Questions of sweatshop labor have circled major sneaker manufacturers like Nike and Adidas for years. However, very few people had taken a closer look at what manufacturing in Asia really means for these massive corporations. Are they really making money hand over fist like we assume? SoleReview did just that, and the findings might surprise you.
With the help of some illustrative infographics, we can estimate how much money specific models of sneakers cost to make. At first glance, the disparity between production cost and retail cost is massive. It costs $33 for Nike to manufacture the Air Max 2016, which retails for $190. It only costs adidas $76 to manufacture the Yeezy Boost 750, which retails for $350! It’s enough to hate these sneaker companies, but before you grab your pitchforks and head for their corporate HQ, let’s dig into the numbers a bit further.
These original costs only cover the assembly of the shoe, which is a short segment in the lifecycle of a sneaker. Along with production, brands have to pay for things like: hiring people to design the shoe, buying the materials (leather, Boost sole, etc.), shipping the shoes to America, paying import taxes and marketing the sneaker. On top of that, a good portion of shoes are sold through retailer like Footlocker and Champs. Those brands buy the shoe at a discounted rate than consumers buy them, meaning they get $180 Ultraboosts for considerably less (think $90-100).
When it’s all broken down, brands usually make between $2 and $5 on every $100 shoe. Adidas and Nike both posted revenues in the tens of billions in 2015, so making 2% on thousand upon thousands of shoes (let along apparel) amounts to a lot. The lesson? For corporations, size matters.
[via SoleReview]