From team orders and fitness facilities to specialty retailers and global distributors, today’s B2B sporting goods brands are competing in a game of speed, scale, and service. Buyers expect contract pricing, real-time inventory, and seamless ordering across channels.
Miss the mark, and they’ll find a supplier who delivers.
To keep pace, B2B sporting goods sellers must modernize digitally. Modernization is what transforms fragmented systems into connected operations and makes it possible to serve buyers with the speed and scale they expect.
This guide breaks down how to build a scalable, digital-first B2B sporting goods business. From pricing and partnerships to inventory systems and international growth, you’ll learn about the tools and strategies needed to win in a changing market.
What is B2B sporting goods distribution?
B2B sporting goods distribution is the process of selling and delivering sports and recreation products—such as fitness equipment, athletic apparel, and outdoor gear—from manufacturers, wholesalers, and suppliers to other businesses.
It includes bulk sales to institutional buyers such as schools, colleges, and national sports leagues, as well as commercial supply to fitness chains, specialty retailers, professional training facilities, and corporate wellness programs. The model focuses on meeting institutional demand through contract pricing, bulk ordering, and long-term relationships.
Key differences between B2C and B2B sporting goods sales
The core difference between B2C and B2B sporting goods sales is the audience. B2C sells to individuals via immediate, list-price checkout. B2B sells to organizations under contracts with negotiated pricing, bulk orders, and longer sales cycles.
Here’s a quick side-by-side of other differences:
Comparison point | B2C sporting goods | B2B sporting goods |
---|---|---|
Buyer and intent | Individuals buying for personal use | Organizations (teams, schools, gyms, retailers) buying to outfit groups or facilities, or for resale |
Catalog and pricing | Open catalog with public pricing and promos | Gated catalogs, contract pricing, tiers, and negotiated quotes |
Order size and frequency | Small, one-off orders | Bulk orders, recurring purchases, seasonal replenishment |
Buying flow | Browse, compare, add to cart | Quick order by SKU (stock keeping unit), purchase lists, purchase orders (POs), approval workflows |
Payments | Card or wallet at checkout | Invoices, deposits, partial payments, and net terms |
Logistics | Parcel shipping to one address | Freight, multi-location fulfillment, scheduled delivery appointments |
Data requirements | Basic profile (name, email, shipping info) | Company profiles, tax/exemption details, multiple buyer roles |
Post-sale needs | Simple returns and refunds | Service agreements, repairs, parts replacement, warranty tracking |
Sales cycle | Short; sometimes impulse-driven | Longer; involves reps, samples, negotiations, and contract renewals |
Major market segments in B2B sporting goods
B2B sporting goods spans several buyer types with distinct order sizes, replenishment cycles, and service needs—from seasonal bulk buys for teams to component sourcing for original equipment manufacturers (OEMs).
Use the breakdown below to see what each segment buys:
- Team and institutional buyers: Schools, colleges, leagues, and clubs purchase uniforms, equipment, and accessories in bulk.
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Commercial fitness and facilities: Gyms, studios, corporate wellness centers, and rehab clinics outfit and maintain equipment.
Specialty retailers and pro shops: Bike shops, running stores, outdoor retailers, and ski/snowboard shops source branded inventory and components. - OEMs and component supply: Manufacturers and assemblers buy parts and performance components for finished goods.
- Government and public sector: Parks and recreation departments, military and first-responder training facilities, and municipal programs procure gear for public-facing programs.
- Venues and events: Stadiums, arenas, race organizers, and outdoor parks purchase gear, signage, and rentals for events and fan experiences.
- Distributors and wholesalers: Regional and national distributors supply independent retailers and facilities with sporting goods inventory.
- Camps, instructors, and academies: Youth camps, coaching programs, and training schools order seasonal and specialized gear.
The B2B sporting goods market landscape in 2025
From 2021 to 2024, the global sporting goods market grew about 7% per year. From 2024 to 2029, the industry is projected to grow about 6% annually.
With slower growth, digital modernization becomes the path to efficiency and retention. To stay competitive, B2B sellers need to lean into predictable, contract-based revenue (such as wholesale sporting goods distribution, institutional, cross-border) and shore up fundamentals like contract pricing, real-time inventory, and multi-location fulfillment.
With that context, the sections below outline emerging trends and the impact of digital transformation on distribution.
Emerging trends shaping the industry
Here are some of the top trends shaping the sporting goods industry and B2B brands:
- Wholesale resurgence: Incumbent brands like Nike and Adidas are renewing their focus on wholesale to increase reach and brand presence, aiming to regain market share they lost while eyeing the DTC market. Challenger brands (e.g., Hoka, On) have rapidly expanded their market share partly by leveraging wholesale-first strategies, with 65% to 70% of their sales coming from wholesale.
- Challenger brands keep gaining: Newer, focused players are outgrowing incumbents. Nike and Adidas together shed about 3 percentage points of market share from 2019–2024 as challengers expanded. For B2B, that means more brands vying for shelf space and team deals, and higher expectations for service levels from suppliers.
- Two-track demand: Among active consumers, fitness is part of identity and routine. Demand is such that in-person classes were used by 81% of respondents in the past year—about 2.5 times more than online classes. At the same time, global physical inactivity reached 31% in 2022 and could hit 35% by 2030, an untapped base of about 1.8 billion people. This means there is a B2B opportunity to expand into programs for schools, municipalities, employers, and venues that lower barriers to activity.
- Live and retail convergence: The global live events ticket market surpassed $100 billion in 2023 and could reach $150 billion by 2030. This convergence is fueling experiential formats that blend sport, entertainment, and retail, in turn creating B2B opportunities for outfitting venues, popups, and community events. Digital modernization enables suppliers to manage these high-volume, time-sensitive orders with the same efficiency as recurring institutional contracts.
Even with a minor deceleration, opportunity is wide open for B2B sellers who upgrade systems to match how buyers purchase. That’s the bridge to digital transformation—making quoting, contract pricing, and quick SKU ordering effortless, connecting inventory and order status across locations, and showing landed costs at checkout.
Impact of digital transformation on traditional distribution
Legacy models that rely on spreadsheets, phone calls, and siloed systems are rapidly giving way to modern, connected infrastructure. For traditional distributors and wholesalers, switching systems helps with operational clarity, speed, and scalability.
With Shopify’s unified order management system (OMS) and automation capabilities, sellers can connect data and workflows across their business, creating a single source of truth for inventory, fulfillment, and customers.
In practice, that transformation looks like:
- ERP + OMS upgrades: Sporting goods suppliers are upgrading from fragmented tools to unified B2B order management systems that improve visibility and coordination across orders and locations.
- Connected inventory across channels: Real-time visibility into warehouse, store, and third-party inventory prevents costly stockouts and enables smarter routing for bulk or just-in-time (JIT) delivery.
- Digitized quoting and pricing: Platforms like Shopify enable B2B sellers to manage gated catalogs, tiered pricing, and customer-specific terms directly within their storefront, eliminating the need for emailed spreadsheets or custom quotes.
- Workflow automation: Reps, finance teams, and warehouse staff are saving hours per order thanks to automated quote approvals, payment term rules, invoicing, and status updates.
- Data-backed planning: Digital tools provide actionable insights into sales velocity, SKU performance, and forecast accuracy—key for managing seasonal sports demand, maintaining optimal stock levels, and reducing returns.
- Stronger customer experience: Digital self-serve portals, punchout catalogs, and EDI/API integrations give buyers what they expect: contract pricing, quick orders, and transparency—without sacrificing personalized service from reps.
For B2B sporting goods sellers, digital transformation isn’t optional—it’s the foundation for staying competitive as buyer expectations rise.
Building a successful B2B sporting goods business model
In an industry filled with both legacy brands and fast-moving challengers, the strongest B2B sporting goods businesses do three things well: they define a clear audience, align pricing to bulk and contract-based buying, and set up operational systems that can flex with demand. That combination is what turns one-off sales into repeatable, scalable revenue. Let’s explain further:
Choosing your niche and target customers
The foundation of any successful B2B sporting goods business is knowing exactly who you're selling to—and why they need you. Rather than trying to serve everyone, focus on a segment where your products solve a specific, recurring problem.
Start by identifying your primary customer type. Are you:
- Outfitting national or regional leagues that need reliable, seasonal gear?
- Supplying multi-location fitness chains or corporate wellness facilities with commercial-grade equipment?
- Providing OEMs and institutional manufacturers with specialized components?
Each segment has different buying habits, service needs, and operational expectations. And your niche will shape everything from your product catalog to your pricing model to your fulfillment workflows.
Here’s how different B2B segments impact operations:
- Team and institutional buyers value reliable lead times, full-size runs, and pre-packaged seasonal kits for easy distribution across rosters.
- Retailers and pro shops care about merchandising support, high sell-through rates, and fast, flexible reordering.
- Facilities and events prioritize bundled services (like setup or maintenance), rental options, and volume-based discounts tied to capacity or event size.
Use these differences to guide how you:
- Structure your product catalog (e.g., kits vs. SKUs)
- Set up pricing (e.g., tiers, contracts, or custom quotes)
- Build your order flow (e.g., quick reorders for retailers vs. PO approvals for institutions)
Clear focus on your niche ensures your business scales efficiently—and gives customers a reason to choose you over generic suppliers.
Developing pricing strategies for bulk orders
Bulk pricing starts with incentivizing volume while protecting margins. Start with base tiers (e.g., 50 units, 100 units, 500 units), then layer on pricing by customer type (retailer, gym, school) or contract terms.
For example, with the Shopify B2B Suite, you can:
- Assign custom price lists per company or segment: Set negotiated pricing by account, region, or customer type so each buyer sees their correct terms automatically.
- Trigger volume breaks that apply automatically at checkout or quote: Offer bulk discounts based on quantity thresholds without needing manual overrides or custom quotes.
- Create approval workflows for quotes or custom terms: Route large orders or negotiated deals through internal review and sign off before converting to final orders.
- Support net payment terms or deposits for longer lead times: Allow customers to place orders with flexible payment options like deposits, partial payments, or net terms—while keeping reporting and reconciliation clean on the back end.
With Shopify, you can set unique price lists per customer, assign catalogs, and support PO numbers and quote-based orders—no workaround required.
Creating value-added services for retailers
Once you’ve defined your audience and pricing model, you need operations that can handle volume, complexity, and speed. B2B sporting goods sellers often manage a mix of bulk orders, seasonal surges, multi-location fulfillment, and account-specific terms. To make that work, you need:
- Centralized product and pricing data: Keep SKUs, specs, and contract pricing tied to customer profiles so orders stay accurate.
- Flexible order-routing: Send orders to the best fulfillment node—warehouse, store, or third-party—based on inventory, geography, or SLAs.
- Live inventory visibility: Know what’s available to promise (ATP), including what’s allocated, incoming, or reserved for key accounts.
- Quote-to-cash automation: Standardize approvals, deposits, and payment terms so your finance team isn’t reconciling manually.
- Cross-border workflows: Automate landed costs, tax handling, and compliance for international orders.
Platforms like Shopify bring these systems together. With B2B company profiles, order routing, multi-location inventory, and integrations for your ERP, warehouse management system (WMS), and customer relationship management (CRM), you can scale up without creating more operational debt. The result? A more resilient operation that turns one-off sales into scalable, repeatable revenue—a priority for every enterprise seller.
Essential technology for B2B sporting goods operations
Once your business model is in place, it’s time to set up the tech stack that powers it. For B2B sporting goods brands, the right systems make it possible to manage complex orders, sync with partners, and scale without slowing down. Here are the non-negotiables:
Ecommerce platforms and customer portals
An ecommerce platform acts as the digital backbone of your distribution business. It’s where you manage your online storefront, process orders, sync inventory, and give customers a seamless buying experience. The right platform helps you stay organized, sell across channels, and grow without adding complexity.
Here are the key features to look for in a B2B ecommerce platform for sporting goods:
- Custom pricing and catalogs: Tailor pricing and product visibility for different buyers or customer groups. This is critical for teams, schools, and retailers with negotiated rates or specific product lines.
- Bulk ordering and fast reorders: Make it easy for buyers to purchase multiple SKUs (like uniforms in different sizes or colors) and reorder common items quickly. The right platform should offer tools like quick-order forms or prebuilt reorder lists.
- Flexible payment terms: Support purchase orders, net terms, and other B2B-friendly payment options. For example, Shopify Plus integrates with B2B payment gateways and lets you set custom terms for each customer.
- Inventory visibility across channels: Sync wholesale and retail inventory to avoid overselling. This is especially important if you sell direct-to-consumer as well as to gyms, schools, or retail chains.
- Self-serve account portals: Give buyers access to past orders, invoices, and tracking info so they can manage their purchases without contacting a sales rep.
- Multi-location fulfillment: Route orders to the best fulfillment center (warehouse or store) based on inventory and shipping location—ideal if you stock gear in different regions or partner with 3PLs.
- Mobile-optimized B2B experience: Coaches, managers, and retail buyers are often placing orders on the go. A responsive, app-like interface ensures they can browse and buy easily from any device.
- Integration-friendly architecture: Seamlessly connect your ERP, product information management (PIM), or CRM so your workflows stay aligned and data doesn’t live in silos.
- Support for product variants and kits: Manage gear sets (e.g., jersey, shorts, socks) and variations like size, color, and number printing with ease
Inventory management and fulfillment systems
An inventory management and fulfillment system helps you keep the right products in the right place, so you don’t miss sales, overstock slow movers, or lose visibility between warehouses, stores, and dropship partners. In B2B sporting goods, that’s especially critical when you’re dealing with bulk orders, seasonal spikes, team kits, or complex product variants like size runs and equipment sets.
For B2B sellers, the stakes are especially high. Fulfillment issues can affect your ability to win (and keep) wholesale and institutional accounts. When you're outfitting an entire gym or team, a single missing item can derail the whole order. That’s why a modern system needs to give you real-time inventory tracking, route orders to the best location, and connect seamlessly with your sales channels and warehouse teams.
Allbirds is a great example of how the right system leads to growth.
As the brand expanded from ecommerce into physical retail, they struggled to manage inventory across stores and warehouses—stocking too much in low-traffic stores while missing online sales due to limited warehouse availability. By implementing ship from store using Shopify POS, Allbirds turned retail locations into fulfillment hubs.
This change allowed them to fulfill online orders with in-store inventory, increase product availability across channels, and reduce both labor and shipping costs tied to warehouse returns. The result was a faster delivery for customers, better sell-through in stores, and stronger operational efficiency across the board.
Integration with retailer systems (EDI, API)
For B2B sporting goods brands selling to major retailers or institutions, seamless integration is table stakes. Partners expect you to “speak their language,” whether that’s via EDI, punchout catalogs, or APIs. If you can’t, you risk delays, fulfillment errors, or losing the account entirely.
These integrations keep high-volume orders moving and eliminate manual work across purchase orders, invoices, and shipping confirmations. Automating those workflows reduces costly errors and builds trust with retail partners that expect speed and precision.
As more buyers move from batch-based to real-time ordering, B2B sellers need scalable systems—not custom workarounds for every new account.
That’s where Shopify’s cloud-based OMS comes in.
With native integrations from providers like SPS Commerce and Orderful, Shopify can pull in EDI and eProcurement orders directly. That means one centralized system for managing all order types—whether they come from DTC, sales reps, or large retail chains—while using shared business logic for routing, tracking, and fulfillment.
Benefits of EDI + OMS integration with Shopify:
- Centralized operations: One place for all inventory, order, and customer data
- Smarter fulfillment: Automated routing, updates, and confirmations
- Less overhead: No more duplicate systems or one-off workflows
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Scalable partnerships: Support more retail accounts without adding headcount
What to look for in your integration setup:
- Support for standard EDI documents: Like POs (850), invoices (810), ASNs (856)
- Real-time OMS sync: So inventory and order status stay accurate
- Flexible workflows: To match each retailer’s rules without custom dev work
- API-first architecture: For future-proofing and custom use cases
Managing seasonal demand and inventory challenges
In sports retail, timing is everything. From tournament-driven surges to school sports seasons and weather-driven activity spikes, demand can swing fast—and hit hard. B2B partners that handle seasonality will not only avoid stockouts and overages, but also win loyalty by being the supplier that always comes through.
Forecasting for peak sports seasons
B2B sporting goods brands rely on smart, seasonal forecasting to stock the right SKUs at the right time—especially when supplying teams, facilities, or retail partners. Here’s what advanced demand planning includes:
- Regional season alignment: Match inventory to when sports happen in different regions—e.g., spring soccer in the South, but still winter conditioning in the North.
- Event-driven sales mapping: Plan around school start dates, tournament schedules, or regional leagues to anticipate surges in wholesale sporting goods orders.
- Historical order patterns: Use past years’ data by product, region, and buyer type (e.g., schools vs. gyms) to set smarter reorder points and safety-stock thresholds.
- Product lifecycle insights: Account for new model launches or obsolescence cycles—especially for footwear, protective gear, and performance tech that changes each season.
- Size run forecasting: Predict which sizes move fastest in uniforms, shoes, or protective gear to avoid mismatched kits or leftover inventory.
- AI-assisted demand-prediction: Layer in external signals like weather trends, local event calendars, and macro activity data to predict shifts in volume or product mix.
- Channel-specific forecasts: Split B2B demand by buyer type (wholesale, institutional, retail partners) to avoid overstocking one channel while shorting another.
Strategies for off-season inventory management
While peak seasons bring surges in demand, the off-season is where margins are protected and waste is minimized. For B2B sporting goods sellers, digitally connected inventory systems help keep operations lean and cash flow strong year-round.
Here’s how to do it:
- Segment inventory by seasonality: Identify which SKUs are evergreen vs. season-dependent. This helps determine what to keep on hand and what to mark down, bundle, or liquidate.
- Leverage historical sell-through data: Analyze past off-season performance to predict slow movers and deadstock risks. Use this data to guide reorder decisions and markdown timing.
- Bundle aging inventory with in-demand items: Move slower products by pairing them with high-performing items—e.g., bundle last season’s gear with accessories or consumables.
- Use off-season to trial dynamic pricing models: Experiment with price elasticity on slower-moving items without risking peak-season revenue. Test what discount levels drive conversions without eroding value perception.
- Redirect surplus to outlet, resale, or team-level fulfillment: Offload excess goods through secondary channels like team kits, outlet stores, or resale partners to avoid deep discounts on your primary channels.
- Shift focus to pre-orders or customization: If demand is low, reduce risk by offering build-to-order or customizable gear. It minimizes on-hand stock while keeping customers engaged.
Just-in-time delivery models
Agility is a competitive edge, especially in sporting goods, where team needs and fan demand can shift overnight. Just-in-time (JIT) delivery models help B2B sellers stay lean and responsive by reducing on-hand inventory and fulfilling orders closer to the moment of need.
Instead of stocking deep across every location or variant, brands use JIT to align inventory with actual demand signals. That might mean working with localized suppliers and fulfillment partners to produce and ship gear as orders come in, or triggering restocks based on preorders, event calendars, or customer waitlists.
The backbone of a successful JIT strategy is a connected inventory system—one that syncs real-time availability across warehouses, stores, and dropship partners. This lets sellers route orders efficiently, avoid overstocking, and fulfill from the optimal location without delays or missed items.
For B2B operations, this agility helps meet tight timelines for team outfitting, promotional events, or large-scale seasonal rollouts—without ballooning overhead. When done right, JIT delivery is not only a cost-saver but also a huge service advantage that builds trust with buyers.
Scaling your B2B sporting goods business
Once your operations are running smoothly and your sales pipeline is consistent, the next phase is scale. Growing your B2B sporting goods business means identifying the right levers to pull—whether that’s introducing new products, forming key partnerships, or entering new markets.
Expanding product lines and categories
Expanding your catalog can boost revenue and strengthen long-term buyer relationships. Done right, it helps brands meet evolving needs without overextending your operations. For B2B sporting goods businesses, digital systems make expansion more agile—using data to spot new categories, test quickly, and scale only what works. A few ways to approach it:
- Spot high-potential gaps: Use sales data and customer feedback to uncover adjacent categories—like expanding from soccer kits to training equipment or hydration gear.
- Test before you commit: Roll out new products in small batches through limited-time wholesale drops or to a subset of trusted customers.
- Stay regionally and seasonally relevant: Align launches with climate and sport calendars—for example, cold-weather gear in mountain towns or tournament-ready apparel in spring.
- Bundle: Introduce new products alongside bestsellers to drive discovery without taking on major inventory risk.
Building strategic partnerships with manufacturers
Manufacturers can be innovation partners, growth enablers, and a source of competitive advantage. Here’s how sporting goods brands can approach manufacturer relationships more strategically:
- Share long-term product roadmaps. Give manufacturers visibility into your seasonal planning, material needs, and innovation pipeline so they can align R&D, sourcing, and capacity planning early.
- Co-invest in product development. Partner on prototyping, testing, and sustainability improvements. Consider joint R&D funding for specialty gear or performance-enhancing technologies.
- Standardize performance metrics. Create shared KPIs around defect rates, delivery timelines, sustainability benchmarks, and product innovation—not just unit cost.
- Align on sustainability goals. Work with manufacturers to source eco-friendly materials, improve labor practices, and meet compliance requirements. Offer incentives for hitting ESG targets.
- Secure volume guarantees when possible. If a product line is expected to scale, negotiate volume commitments that help your manufacturing partner plan efficiently—and pass on cost savings to you.
- Foster direct communication with their leadership team. Don’t let communication get stuck with procurement or operations. Building trust at the executive level can fast-track problem-solving and innovation.
- Be transparent about challenges. If sales are down, communicate early. If demand is spiking, collaborate on contingency planning. Proactive honesty builds long-term trust.
International expansion considerations
Selling sports gear across borders requires adapting to new markets, including different seasons, varying sports preferences, distinct fulfillment expectations, and compliance hurdles. Whether you're shipping ski gear to the Alps or team kits to Australian clubs, your tech stack needs to handle complexity without slowing you down.
A unified platform like Shopify helps streamline international operations. With Shopify Managed Markets, enterprise brands can automate duties, taxes, and compliance at checkout, while offering local currencies and payment methods.
Case in point: LAZRUS Golf doubled the number of countries where they sell and saw Eurozone conversion rates improve by 55% after implementing Managed Markets—proving that cross-border growth doesn’t have to add complexity.
To scale your sporting goods business internationally, consider:
- Regional demand cycles: Football season in Europe doesn't line up with North America’s. Tailor your product drops, inventory timing, and marketing to regional sports calendars.
- Cross-border logistics and warehousing: Choose 3PLs or fulfillment partners that understand gear sizing, customs documentation, and seasonality in your target regions.
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Local regulations and labeling: Some markets have specific standards for protective gear, apparel labeling, or child safety items—especially for school and youth programs.
Localized experiences: Translate product pages, list pricing in local currencies, and feature sport-specific imagery relevant to local communities and teams. - Simplified compliance and payments: Platforms like Shopify handle duties and taxes at checkout and support local payment options—so buyers aren’t hit with surprise fees or friction at purchase.
International expansion can open doors to new revenue streams, diversify your customer base, and elevate your brand’s reputation. But it requires thoughtful planning and strong foundational operations.
B2B sporting goods FAQ
What are the minimum order quantities for B2B sporting goods?
Minimum order quantities (MOQs) in B2B sporting goods distribution vary by brand, product type, and supplier. For large manufacturers, MOQs often start at 50–100 units per product, while smaller wholesalers or private label providers may offer lower MOQs. If you're sourcing custom gear or apparel, expect higher minimums due to production costs. Some platforms and marketplaces now offer tiered pricing to help smaller retailers buy in bulk without overcommitting.
How do I become an authorized dealer for major sports brands?
To become an authorized dealer in the sporting goods wholesale market, businesses typically need to submit a business application directly through the brand’s website or via their distribution partner. Requirements often include a valid resale license, proof of business operations (e.g., retail storefront or ecommerce site), and a commitment to minimum annual purchases. Brands like Nike, Adidas, and Under Armour may also require you to meet display and brand representation standards.
What certifications are required for sporting goods distribution?
Certifications vary based on region and product type. For general sporting goods, a resale license and business registration may be enough. However, if you're distributing protective gear, equipment for youth sports, or goods with safety standards (like helmets or pads), you may need to comply with ASTM, CE, or ISO certifications. For international distribution, customs and import/export compliance documents are often required.
How can I compete with large sporting goods distributors?
To compete with large sporting goods distributors, focus on specialization and service. Niche down into a specific category (like youth soccer gear or sustainable fitness products), offer exceptional customer support, and build strong supplier relationships. Local fulfillment, fast delivery, and flexible order sizes can also help you stand out. You can also win on digital strategy—optimize your B2B site for search, and provide an easy ordering experience.
What are typical profit margins in B2B sporting goods?
Margins depend on the product category and scale. Most B2B sporting goods distributors operate on gross margins between 20% and 40%. Branded apparel and accessories tend to have higher margins than equipment. Private label products can offer even better margins but require more upfront investment. Keep in mind that volume, exclusivity agreements, and operational efficiency all play a role in profitability.