM: $290

That's just your cost, before you even factor in $1 in profit. Then there's advertising, website hosting, merchant fees, warehousing, etc etc. Now, taking *all* of that into account, now check out Newegg: The Q660 boxed sells there for $255, with free shipping. That's almost $40 less than your COST, before you even charge people for shipping or any measure of profit.

Next, consider that you had to put down quite a bit of cash to purchase them in the first place. There is an associated opportunity cost with tying up your money, figure ~5% annual interest you sacrifice. Finally, you will often times be stuck with inventory that you cannot sell at a profit (competitor offers a better deal, new products launch, etc) so you end up selling a lot at a loss.


This business has extremely low barriers to entry - anyone can quite easily get distributor accounts and start up. Anyone who has had economics class, however, knows that low barriers to entry = very low profit margins. In this business, unless you find some super niche or buy in HUGE volumes, you will not make money.

To put things into perspective, I move many thousands of Intel processors each year alone, aside from other products. This business is a huge time sink, and I easily spend 40+ hours/week running it, on top of my "real" job. After running for nearly 5 years now, I just purchased a flat panel TV with my profits... and that's pretty much all the profit I've seen so far. If you average out that "profit" vs. the time I've spent, workers in Indian ghettos would laugh at my wages. Even with my large volumes, this is a labor of love, not a profitable business.


The point is, don't expect to make money

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Thanks!

sofarfrome

so you are in it for the pure pleasure of selling computer parts?

mica3speedy

sounds like it . to the op, if you are looking to buy in bulk you may want to look at ingram micro.

facepunchlove

Thanks for the help. I guess I shall not be getting into this business. I had no idea that the Intel distributors were selling them at such high prices. I expected them to be around 3/4 of the retail price.