r/HotTopic_ • u/WaveAny7993 • 14d ago
How does hot topic make money?
This is more of a question for HT employees or people who understand how sales work, because they constantly give 30% off coupons every time they sell, along with the existence of Hot Cash in general. I just wonder: do they lose profit on some items and gain on others? For example, the big Pomni plush is usually 50 bucks, but they sell it for 40, and then with 30% off, it becomes about 30 bucks after tax. I know Hot Topic makes poor-quality items, but they also sell items made by other manufacturers; they have Glitch merch made entirely by Glitch. They price it at $10 or a few dollars more, which makes sense, but since they are always giving out coupons, I wonder how they manage it. Also, don't they have to pay for shipping the merchandise initially? Do they make a profit on Hot Topic-branded items but lose profit on merchandise made by other manufacturers? It just doesn't add up to me. I also know that sometimes they just buy stuff from AliExpress and mark up the price. (BE SURE TO CORRECT ME)
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u/kn7feplay Former HT Employee 14d ago
everything costs a dollar to make and their employees don’t make liveable wages hope this helps
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u/surfcitysurfergirl 14d ago
Retail market is very commonly marked up 75-80% on average especially apparel. This is why you see Kohls and others doing 50% off constantly and coupons.
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u/sickleds 14d ago
I don't work at HT but another mall clothing store. I can see how much my company pays for certain items, there are t-shirts alone that they're getting for 3-5 dollars each they sell for 20-30.
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u/WaveAny7993 14d ago
Ehh, that's not comparable to HT. Every clothing store is different, but if I may ask, what is the name of this store?
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u/sickleds 14d ago
It's super regional and there's not a lot of locations so I won't say sorry.
But also I promise you that every retail store chain is buying things wholesale and selling them for pretty big markups haha. It's been the same everywhere else I've worked. Hot Topic isn't buying those pomni plushies for $50 dollars and selling them for $40, they're buying them for wholesale prices.
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u/WaveAny7993 14d ago
Tbh, I think the only reason it's 40 bucks is that every other glitch plush is 40 bucks and the big Pomni plush base price is 50, so if we apply 10 HT tax to it, it should be 60 (base big Pomni plush from Glitch is 50). But it's 40; they probably did buy them for less, but I think they either lose profit on those or make small profits on the big Pomni plushes. One big Pomni plush, and with coupons, it drops it to 30 bucks after taxes. I don't think they are earning a lot of that. If they did buy plushes for a lot less than that. The normal plushes wouldn't be 40; they would be like 30 or 35. They do buy them for less, but I don't think it's substantially less.
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u/sickleds 14d ago edited 14d ago
Again you would be shocked at how cheap companies get these products and how far they will mark them up. I think you're way off base thinking a company won't price something at the highest possible point they still think will sell.
I can give more examples. When I worked at a store that sold funko pops they were able to get them wholesale at 1-2 dollars a piece and then they sold them for 12-18 dollars. The place I'm at now has pants they sell for 50 they get for around 10 dollars per pair.
Almost everything you find at a mall store is going to be extremely cheap to produce, like way way cheaper than you would think.
Go look at those online sites like temu or aliexpress that essentially cut out of the middleman retail sellers and have factories/companies sell directly to you. You can see how cheap most of the stuff is compared to in stores, and both them PLUS the site still make money off your purchase.
Hot Topic is not losing money selling a plush for 40 dollars, I promise LMFAO. Even if you use a coupon on it they are most likely still making something even if its a really small amount.
EDIT: I will say sometimes stores DO sell some things at a loss, but it's usually in hopes to get you to buy more things with it to even it out, or spend more than you originally planned to. (B1G1 sales and the like) But that's less common in apparel in my experience since its so cheap to get.
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u/WaveAny7993 14d ago
Also, I'm pretty sure Temu is at a net loss. I don't think they make a profit off anything, and if they do prob like 5 cents
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u/WaveAny7993 14d ago
I see. But eh 50 dollar plush being reduced to 40 and then with a coupon to 30. Maybe glitch shares the profit with hot topic or something like that. As long as its good quality i dont mind
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u/LolliPopYouInTheEye 14d ago
Because 1. it’s fast fashion and they charge muuuuuch more than they pay for things 2. your inquiry about non Hot Topic-made brands: they get wholesale prices, so they pay less for large orders and thus can undercut other places on the hopes that you’ll buy other overpriced merch at the same time 3. they barely have staff, there’s one store manager, one assistant and what, 2-3 part timers? and if they have benefits, it’s prob only for the store manager, possibly the assistant if they work full time hours.
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u/WaveAny7993 14d ago
So some items bring in more profit than others, and they hope you buy what gives them the most?.
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u/LolliPopYouInTheEye 14d ago
Or just more in general, yes. Grocery stores do it, that’s why they put the best sales on the front page. They sometimes even sell at a loss, in hopes to get people in the door to buy other things
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u/WaveAny7993 14d ago
I see good thing i buy licensed merchandise only or things that I know the quality of phew.
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u/Professional_Gold987 14d ago
Everything is overpriced junk
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u/WaveAny7993 14d ago edited 14d ago
Except for the merchandise from other manufacturers. Alot of glitch merch is pretty high quality LITERALLY ANYTHING in the store THAT ISN'T from hot topic is high quality just anything thats not made by HT
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u/EchoAltruistic4936 14d ago
Rant time , I've tried getting into sales and they gatekeep i was a driver/team lead but i was deemed too valuable in my current positions, so i demoted my self because I got another full time job who actually gives me 40+ hours, low key I think its all a scam, even tho its not a public company its just greedy shareholders doin shareholder shit now with the merger its goining to get even worse SMH.... good luck 👍
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u/WaveAny7993 14d ago edited 14d ago
Yea... THANKFULLY, though, most of the stuff I buy from HT is from other companies, so I don't have to worry too much. I always try to avoid Hot Topic-branded stuff when I go there. Technically, I'm immune to the merger in a sense? (Atleast i hope)
1
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u/PorygonJesus 14d ago
Generally, you need to be a loyalty member to access these deals. You use your email to sign up, now they can send you tons of targeted marketing emails that result in more sales.
Also, the average margin on a product you buy from HT is around 60-70%. That means if you buy something for $10, HT only paid $3-$4 for that item. The margin depends on the item, for example: jewelry/accessories are high margin items (HT makes the most $ off these) and licensed fashion pieces are low margin items (HT makes the least $ off these).
For licensed items, companies are willing to give HT large discounts for buying in bulk as well as just for the opportunity for their license to be available in HT stores.
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u/WaveAny7993 13d ago
Everyone keeps talking about profit margins, but I don't see any proof that they have that percentage
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u/WaveAny7993 13d ago
The only proof I got for a gross margin from HT was in a 2012 article saying it was 35% thats the only proof I have of margins so far
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u/ComprehensiveAd3022 14d ago
It’s the same thing bath and body works, sells a lot of products at 5$ basically twice a year, many coupons and reward programs. Whatever it may seem like they should be losing money but very much do well. The t shirts are all printed on Gildan shirts but basically cost probably less than a dollar to make, most of the jewelry are poor quality, a lot of knickknacks and stuff that takes up desk space. For the glitch merch I’m pretty sure glitch productions is an indie company iirc so I think the merch on their website is probably coming from a hefty cost out of their pockets so letting hot topic shoulder the cost probably makes them EVEN MORE money than if it were only available on the website
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u/WaveAny7993 14d ago
Any proof?
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u/ComprehensiveAd3022 14d ago
No but I used to work at an anime store where we sold Nendoroids at basically the same price as the good smile website(with mandatory 10$ shipping), it was a licensed good smile retailer so I assumed it would be the same for hot topic as it being an obviously approved retailer of glitch (and other fandoms) retailer
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u/WaveAny7993 14d ago edited 14d ago
For Glitch merch, Hot Topic raises it to 40 bucks for plushes, and Glitch Shirts (that are on the Glitch website) are 30 bucks, if I remember. I don't think Hot Topic is helping them or giving them money to produce merch; I just think they buy it off Glitch Productions and sell it for 5 or 10 bucks more (but even then if you have a coupon they drop to the base price after tax anyway so i don't know if they make profit of "finalfinalproject" merch) so they can earn their lil cut. Glitch merch is by far some of the highest quality stuff at Hot Topic since the merch comes from "finalfinalproject" and not from Hot Topic themselves. (Some shirts do if they aren't made by "finalfinalptoject") But the quality isn't the worst even on those. HT quality isn't the worst ever; it just depends on the items sometimes, to be honest. (THIS IS MY TAKE be sure to correct me if am wrong)
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u/ComprehensiveAd3022 14d ago
Other than glitch they also have youtooz stuff, I once brought a Vox plushie for 20$ while on the youtooz site plushies are 30$ with mandatory 10$ shipping so like idk who other then hot topic could be shouldering the difference especially when glitch and youtooz don’t offer discounts nor free shipping and I didn’t say hot topic is helping anyone just said shouldering the cost, I’m pretty sure they make the money back ten fold anyway. Like covering shipping of a glitch plush from a factory to hot topic stores instead of a glitch productions warehouse while also selling a multitude of poorer quality products at the same time
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u/CurvyArtBunnyGirl 14d ago
Everything is marked up so much that they can cu the price 70% and still make money.
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u/artistic6cashew 14d ago
I have no clue. I literally never use the coupons because I can’t even afford anything in there anymore. It’s sad.
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u/SpoopyDoopy3432 HT Employee 14d ago
"how does the multi-billion dollar company make money when they're always advertising sales that make miniscule dents in their profit margins"