this post was submitted on 22 Jun 2024
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United States | News & Politics
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That is what I am saying. When Walmart sells a grill the total price the grill is revenue. Even though most of that will end up going to the grill company.
It is mind blowing that Invidia even compares to that.
Nvidia is cashing in very very well on the AI bubble at the moment. It's unsustainable of course but yeah
Distribution, when scaled becomes a monopoly. Walmart does not buy products like you are implying. Walmart is primarily a consolidation of both distribution and retail. They set their own margin requirements. The grill maker is not selling their products for Walmart to retail. The grill maker is doing everything they can to get a product into Walmart because Walmart is the gatekeeper. It becomes a situation where, I can sell 5k grills world wide per year to a niche market online or with the biggest independent distributors I can find. I can run a small 10 person business on that business model, but I need keystone margins (50%) and a retail price of $600 to break even, and $800 to be sustainable long term. Walmart wants me to make 100k grills at a price of $350. Because of the scale I can stop thinking about margin and start thinking in terms of cash flow. The scale allows me to make just under $100 per unit sold, and after doing the math, I can grow my business substantially.
Walmart doesn't approach me per say, I approach them and pitch my product because I know their requirements, and if they choose my product, it is a major growth opportunity.
Decades down the line, no one can get their stuff into a Walmart because it takes massive capital to compete within the ecosphere. You can't start a business with a million dollars and create the economy of scale needed to meet Walmart's margin requirements. This is why that niche product elsewhere costs so much more. Walmart, like all other big box stores, is like retail authoritarianism, it takes away the democratic opportunities of the average person and creates a financial dependency with a inflationary monetary control scheme. Eventually, most people are dependant on the lower price goods and have no effective choice. While at the same time, the choice of Walmart prevents them from creating innovative small businesses and products at a grass roots level, stiflingly social mobility as a major gatekeeper for class disparity.