Hypermarkets walmart

Question

Hypermarkets , like other big -box stores , typically have business models focusing on high -volume, low-margin sales . -- Hypermarket, Wikipedia

What does the phrase "focusing on high volume, low margin sales" mean in the above setting? Please let me know. Thanks.

AlpheccaStars · Accepted Answer

Hi Jack;

There are many successful business models.

Suppose you have two businesses selling petrol (gasoline) to motorists. They get their gasoline from the same supplier at the same price.

One of these businesses has attendants who wash the windows of the customer's cars, check the tire pressure and the liquid levels (oil, windshield washer fluid, radiator, and brake fluid) while they are filling up the customer's tank. They inform the customer if they see any problems, and will add water and air as necessary.

The other business has no attendants except for the one person at the register who takes the money. The customer fills up the car himself, and has to check everything himself.

The first business sells the gasoline at their cost plus 5 cents per liter. The second sells the gas at their cost plus 5 cents per 10 liters. This difference between material cost and selling price is called the margin.

Many people will choose the second business because the price is cheaper. The second business sells at a "low margin" so they can attract more customers. They need to sell a lot of gasoline to make the same profit as the first business. (That is "high-volume")

The first business attracts customers who want the extra service and information about how their vehicle is doing. These customers are not sensitive to price, but to service.

Jackson6612 · Answer

Thanks a lot for such a detailed answer.

Best regards
Jack

Hypermarkets walmart

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