I have always wondered how hypermarkets make their profit. I know they buy and sell lower quality brand names in bulk so they can push their retail prices lower than other supermarkets who sell by per piece. However, that still does not solve the question on how they can profit if they keep pushing the prices of various products lower, rotating their low priced items every week or so.
And because their prices are so low, people are willing to compromise on the quality. If you just look at the number of customers who come back with their non-working electrical and electronic products well within the warranty period, you will know what I mean. What is the fun of buying something when you will have to lug the item to and fro trying to claim warranty?
When I buy something, at any price, I expect it to work. And I believe many people are of the same thinking, and yet hypermarkets keep bombarding the market with sub-standard electrical and electronic products.
Anyway, not too long ago, three of my contacts who work in a few hypermarkets in the country told me that hypermarkets will take their goods from suppliers on credit for a grand six months. Every day, they will push off these items at very low prices, sometimes at cost, sometimes at a profit margin of only one or two sen.
Did you know that popular hypermarkets in the country could generate a sales turnover of one to two million Ringgit PER DAY? And what do they do with this cash? They are definitely not going to pay off their suppliers since they have a six month credit.
However, they will deposit this cash into a bank, most probably a foreign bank, who will be giving them a higher than normal interest rate that has been pre-negotiated. And with the interest earned, they pay off their utility bills and staff.
Actually, this kind of business, we also know how to run. It is like, no capital but want to do business, so use the capital of someone else. In this case, it’s the suppliers’.
And because their prices are so low, people are willing to compromise on the quality. If you just look at the number of customers who come back with their non-working electrical and electronic products well within the warranty period, you will know what I mean. What is the fun of buying something when you will have to lug the item to and fro trying to claim warranty?
When I buy something, at any price, I expect it to work. And I believe many people are of the same thinking, and yet hypermarkets keep bombarding the market with sub-standard electrical and electronic products.
Anyway, not too long ago, three of my contacts who work in a few hypermarkets in the country told me that hypermarkets will take their goods from suppliers on credit for a grand six months. Every day, they will push off these items at very low prices, sometimes at cost, sometimes at a profit margin of only one or two sen.
Did you know that popular hypermarkets in the country could generate a sales turnover of one to two million Ringgit PER DAY? And what do they do with this cash? They are definitely not going to pay off their suppliers since they have a six month credit.
However, they will deposit this cash into a bank, most probably a foreign bank, who will be giving them a higher than normal interest rate that has been pre-negotiated. And with the interest earned, they pay off their utility bills and staff.
Actually, this kind of business, we also know how to run. It is like, no capital but want to do business, so use the capital of someone else. In this case, it’s the suppliers’.
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