I mean it sounds very fishy ? If they can make money selling it at 500 USD , how come they were selling it at 1500?. Did they consider the 1000 USD difference as the profit?!!!.
P.S the TV example is a real one , 42 inch TV sold at Walmart
2006-11-24 21:47:34 · 7 answers · asked by Wondering 3 in Business & Finance ➔ Other - Business & Finance
Yeah, it's sad how much of a profit these people make on this stuff. Even if they made very little to no profit on items they have on sale, it's not worth a $1000 markup!
2006-11-24 22:14:24 · answer #1 · answered by schaianne 5 · 0⤊ 0⤋
Keep in mind that retailers do not purchase their goods at a retail price. They buy in bulk and receive major discounts from suppliers. Walmart can afford to sell the TV for $500 because they probably purchased it for less than that amount. Therefore, their profit margin is lowered in comparison to $1500; but they still make a profit. The more people buy the more profit they receive. Walmart's philosophy is to buy in bulk, sell items at a cheaper price than its competitors, and reel the crowds in! That spell profits, profits, and stores on every corner of the world.
2006-11-24 22:16:30 · answer #2 · answered by Anonymous · 1⤊ 0⤋
This is what is called a "loss leader" in the business.
The concept goes: The more people you get into your store, the more $ they will spend, especially if you have an unbelieveable deal because many will think your other prices are competitive.
So, they lose $ on the loss leader, hence the name, and make much more than they lose, or would have without a loss leader on the other items sold.
Is that whacky or what?!
2006-11-24 21:52:01 · answer #3 · answered by Star 5 · 1⤊ 0⤋
So they lower their profit one day on one item. It brings people into the store. Also, the sale TV is a brand no one has ever heard of and quality may not be as good or as reliable.
2006-11-24 21:49:51 · answer #4 · answered by hirebookkeeper 6 · 1⤊ 0⤋
Walmart will lose money on that TV but will make money by the time you leave that store. They probably will only have a limited quantity, 20 or so.
2006-11-24 22:13:26 · answer #5 · answered by Hindu Guy 2 · 1⤊ 0⤋
Yes! I seen that ad too!
I bet it's a piece of crap. Wal mart is notorious for selling crap, and people think they are getting a 'deal'.
2006-11-28 02:26:12 · answer #6 · answered by Anonymous · 1⤊ 0⤋
pretty much
2006-11-24 21:50:28 · answer #7 · answered by forex 3 · 0⤊ 0⤋