Besides the markup margin (I suspect 30% is too low for the supplement industry)[/quote]
I think you’re right in terms of how things end up being priced, but I also think the issue is likely to be the number of people involved. A Biotest rep here once said that Grow! would cost $65 or more on store shelves, and you can get that out of the standard 30% markup if you use an extended supply chain structure:
Biotest – $23
National distributor – $29.90
Regional distributor – $38.87
District manager – $50.53
Store owner – $65.69
Even though you’re only going 30% at each step, you end up with a 186% markup in the end. This isn’t an unreasonable hypothesis, but of course I’m no expert on how supplement stores organise their supply chains.
Not actually a kickback, but usually a SPIF (Sales Promotion Incentive Fund). Opposition to this practice is steadily growing in several industries, as it is fundamentally a kickback.
Another point might be expectations of quantity discounts that Biotest is simply unable to give; if $23 is as low as it goes, then that’s as low as it goes, full-stop. Some stores may be childish about this.
Some companies artificially inflate their list price to pretend the actual price is a special discounted rate, but this is a little shady, so a company that didn’t want to do this might look like a bunch of dicks for refusing to give quantity discounts.
And another possibility is that the store may have a contractual obligation to ONLY buy products from a specific source (this is particularly common with franchises like GNC), in which case they would be forbidden to order Grow! direct from Biotest no matter how much they wanted to.
One would hope that customer demand and superior quality are incentives to carry something, but that assumes you’re in the business to make a difference – not to make a buck. Yes, I do realise this is a highly unusual proposition. What most people DON’T realise is that the average customer can tell when you’re in it to make a buck, and generally doesn’t like it.
A related behavior would be refusing to carry supplements that suck. T-Nation ran a story a while back on dangerous forms of creatine, and based on the information there, a conscientious store owner might want to clear his stock of products that used it. After all, if space is at a premium, why take it up with crap? It only takes one shitty purchase to convince a customer that you don’t really give a rat’s ass about him.
Well, of course not. If you’re going to order over the web, you’re going to go for either the most reputable source or the lowest price, and compared to Biotest I would be neither. But I’m thinking about actual people in actual stores looking at actual shelves with actual jars of Grow! sitting there, where they can pick them up right now and take them to the cashier. That’s a whole different ball game.