Athletic Footware Value Chain

Athletic Footware Value Chain

In China:

• $15.67 materials
• $2.59 direct factory labor
• $4.56 indirect factory labor and overhead
• $1.90 factory capital and entrepreneurial profit

Price leaving China: $24.71

In the Pacific:

• $3.88 shipping and transport

Price landed in Oakland: $28.59

Cost of goods here in the U.S.:

• $0.76 Warehousing & distribution
• $0.38 Royalties
• $0.27 quality assurance
• $0.23 research and development
• $0.38 other costs of goods sold

Final cost of goods sold: $30.62

• $12.90 Sales, etc.
• $1.75 Corporate overhead
• $2.56 Corporate taxes
• $4.21 Interest and profit

Value at wholesale: $52.03

Retail sales costs: $47.97

Retail price: $100.00

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Source: Katherine McIntyre and Ezra Perlman (2000), "Nike: Channel Conflict' (Stanford): https://gsbapps.stanford.edu/cases/documents/EC9B.pdf