I often though about if for some reason I had a lot of money if I should try to make common things and sell at low margins over a charity setup. Like target 1% above inflation for the companies profit when targetting the price of the items.
To put it simply, cost isn’t the same for everybody.
Even beyond this:
Coca-cola and Walmart had a secret inside deal. Nobody could sell coke products for less than Walmart.
When they find out smaller grocery stores are undercutting Walmart to drive traffic, the wholesaler/distributor will go into those smaller chains and force them to pay even higher wholesale prices to force them to raise their prices.
Walmart gets bulk discounts nobody else on the planet receives, then games the market to hedge themselves against everyone else - not setting a fair market price floor, but rather a price ceiling.
They get to be the lowest priced, everyone else the highest.
Yep. And boot-lickers of that kind of business ethics will always say “Well that’s capitalism, baby!”
But it’s really not. Capitalism as an economic theory IS those small businesses that are being driven under. It’s human beings making a living from their own labour." Even if that human being is the person in charge and doesn’t set foot on the sales floor (for example), it’s still a human being at the helm.
My goto example for some reason is always furniture, I don’t know why. But someone making bespoke wooden furniture out of his garage because he enjoys it and other people want to purchase it. That’s capitalism.
If that same guy’s product gets so big that he starts a company, get’s a factory, and now has employees making the furniture for him, it’s still capitalism because he built that company with his own sweat and he deserves to reap the benefits of such.
What’s missing from what the bootlckers call capitalism is the human element.
When the human equation is taken away and everything is at the whim of a stock price, it’s not capitalism anymore, it’s called a Corporatocracy. Humans themselves become just another metric on a spreadsheet called “labour”. Something to be accounted for, controlled and minimized for the sake of the share price. Those shares aren’t owned by humans either (for the most part), they’re owned by other corporations and hedge-funds. Humans are so far removed from modern corporatocracy that there’s no room for (or even understanding of) empathy.
Corporatocracy is part of, and the logical conclusion of, any economic system that values private profit. Capitalism is not the pure, uncorrupted version of this. (And from where I’m sitting you’re a bootlicker too for takes like “he built that company with his own sweat and he deserves to reap the benefits of such.” It conpletely ignores the labor everyone else put into that company, from the employees to the supply chain to the tax-funded infrastructure.)
Also, unless you’re selling literally everything, they can pad their margins on what you don’t provide, and pound you into the ground with loss-leaders, ON TOP of volume discounts. That’s how Walmart destroyed local businesses, by taking “acceptable losses” selling below cost for a while until it broke the competition.
Big corps do this the reverse way.
First off for the most part, high prices isn’t where big corps are screwing us usually. Least not on luxury goods. Mainly low wages is the real killer, our shit is stupidly cheap. Prices that are only possible via exploitative labor and high environmental destruction. So even the premise is flawed.
But then the bigger thing, even if you could say sell something below amazon’s price… and keep up with inventory and shipping to keep doing it. Amazon can, and will bring their price down… temporarally, only as long as you are still selling the product. They have bots watching everything… and they will undercut you. For them it’s not a big deal, they are in basically every other industry, so while you are still paying for hosting, some bare minimum staff needed to get and sell your product, amazon can just undercut you, make sure you have no customers and starve you out, and the second the bots see you are no longer selling… they jump their prices up to where they are profitable again.
I sell locks at my work. We get our stuff through a distributor at a set price discounted from MSRP. We are not large enough to buy direct from manufacturer for these locks. Amazon and home depot are selling the same locks cheaper than we buy them from the distributor because they can buy direct and buy more volume than even our distributor. You would need to buy in volume higher than Amazon which would be difficult because it would require a ton of up front capital which you would not really have a way to make back because you are making no profit. This isn’t the case for everything but it’s particularly bad with residential smart locks.
Anyway to answer the question no it would not drive Amazon’s prices down because at cost we would still be selling them for more than Amazon.
Hello fellow locksmith. We’ve basically given up on selling residential Smart Locks and Padlocks in our shop. For pretty much the same reasons you’ve described. Our prices would be outrageously higher.
Fortunately we deal in car keys, and dealerships still give us plenty of breathing room to beat them on parts, service, and lead times.
I so desperately want to expand our capabilities on doing car keys but my boss is allergic to spending money. It really seems like a no brainer when the dealerships change an arm and a leg we could easily beat their prices.
Assuming you’ve got a sidewinder cutter it’s worth researching GM’s onboard programming. You can do most vehicles older than 2023 without a programmer.
Yeah we have a sidewinder cutter and a silca RW4 cloner so we can do on board programming and clone a decent amount of the transponder keys but I want my boss to get a programmer so we can actually do remotes and prox keys because we get people asking about them a lot.
If you have a cutter and cloner theres almost no reason to not grab a SmartPro or Autel. It’d pay for itself in less than a year.
Exactly that’s what I keep telling him but my boss doesn’t want to spend the money for whatever reason. I’ve thrown all the numbers at him showing him every customer we’ve turned away that we could have done if we had a smart pro but he still refuses to actually buy it. It’s just completely baffling to me tbh.
Pretty much this.
People have shared how Costco would work with farms and say, “Well pay you less per product, but we’re order a magnitude more than your next buyer. Enough that you can retire next year.”
The numbers are insane.
The difference between you doing that and a megacorp doing that (amazon) is that the megacorp has a lot of money to keep doing that for years
That’s basically what Amazon did. They did it even worse: they sold many things below cost. They ran their entire business burning cash for a long time (surviving off money raised from investors and later from going public and selling stock), driving other book stores out of business. Once they had enough market share and less competition, they negotiated tougher deals with publishers for lower costs and raised their prices to be at least a little profitable (they still sell some things loss-leader and many things at cost).
Edit: publishers, not punishers!
Fuck. Not only are there multiple Punishers, but Amazon negotiated tougher deals with them?? Shit. That’s how you capitalism I guess.
Selling stuff at cost is already selling stuff at a loss if you factor in labor and overhead. How long can you go losing money? Probably not as long as Walmart or Target or Amazon. That’s what they’re betting in.
Employing your exact strategy is how Amazon became one of the largest corporations on the planet. In fact, they still sell their entire Amazon Basics line at a loss for this reason.
“At cost” could be a compound value inclusive of overhead and labor.
Well, that’s just a regular business then.
Well no, it’s something more akin to a co-op, because profit isn’t built in.
Large companies can do / have done that (dumping) to drive out smaller competition.
Small companies usually cannot afford this.
Unless you can pitch this as a disruptive idea to gullible investors (looking at all tech startups that burn trillions without making profits)
And now you know the story of Amazon.
In Australia, Woolworths got reprimanded for selling fuel at a loss. They had a deal where you could buy groceries to earn points which could get you cheaper fuel at their fuel stations. Other companies couldn’t compete, and Woolworths was only able to sustain it because the extra profit they made from selling groceries covered the loss on the fuel.
Many companies have done similar. Uber operated at a loss for years to force taxi companies into bankruptcy, then put their prices up to higher than the taxis had been after the competition was gone.
Comcast had very cheap internet prices in any area where Google was offering Google Fibre, but exceedingly high prices (and worse service) in areas with no competition. Google couldn’t compete on price because Comcast could afford to operate at a loss in a few areas, and Google couldn’t afford to start offering internet across the entire country during it’s startup phase.It could be done, but big businesses don’t play fairly. They have lots of money to spend on driving you our of business, and lots of future profits as incentive to do so.
As others have said that is a business strategy that has been employed many times.
It is all about who can outlast the competition.
Long story short, logistics benefits from scale. The cost to ship a pallet of poptarts to a store is roughly the same as shipping half a pallet. Smaller stores can’t really undercut larger corporations because they don’t have the scale.
Also when your mom and pop store doesn’t make a profit for 3 months, they go under. When a Walmart doesn’t make a profit for 3 months, they stay open because they have those loses spread across hundreds of other Walmarts.
You mean google fiber?
Maybe, but why would somebody do that in the first place? Put effort, money, time and resources into a loss net gain?
You would need lots of those stores to justify others to lower prices like one or more on every town and place…
Maybe a state run enterprise at that point… But that woul be… Communism I guess.
How would this store afford to pay its employees, rent and utilities if it only sold things at cost? One store alone would also make no difference, you’d need a chain of many stores.
I am talking like a small town. Buy.build business outright have a couple investors for tax purposes and only employee people going thru hard times who want to work and give them a percentage in store. Cover all insurance cost and everything.
I suggest having a side business to help prop this ‘at cost’ idea up. Could be as simple as a moving truck rental business.
