I know the Walmart corporation has always implemented a strategy centered around aggresively low prices, but how could they afford to do this? How is it possible for them to have merchancise 50% below the suggested retail price and still make a profit? What makes Walmart the largest corporation in the United States? What sets them apat from the rest of the hard working business owners?
2007-07-15 05:05:42 · 16 answers · asked by superkbiggs 2 in Business & Finance ➔ Other - Business & Finance
my dad said something about information technology. they have the best i guess
2007-07-15 05:07:50 · answer #1 · answered by Anonymous · 2⤊ 0⤋
This is simple! We call this the rate of turn! When Wal-Mart purchase goods from manufacturer, they normally move from their warehouse to the store shelves in 3 days! Then by offering a very low price, the sales volume of those articles are increasing. This an item arriving in the store could be sold under a week after arriving on the shelves. And since Wal-mart has 60 to 90 days to pay for the sold inventory to the original manufacturer, they make money on the interest rate on those sold items (as they got the money from the customer to pay for it, but have about 2 to 3 months to pay).
So the faster the rate of turn of a product, the more money Wal-Mart is doing (centrally).
For exemples; If a soap product has a rate of turn of 50, it will means that the product has times to be sold 50 times BEFORE we have to pay for it!
Most stores have a rate of turn around 6 to 8, while certain Wal-mart departments have a rate of turn over 20...
2007-07-15 12:56:06 · answer #2 · answered by Jedi squirrels 5 · 0⤊ 0⤋
It's the "buy in bulk" strategy. Have you ever been to the grocery and noticed that, say, 2 chicken breasts cost $2.98, but if you buy a package of 10 frozen chicken breasts the cost is $7.98? That means that the package of 2 breasts cost $1.49 a piece, whereas the package of 20 breasts brings it to about $0.79 a piece. Now say you want to buy a pair of jeans. Wal-Mart purchases them from a supplier for $20.00 per pair. 50% below msrp brings them to $10.00 per pair. If only one pair is sold, they lose half of their profits. If two pairs are sold, they break even. If three pairs are sold, they have a 50% increase in profit, and so on. And the percentage that Wal-Mart customers as a whole are buying more than one of any item : 100%. If you want to know about the beginning of Wal-Mart, you might want to read "Sam Walton : Made in America". It's an older book, but your local library should have a copy. Plus I think probably most of Morgan's comments are true!
2007-07-15 05:19:05 · answer #3 · answered by Missy 4 · 1⤊ 0⤋
The basis for the Wal-Mart model is volume pricing.
example.
Let's say an item sells for $100 usually
I buy one item for $50 and put it up for sale at $100.
Wal-Mart calls the manufacturer and arranges to buy in quantity. Let's say if they buy 100 to put one in each store in an area. The maker will sell them at $45 each since they are buying in bulk. Wal-Mart then prices the item at $90.
Let's say i can sell mine and make my 100% profit ($50)
Walmart sells their 100, and even though they sold it for less, they still made 100% profit and cleared $45x100= $4500.
My profit = $50. Wal-mart profit = $4500. They win.
So... Wal-mart buys things in volume to obtain a lower price, thereby being able to offer it at a lower cost to their consumer, and in turn, they sell more units.
2007-07-15 05:08:45 · answer #4 · answered by Mr. Know-it-all 4 · 0⤊ 0⤋
What I know is that Wal-Mart has been the target of criticism from some community groups, women's rights groups, grassroots organizations, etc. Specific criticisms include the company's extensive foreign product sourcing (from the poorest countries in the world), low rates of employee health insurance, resistance to union representation, and alleged sexism, among other things. They exploit people.
2007-07-15 05:10:42 · answer #5 · answered by shake4me 7 · 1⤊ 0⤋
NO one can sell at 50% off regular prices. Off suggested retail, YA, but who ever sells at the suggested retail? Cars? The worst mis-representation.
Walmart operates on the lowest possible margin, based on high volumne purchasing, cost controls...wages, low markdowns, shortages, theft, etc.
2007-07-15 05:13:03 · answer #6 · answered by ed 7 · 0⤊ 0⤋
They restrict employee hours so almost no one has a full time position, excluding them from qualifying for company health care. They hire at only the bottom range of the pay scale. They only contract with companies that will sell to them for drastically reduced costs than they sell to other companies or they boycott them. (see Rubbermaid) They purchase 90% of their product or better from china who's average hourly wage is 75 cents. This wasn't cutting it however, so they've opened their own factories in china where the average wage is 25 cents per hour.
2007-07-15 05:13:50 · answer #7 · answered by Morgan M 5 · 1⤊ 1⤋
Buying in mass quantities enables Walmart to be able to offer lower prices to the consumer.
2007-07-15 05:08:40 · answer #8 · answered by Sparkles 7 · 1⤊ 0⤋
They just have that on some merchandise. Other merchandise is at an over 100% markup.
They get people in for sale prices, and make their money on other items.
2007-07-15 05:19:18 · answer #9 · answered by Unknown.... 7 · 0⤊ 0⤋
Alot of the stuff they get is from China. And they don't spend so as much money alot of competitors spend on advertising. Wal-Mart is just well known. I don't know what my family would do without Wal-Mart
2007-07-15 05:08:35 · answer #10 · answered by Anonymous · 0⤊ 0⤋
They buy in bulk since they are such a big company, just like buying in bulk from Costco results in paying less per item.
2007-07-15 05:10:52 · answer #11 · answered by Powdermonkey 2 · 0⤊ 0⤋