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.
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.
And now you know the story of Amazon.
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!
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)
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.
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.
Ok how about the store only sells enough of a markup to cover lights and other stuff?
You mean including also staff wages? Would that also cover a wage for the owner? Or, in other words, a tiny bit of profit so the owner can live out of it?
At this point, try to put a cap on greed.
The owner being myself. I would pay my workers a fair price. Would work around school schedules and such. I would meek out the bare minimum for me but that would be it.
In that case, you should definitely open the shop.
I think, tough, that your prices will be higher than normal retail, due to volumes and supply chain.
Also, the local “Wall-Mart” (or whatever corporation) would need to sell a very small loss for a few months to kill you, while subsidizing their loss with other shops in other locations…
You can’t win. But you can try and people will undoubtedly appreciate that
Not looking for a fight but back in my hometown an Aldi;s is going to open up right across the street from a Wal-Mart. And yet they Aldi’s is a huge company.
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.
Dude, as someone that worked, briefly, in retail at a corporate level, the agreements between the major players like Coke and Pepsi and the big boxes are like some Van Halen “no brown M&Ms” level shit on both sides of the equation.
I have seen emails describing what happens when a coke representative walks into one of those stores and finds that their product is not merchandised within X feet of X aisle or is out of stock on the shelf and there are serious financial sanctions for that shit. Something is minor as a customer setting a 12 pack of 7-Up on top of the stack of Sprite has gotten escalated to levels that would be ludicrous to a layman.
Everything, every single shelf or peghook or rack in that store, has a dollar amount attached to it, and the sums of money being exchanged over whether your product is placed at eye level or down on the bottom shelf is unreal.
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.)
