nitin_mehra20-
"1) I am not against making profit. Even if one buys online, the company is not selling products for a loss. If they would have, they won't stay in business long."
Online sellers can sell for less because in some cases, they sell what they haven't even ordered yet. If this is the case and they sell a huge number, they can go to the supplier and say they have a large number already sold and they want a better price. For a large number, a supplier will usually cut a few points. Also, some online sellers are part of a company that also is a wholesale distributor and they already have an advantage compared to regular retailers. These are the ones who sell for less than dealer cost and can get away with it because they fall under the umbrella of "authorized dealer", for a while. Harmony remotes were being sold for less than cost by some of these and that's why their distribution network was completely changed. It's also why I and many other dealers stopped carrying them.
2) "Profit margins are fine as long as they benefit the seller and delivers quality to the consumer. I am not suggesting that the shop owner sell it for a loss, a profit margin of even 20-25% over and above the dealer cost seems like a fair buy, cause I am getting personalized service and a great ambiance to shop in, while the dealer is making a profit."
I don't want this to seem like a personal attach but you definitely don't know how much it costs to run a business and keep a store open, especially if they're in some kind of mall.
Let's do the math. If the average profit is 25% and they do $1M/yr, they need to pay (rough numbers)
Lease- $6000/mo
Insurance- $5000/yr
interest- $500/month (just a guess)
Owner's salary- $50K/yr
Wages for 5 employees- $30K each/yr
Advertising- $3000/yr
Unemployment insurance- $15K/yr
Office supplies- $3000/yr
Accounting software and fees- $3000/yr
Utilities (Elect, Nat Gas, Phone, Internet, Cable/Sat)- $5K minimum- costs more for a business
This is a partial list, so if this is added, it comes to $246K. The wages are pretty weak and for the amount of work that goes into this kind of endevour, that margin isn't enough to make someone want to be in business for, long.
3) "But, if the sole aim of a dealership is to monopolize and arm twist the user to buy from them only and that too at an exorbitant cost, cause they want to extract the entire operational cost of operating their store plus profit from few buys a month, then it is not acceptable."
No dealer wants to sell goods that can be bought on every corner. That leads to massive price slashing and no profit, so they want exclusivity. If they can convince a manufacturer that they will do a better job of selling those lines, they may get it in an area where a dealer exists and it will either make the first one kick into high gear, drop the line or in some areas, they'll be dropped. We're not talking about selling clothes, we're talking about something that a customer may/will need/want pre-sale information and expertise, needs to be set up and not just hung on a rack and it will probably need follow-up contact with the customer. That costs money. An A/V store can't rely on having a sale every few weeks to clear out their inventory like Kohl's Department store can. Many dealers close after the New Year because they rely on December to be the bulk of the year's sales. A bad December spells doom for many marginal dealers. Being stressed out for 11 months/yr is not a good way to go through life and there's no way to predict how the market will react to the kind of BS that has happened in the last year.
3) "Cause few buys a month including my own is not my problem, I am also in the market to receive value as is the seller to make profit. If i am working my a** off to get a better deal, researching my product and trying to get a bargain, then he too should be working to offer better deals and advertise his services."
Offer better deals and advertise his services- those both cost the store money and unless the manufacturer offers special discounts, the manufacturers don't lower their prices. Ever. How then, will the dealer make money if people want better prices and more advertising? Sure, advertising can help bring people in but how does he know what people will buy? You can't advertise everything, all the time. That makes the local customer base think everything should sell for low prices all the time. Selling by volume moves boxes but it also makes keeping track of everything much harder. That costs money, too.
4) "Yes, if i had a store I would like to make a profit, but i would work towards it. I would advertize, give people great deals, personalized service at a "fair" markup."
Again, you mentioned three things that cost money and I guarantee that if you were in this kind of business, your idea of "fair" markup would change drastically in a short time, especially if you had online sellers to compete with.
5) "Personalized service and experience can only go as far, it cannot be made into an excuse to charge me 50-60% above cost IMO"
It would if you knew how much time, effort, stress, work, dedication, creativity, planning and risk was involved in it. A store owner has a lot at stake- the money spent before opening the doors for the first time can be staggering. This has to be recouped in some way and slashing prices, advertising frequently, having a large staff, a well laid-out store and large inventory don't help to cut costs.
