You created a line of bandaids with the pictures of famous entrepreneurs (Elon Musk, Steve...
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You created a line of bandaids with the pictures of famous entrepreneurs (Elon Musk, Steve Jobs, etc) on them, and demand has gone viral! You sell them through 3 channels: 1) you sell direct to consumers on your own website for $16/box, 2) you sell to Walmart for $4/box wholesale, and 3) you license the images to Johnson & Johnson's China subsidiary for $0.20 per box of bandaids they manufacture and sell in China. Your COGS to manufacture bandaids for your website and Walmart is $2.00/box. You notice that 15% of your unit sales are coming through your website, 60% from Walmart and 25% from J&J. What is your overall gross margin? If the channel mix unit percentages were flipped to 25% to Walmart and 60% to J&J, how will this change your overall gross margin? How will it change overall gross profit? Which channel allocation do you prefer, and why?
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