NZShop economics

Here’s a tilt at NZShop’s financial’s, based on essentially no information.

My last order confirmation number from NZShop was over 62000. If this is the total number of orders ever, and the average sales price is $50 (they seem to be all about DVDs), then that’s a total of $3.1m in sales (Say a reasonable range of $1.8-$4m).

If their margins are 5% then they have had gross profit to date of between $100 and $200k.

If their margins are 10% then they have had gross profit to date of between $200 and $400k. (I’m making these margin numbers up – no cheating by looking at past client numbers)

I have no idea of how long they have been around, or what their inventory arrangement is. If they are holding stock then this is a marginally viable business at best unless they are the world’s best stock pickers – DVD prices fall over time for the popular items. If they are not holding stock then they probably do not have a price advantage, so sales are lower. I’m assuming that DVD’s are like CD’s and only cheap if you buy them in bulk. Perhaps they are backed by a retail store or chain?


Bro Town Series 3 is selling for $34.95 – the same price as on Real Groovy, but shipping appears free on Real Groovy and is $6 on NZShop. Interestingly it is also on Trade Me for $31.46 + $3.50 shipping from seller “aklrealgroovy“. Marbecks charges $33.99, (+$4 if you order less than $50 total) and gpstore $34.95 + $3.95 shipping.

So NZShop is, on a sample of 1 item, expensive – the most expensive in New Zealand. That makes for better margins for them, although I daresay that Real Groovy should be getting better wholesale prices, so call it even.

The site is pretty low rent, and there is no information about who is behind NZShop on the site. Perhaps this is even a solo trader working from a garage or bedroom and sourcing from a wholesaler or The Warehouse – if so that’s really good business.

If they are paying reasonable rent and for multiple staff then the economics rapidly get much tougher, more so if they have good amounts of google ads out there. I’m in aussie right now so won’t be seeing any of those (though I get

In summary – great business if there is no inventory, not so great if they are holding and aging inventory and are paying real costs. (and I may have got this all wrong)

Published by Lance Wiggs