That’s an expected tradeoff of operating an essential service is the point. It’s not as though their margin is that slim by mistake, or out of goodwill, or bad business sense. It’s meant to lead to the situation where we shop at Walmart not by choice, but in lieu of other options.
Comment on Walmart's use of digital price tags signal the future of retail shopping, but consumers are worried
cygnus@lemmy.ca 4 weeks agoSlim profit margins my ass. Walmarts gross profit for the twelve months ending July 31, 2024 was $163.786B,
Not to sound flippant, but do you know what gross profit means? They aren’t pocketing all of that. Walmart’s net profit margin is 2.66%, which is minuscule. They make up for that by having enormous volume.
gila@lemm.ee 4 weeks ago
cygnus@lemmy.ca 4 weeks ago
Not really — it’s because nearly everything they sell is highly fungible, and they compete on price. Nobody is willing to pay a premium to shop at Walmart. Twenty years ago you’d have been correct, but they’ve pretty much saturated the market at this point. They’re trying to find profitability in automation rather than adding tons of new stores.
gila@lemm.ee 4 weeks ago
I’m really meaning the lack of option not to consume fast-moving consumer goods, rather than the option to pay a premium for them elsewhere. When their market position is similar to like an outlet for government rations except for private profit, their net is essentially what was skimmed off the top of free enterprise. 2.66% is just the current maximum amount that is justifiably worth without doing societal harm
cygnus@lemmy.ca 4 weeks ago
That’s true, but what you describe is pretty much the end state of big-box retail. Amazon is essentially the same, if we exclude AWS. It’s all a race to the bottom. The solution, as always, is to buy direct from smaller producers if possible.
ericjmorey@beehaw.org 4 weeks ago
You made a good point and I immediately thought that reporting a gross profit dollar amount as an example of how profit margins are not slim as simply inappropriate ad would have responded myself if you hadn’t. There’s no single dollar figure that can inform anyone about the profit margin of a business. A number without context is useless.
TachyonTele@lemm.ee 4 weeks ago
Gross profit can be defined as the profit a company makes after deducting the variable costs directly associated with making and selling its products or providing its services.
cygnus@lemmy.ca 4 weeks ago
Yes, but there are many more expenses associated with running their business beyond simply COGS. Their net income last year was 11B, which is pretty average for a company that size.
TachyonTele@lemm.ee 4 weeks ago
I’ll be completely honest. I don’t care anywhere near enough about the actual number that you do. I looked it up, and that was that. I didn’t write a financial report.
cygnus@lemmy.ca 4 weeks ago
I dislike that you’ve put me in the position of defending Walmart, but don’t you find it rather misleading to imply that they made 163 billion dollars in profit when the real number is less than 10% of that?
667@lemmy.radio 4 weeks ago
A measly $3.2b. Can hardly afford a new yacht with that!